(404) 609-1696

ATLANTA,GA

(404) 341-5314

DULUTH, GA

Whistleblower Lawyer Blog

SEC Charges FCPA Bribery Scheme–Feds Collect $15 Million

The SEC Whistleblower Program encompasses not only classic securities violations, but also violations of the Foreign Corrupt Practices Act (“FCPA”), a topic we have followed closely.

This past week, the SEC filed and settled an FCPA case against Armor Holdings, Inc., and collected more than $5.6 million, while the Department of Justice added almost $10.3 million in criminal fines.

The SEC charged that Armor Holdings, Inc. engaged in a bribery scheme to sell body armor to U.N. peacekeeping missions. The Commission also alleged that Armor Holdings violated the federal securities laws’ books and records and internal controls provisions by failing to account properly for commissions in 2001-2007.

Demonstrating the SEC’s increased emphasis on FCPA enforcement, this case is one of 32 FCPA cases the Commission has filed since 2010. Bribery of foreign government officials for business is having increased repercussions.

According to the SEC’s Complaint, through a U.K. subsidiary Armor Holdings paid more than $200,000 through an intermediary to a United Nations official who could send it business, and used a sham consulting agreement to disguise its actions. The result was more than $7 million in additional revenues, and more than $1.5 million in additional profits, according to the SEC.
(more…)

Continue Reading

Why the SEC Whistleblower Rules Show A New Seriousness About Using Valuable Whistleblower Information

The suspense over the final SEC whistleblower rules ended with the SEC’s release of its final whistleblower rules last week. The CFTC is to follow suit soon in announcing its own commodities whistleblower rules.

We have followed the SEC rules’ development, after being part of the small group of pro-whistleblower attorneys who met with the Commissioners and staff and urged changes to the draft rules to make them effective.

In January, I had the opportunity to visit with SEC Chairman Mary Schapiro,
(more…)

Continue Reading

Fraud Enforcement Adds Teeth by Pursuing Individuals Allegedly Responsible for Organizations’ Frauds

Last week the government’s criminal trial of former GlaxoSmithKline vice president and associate general counsel Lauren Stevens ended abruptly, as the judge found no basis to allow the case to go to a jury. Prosecutors had charged that she obstructed justice and made false statements to cover up the company’s improper marketing of the antidepressant drug Wellbutrin SR.

While she dodged a bullet, the case jolted lawyers handling health care fraud investigations, which are more typically civil cases under the False Claims Act.

Yet
(more…)

Continue Reading

New Supreme Court False Claims Act Decision Today: Could This Court Be Any Friendlier to Qui Tam Defendants?

False Claims Act history repeated itself today.

Since Congress acted decisively in 1986 to breathe life into the False Claims Act through amendments intended to expand use of the nation’s major anti-fraud whistleblower law, the Supreme Court and some lower courts have regularly intervened by imposing their own views on what Congress must have meant in writing the 1986 amendments.

Those decisions hostile to enforcement of the False Claims Act included Allison Engine Co. v. United States ex rel. Sanders, 553 U.S. 662 (2008); United States ex rel. Totten v. Bombardier Corp., 380 F.3d 488 (D.C. Cir. 2004), cert. denied, 544 U.S. 1032 (2005); and United States ex rel. DRC, Inc. v. Custer Battles, LLC, 376 F. Supp. 2d 617 (E.D. Va. 2005), rev’d, 562 F.3d 295 (4th Cir. 2009)).

Since then, in 2009 and 2010 Congress responded emphatically with three more sets of FCA amendments to state, in essence, what Congress actually intended in 1986, and still intends, the law to mean. We have previously discussed those amendments made by the 2009-2010 legislation known as FERA, PPACA, and Dodd-Frank. (Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111-21, 123 Stat. 1617 (“FERA”); Patient Protection and Affordable Care Act, Pub. L. 111-148, 124 Stat. 119 (“PPACA”); Dodd-Frank Financial Reform Act (“Dodd-Frank”), Pub. L. No. 111-203, 124 Stat. 1376.)

Today’s decision in Schindler Elevator Corp. v. United States ex rel. Kirk is a victory for those who seek to make it more difficult to use the “old” version of the False Claims Act to battle fraud against taxpayers. The Supreme Court’s decision today continued the legislative tennis match with Congress.

The Court held that what is known as the “public disclosure bar” of the False Claims Act deprived courts of jurisdiction over this qui tam whistleblower case, because the whistleblower had attempted to corroborate his allegations through FOIA requests.

