Expert Answers to New York Whistleblower’s FAQs

Individuals with original information about fraud against the government can file a whistleblower case under the appropriate whistleblower legislation. A whistleblower case may arise in a variety of industries. The claimant is entitled to a share of any monetary recoveries that may result from their case. The most common whistleblower cases are filed under the False Claims Act. Still, the IRS, the SEC, and many other agencies have their own whistleblower programs, which were created to encourage fraud reporting and transparency.

Federal and state False Claims Act (FCA) cases relate to fraud that caused losses of taxpayer funds. Medicare and Medicaid fraud, government contract fraud cases, and others are filed under the FCA. Fraud that causes harm to investors is typically reported under the Securities Exchange Commission’s or the Commodity Futures Trading Commission’s whistleblower program.   

Tax fraud is reported under the IRS whistleblower program. Whistleblowers can receive up to 30% of recoveries provided the wrongdoers defrauded the IRS of at least $2 million.  

Fraud cases involving banks and other financial institutions may also be filed under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and the Financial Institutions Anti-Fraud Enforcement Act (FIAFEA).

Under the FCA, individuals can file a claim against fraudsters on behalf of the government. They are then eligible for a reward, typically between 15% and 30% of any recoveries. The phrase “false claims” refers to claims for payment submitted to the government. A whistleblower can sue any company or individual who directly submitted or indirectly caused false claims to be submitted to the government. 

To be considered “false,” the claims for payment should involve overbilling, kickbacks, or any other fraudulent practice. Aside from the federal FCA, there is similar legislation in many states.  

The Dodd-Frank Wall Street Reform and Consumer Protection Act was implemented in the aftermath of the 2008 financial crisis to prevent fraud involving securities and commodities. The SEC and CFTC whistleblower programs are part of the same legislation. 

Under Dodd-Frank, whistleblowers who report misconduct involving securities and commodities trading are entitled to up to 30% of any resulting fines or settlements, provided they surpass $1 million. Manipulating the price of shares, insider trading, and pyramid schemes are some common types of fraud reported under Dodd-Frank. 

If you plan to provide information about fraud against the U.S. government, it doesn’t matter where you live or your nationality. Recently, foreign whistleblowers have received multi-million-dollar awards for their role in recovering U.S. taxpayer funds. The wrongdoers may also be foreign companies or individuals; as long as they defrauded the U.S. government, you can blow the whistle on their misconduct.  

A qui tam lawsuit is a whistleblower lawsuit filed under the False Claims Act. The phrase comes from an ancient English law that read, “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” meaning, “he who sues on our Lord the King’s behalf as well as his own.” This is the historical origin of the concept of receiving a share of recoveries in exchange for helping the government prosecute fraudsters.  

In the case of False Claims Act violations, whistleblower cases are handled by the Department of Justice. Securities fraud is investigated by the SEC, and fraud involving commodities is under the jurisdiction of the CFTC. Other agencies that handle these types of cases are the IRS, in the case of tax fraud, the Consumer Financial Protection Bureau, and the Federal Trade Commission.

Although a large portion of whistleblowers are employees of the defendant companies, virtually anyone with information about fraud can file a complaint. One of the most important aspects of becoming a whistleblower is that the information you provide must be original. When different would-be whistleblowers have the same information, it is also important to file first to secure a reward. Whether you are a foreigner, an employee of another company, or someone who actively participated in the wrongdoing at some point, you may be able to file a whistleblower complaint. 

The False Claims Act establishes a six-year statute of limitations. There is also a provision that gives the government three years after it should have reasonably known about the fraud, for a total not exceeding 10 years after the misconduct occurred.   

As a rule, Dodd-Frank whistleblowers have five years to file a complaint, starting from the date of the violation. In the case of IRS whistleblowers, they have three years to file a claim counting from the moment a fraudulent tax return was filed, but the deadline is extended to six years when the omission amounted to at least 25% of the taxable income stated in the tax return. 

However, the statute of limitations doesn’t apply, and the IRS has an unlimited time to prosecute when: the taxpayer filed a false tax return, attempted to evade payment of taxes with intent, or failed to file a tax return. FIRREA, on the other hand, has a 10-year statute of limitations.

It is always advisable to file your whistleblower claim as soon as you possibly can. There are many exceptions and particular scenarios where different deadlines apply to ensure eligibility for a reward. Although the basics are stated above, it is best to consult with an experienced whistleblower attorney to be on the safe side. 

Whistleblowers often derive great satisfaction from their contribution to preventing fraud against taxpayers and holding wrongdoers accountable. On the other hand, they sometimes face retaliation;  some of them can even lose their jobs. Fortunately, whistleblower legislation generally includes anti-retaliation protections. Thus, if your employer retaliates against you, you may be entitled to significant damages, in addition to your whistleblower award.

Sometimes it can take years to secure a reward. You may feel lonely throughout the process (as it is usually illegal to comment on the particulars of your case), your colleagues and supervisors may alienate you. But at the end of the road, there may be personal satisfaction and a substantial reward to help you get your professional and personal life back on track.

Whistleblower complaints are usually confidential. They are typically filed under seal. Some programs, like the SEC’s, maintain the tipster’s anonymity throughout the process, while others offer a period of confidentiality to ensure the success of the fraud investigation. If you want to remain anonymous, the best course of action is to discuss the issue with a seasoned whistleblower attorney.   

A whistleblower who participated in misconduct either unknowingly or under management orders may be eligible for a reward. Typically, only persons who initiated, planned, or otherwise substantially participated in misconduct can become ineligible for rewards. Individuals who are convicted of a crime related to the fraud are also barred from receiving whistleblower awards.

The first thing to do is to find the right whistleblower attorney. We can help you put together the necessary evidence, remain anonymous, and increase your chances of securing an award. Under certain circumstances, some whistleblower programs require that you report misconduct internally before filing a complaint. Your attorney will help you determine what is the best course of action in your particular case. 

Unfortunately, the internal reporting systems at many companies are designed to weed out whistleblowers, rather than to prevent fraud. If you talk to your supervisor or call a hotline, you may end up facing retaliation. Many whistleblowers have been demoted or fired after attempting to blow the whistle internally. Besides, alerting fraudsters may cause them to destroy evidence, thus making it more difficult for tipsters to prove their claims.  

More often than not, using a government hotline can kill your chances of receiving a whistleblower award. Before lifting up the receiver, consult with a whistleblower attorney. 

Federal False Claims Act whistleblowers receive between 15% and 25% of the total recoveries -- if the government intervenes. If a whistleblower’s lawsuit proceeds without government intervention, the award can be as high as 30%.  

SEC whistleblowers can receive between 10% and 30% of the amount collected whenever monetary sanctions surpass $1 million.

The Internal Revenue Service states that, “If the IRS uses information provided by the whistleblower, it can award the whistleblower up to 30 percent of the additional tax, penalty and other amounts it collects.”

A top-tier whistleblower attorney, like the ones at our firm, will evaluate your case free of charge, and if they see potential, they will take it on a contingency fee basis. This means that you will not have to pay anything unless you receive a reward. This type of case often requires years of diligent work. 

Whistleblower attorneys must have the connections and resources to hire top expert witnesses in order to prove your claims. This is why your choice of attorney is the most important one you will make along with the complex, but often gratifying, journey of becoming a whistleblower.