Our Client Received One of the Largest Tax Whistleblower Reward in History of $104 Million

Bradley Birkenfeld broke the back of Swiss bank secrecy. He was the first Swiss banker to file a case under the IRS whistleblower law. The results of this whistleblower case was unprecedented. UBS bank (at the time the largest bank in the world) had to pay a fine of $780 million. They also had to close all known U.S. accounts, and for the first time in history, the bank turned over the names of 4450 U.S. taxpayers for prosecution in the United States. Mr. Birkenfeld obtained the largest ever individual qui tam whistleblower award in history, $104 million.

Other Notable KKC Cases

Co-counsel on amicus brief submitted on behalf of the American Medical Association in U.S. v. Phillip Morris in support of holding tobacco companies liable under RICO. Appeals court upheld this historic use of RICO to find fraudsters accountable.

Avirgan v. Hull, 118 F.R.D. 252 and 118 F.R.D. 257 (D.D.C. 1987)

Represented the Village Voice in establishing the national precedent for allowing journalists to attend pretrial depositions in cases impacting the public interest over the objection of the deponent.

This case was another early pioneering case challenging the legality of restrictive non-disclosure agreements (NDAs) that corporations widely used to silence whistleblowers. The firm’s challenge to restrictive NDA commenced in 1988. By 1995 we have convinced the Labor Department that such agreements needed to be fully struck-down, leaving the whistleblower free to continue to pursue his or her retaliation case and disclose safety concerns to the government. The Labor Department joined with the Kohn firm in arguing against the legality of settlement agreements with restrictive NDAs. The Fourth Circuit sided with the whistleblower.

Represented amicus curiae in a case filed to the Supreme Court on behalf of a qui tam whistleblower. Justices unanimously ruled in favor of whistleblowers, finding that a ten-year statute of limitations applicable to whistleblower-initiated claims when under specific conditions. This decision was a significant victory for whistleblowers under the False Claims Act.

Between 2008 and 2012, the partners at KKC had worked extensively with Congress to improve protections for federal employee whistleblowers. In 2012, those efforts were successful, and Congress passed the Whistleblower Protection Enhancement Act (WPEA). However, the issue of whether or not the WPEA protections were retroactive was critical to the thousands of pending cases filed before its passage. Representing the National Whistleblower Center as an Amicus Curiae before the MSPB, the firm argued that the provisions of the WPEA broadly defining the scope of a protected whistleblower disclosure should be given retroactive effect as a “clarifying amendment” to existing law. The MSPB agreed with this theory and applied the provisions of the WPEA, expanding the scope of protected disclosures (along with other vital reforms), to all pending cases.

Successfully argued appeal before the U.S. Court of Appeals for the Fourth Circuit expanding the protections afforded corporate employees under the Sarbanes-Oxley Act. The case set a positive standard regarding the right of employees to remove documents from their worksite.

The KKC lawyers vigorously fought for the protection of internal whistleblowers, but the Supreme Court rejected these arguments. However, the ruling of the Supreme Court sent a clear message that SEC whistleblowers filing under the Dodd-Frank Act should report directly to the SEC to avoid retaliation. Read the amicus curiae brief and the court’s ruling.

In this case, the firm established an important precedent regarding the rights of temporary employees. In the nuclear industry, companies often hire employees to perform temporary “clean-up” work. These jobs can last only a few months. The whistleblower was fired for raising concerns, and could not obtain subsequent employment based on his bad reference. The Department of Labor ruled that although the job the whistleblower was fired from was only scheduled to last a few weeks, the whistleblower was entitled to damages arising from his inability to be re-employed doing similar temporary work. In other words, the company was liable to pay damages for all of the temporary jobs it did not hire him for, not just the one for which he was fired. The Labor Department Judge who heard the case ruled as follows:

 “It is beyond a doubt, that as a road technician, Complainant would go where he could find work. Had there been no prospects for future employment at the D.C. Cook plant, Complainant undeniably would have sought employment at another plant under contract with Hydro/Westinghouse. Complainant has demonstrated that similarly situated employees were regularly retained and rehired by Respondent. Therefore, Respondent is liable for back pay beyond the original term of employment.“

This ruling increased his damages from less than $25,000 to $218,000 in back pay and $154,000 in front pay. The case established precedent on the rights of temporary workers to obtain damages for lost future employment caused by illegal retaliation.

The whistleblower lawyers at Kohn, Kohn and Colapinto represented, pro bono, the National Whistleblower Center in this early critically important whistleblower case. Before the False Claims Act amendments of 1986, numerous states had stronger whistleblower laws than the federal government. Corporations regularly argued that federal laws covering whistleblowers pre-empted states from also protecting these workers.