Fortunately for those who favor stopping fraud against taxpayers, the decision should have no effect on qui tam cases filed after the March 22, 2010 enactment of PPACA, the major health reform bill.
(more…)

Continue Reading

Tax Whistleblower Attorneys At IRS Hearing Urge Treasury and IRS to Be True to Congress’s Intent in Expanding the IRS Whistleblower Program

As has been reported today in Tax Notes and CCH, my colleague Richard Rubin and I addressed the IRS at its hearing yesterday on the proposed IRS Whistleblower rules. We were able to speak for roughly one-third of the hearing.

We focused on fundamentals. We urged that Treasury and the IRS must stay true to the intent of Congress to expand the number and types of IRS whistleblower claims that the IRS receives and pursues, and that merit awards to whistleblowers.

I argued
(more…)

Continue Reading

IRS Whistleblower Rules Hearing on May 11 Attracts Global Attention

A frequent question I receive is whether non-US citizens can receive rewards under the IRS Whistleblower Program. There is no limitation to US citizens, and persons around the world are eligible to participate in the IRS Whistleblower Program, regardless of citizenship.

Perhaps this is one reason why the May 11 hearing in DC on the IRS Whistleblower rules has attracted attention far and wide, from the India Times, to the American Banking and Market News, to the Northside Neighbor. We will
(more…)

Continue Reading

Financial Fraud Cases Under False Claims Act Continue, As Deutsche Bank and MortgageIT Face Mortgage Fraud Suit

The 2008 financial sector collapse has led to another False Claims Act case against financial institutions. Today, Deutsche Bank and MortgageIT were named in a mortgage fraud case under the False Claims Act, filed by U.S. Attorney Preet Bharara of the Southern District of New York.

The government’s Complaint alleges that Deutsche Bank and MortgageIT “repeatedly lied to be included in a Government program to select mortgages for insurance by the Government. Once in that program, they recklessly selected mortgages that violated program rules
(more…)

Continue Reading

Tax Whistleblower Rules to “Expand” Whistleblower Program Actually Restrict and Discourage Participation, Say Whistleblower Lawyers

Earlier this week we wrote about our urging the IRS to remain true to Congress’s plain intent to attract a greater number and variety of tax whistleblower claims. Our written comments on changes needed to the IRS Whistleblower regulation were published in today’s Tax Notes.

We will be in Washington on May 11 to address the IRS in person. In the meantime, here is some additional discussion of why these changes are so important.

As the annual deadline for filing state and federal income tax returns has passed, honest taxpayers might be shocked to learn that the government will experience an estimated $350 billion shortfall between what is owed and what is collected, thanks to those who cheat on their taxes. To help plug the multi-billion-dollar tax gap, the IRS has instituted new whistleblower rules, but Michael A. Sullivan, a leading whistleblower lawyer, says the IRS needs to revamp its rules dramatically to encourage participation by the public to help the government recoup what is owed. Sullivan and Richard Rubin, an Atlanta-based federal and international tax attorney, plan to address the IRS in Washington, D.C. May 11 on how the rules can be revised to accomplish the law’s intended goals.

“The new rules are supposed to help citizens participate in closing the almost $350 billion tax gap by removing roadblocks to whistleblowers making claims, and by facilitating reward payments from those claims”

.Earlier this year, the Internal Revenue Service responded to sharp criticism of its existing rules by Senator Chuck Grassley (R-Iowa) by announcing new rules to broaden the kind of claims that will merit rewards to whistleblowers who alert the authorities to fraudulent taxpayers. However, Sullivan, attorney with Atlanta-based Finch McCranie, LLP, and author of the leading whistleblower blog, https://www.whistleblowerlawyerblog.com, says the new rules do not address key obstacles and create pointless delays for whistleblowers, which ultimately discourage citizens from reporting fraudulent taxpayers to the IRS. According to Sullivan, the new rules actually limit payment of whistleblower rewards in certain types of cases and thwart the intent of Congress to expand those rewards.
(more…)

Continue Reading

Search

Topics

Our Other Blog

Ready to Talk? 
We’re Here to Help.

We understand the uncertainty that comes with legal issues. Our attorneys are here to guide you every step of the way — from the first consultation to courtroom resolution (if that becomes necessary). We offer confidential, no-obligation case evaluations.

📞 Call us today at (404) 341-5356 or email finchmccranie@finchmccranie.com to schedule 
your consultation.