Corporations wanted to force employees to use weaker federal laws to protect themselves and prohibit them from using state whistleblower laws, which often included punitive damages. This fight came to a head in the Supreme Court in the case of Vera English, who lost her federal case because she failed to comply with a 30-day statute of limitations. She then attempted to use state laws to obtain protection. The Supreme Court sided with the whistleblowers, and after that, the federal preemption defense was all but dead in whistleblower cases.

Represented, pro bono, that National Whistleblower Center as an amicus curiae in this successful Supreme Court challenge to mandatory arbitration. The Court held that when a government agency (in this case the EEOC) files a discrimination or retaliation case on behalf of an employee a mandatory arbitration agreement cannot be enforced if the government opposes the requirement.

The Gaballa case concerned a problem facing most whistleblowers who are not confidential: Blacklisting. Once an employee is branded as a “whistleblower,” it is often tough to get a new job. This case set a powerful precedent for whistleblowers, prohibiting any badmouthing of a whistleblower with future prospective employers. In the case, the whistleblower hired an agency to contact his former employer to determine what type of references it gave him. His former employer stated that Mr. Gaballa had felt he was the victim of “discrimination.” This bad reference triggered liability, and the whistleblower was awarded compensatory damages based solely on getting a bad reference. The company was also prohibited from giving future bad references.

The Garner case was hotly contested in the state courts of South Carolina. The case finally made its way before the South Carolina Supreme Court on the issue of whether or not a corporate employee at the Savannah River nuclear weapons plant (a federal installation) could sue under the state’s whistleblower law and obtain the right to a trial by jury and significant damages. The state’s Supreme Court ruled for the whistleblower, establishing important precedents regarding the rights of employees at federal nuclear weapons facilities to use powerful state laws to protect themselves.

Filed amicus brief on behalf of NWC successfully arguing for expanded coverage for corporate employees under the Sarbanes-Oxley Act.

Represented the National Whistleblower Center pro bono as an amicus curiae in this important whistleblower retaliaton case. The issue presented was whether the Civil Rights Act of 1871 covered conspiracies to retaliate against witnesses in federal court proceedings. The Supreme Court affirmed the whistleblower’s rights, which would permit employees to file lawsuits directly in federal court, have a jury hear their case, and obtain significant damages, including punitive damages.

In perhaps the most controversial decision in an early nuclear whistleblower case, counsel obtained a rare order disqualifying a major corporate law firm due to unethical conduct. The case resulted in the disqualification of the firm and a significant settlement for the whistleblower, who had raised major safety concerns at the Comanche Peak nuclear power plant.

District Court order forcing company to reinstate pension benefits at market value, not cost value.

Kiki Ikossi successfully challenged her termination from federal employment and created precedent covering all federal employees who raise concerns regarding both whistleblower retaliation and discrimination on the basis of race, sex, religion or other protected classes. The U.S. Court of Appeals for the District of Columbia Circuit held that in such “mixed cases” employee whistleblowers can avoid the Merit Systems Protection Board process (which has a terrible anti-whistleblower reputation) and have their case heard directly in federal court. This was a major breakthrough for all federal employee whistleblowers.

Successful qui tam action against Emory University Hospital for Medicaid fraud.

Large international banking case. The identity of the whistleblower remains strictly confidential. Total award obtained by the IRS tax whistleblower: $10,836,467.73.

Large international banking case. The identity of the IRS tax whistleblower remains confidential. Total award obtained by the IRS tax whistleblower: $12,781,050.59.

Large international tax evasion case/illegal, undeclared account. The identity of the whistleblower remains confidential. Total award obtained by the IRS tax whistleblower: $24,473,293.65.

Large banking case. The identity of the whistleblower remains confidential. Total award obtained by the IRS tax whistleblower: $2,229,553.32.

Large international banking case. The identity of the whistleblower remains confidential. Total award obtained by the IRS tax whistleblower: $4,474,000.

One of the most lasting and important whistleblower issues regards the right of compliance officials and auditors to raise concerns within a corporation aggressively. Courts have split on this issue for years. In one of whistleblower attorney Stephen Kohn’s early cases, he represented the Government Accountably Project as an amicus curie in this precedent-setting case that was viewed within the whistleblower-bar as setting the standard for protecting quality assurance inspectors. In 1985, the court ruled for the whistleblower.

Represented whistleblowers that exposed fraud in FEMA contracting during the response to the 9/11 terrorist attacks. The contractors pleaded guilty to their frauds and were sentenced to prison, and the whistleblowers were able to obtain rewards from penalties paid by the defendants in restitution.

Provided pro bono representation to the amicus curiae National Whistleblower Center in the most important Sarbanes-Oxley Act (SOX) whistleblower case heard by the U.S. Supreme Court. The Court held that investment firms such as, Fidelity Investments, that are not directly publicly traded are covered under SOX. This holding significanty expanded coverage for corporate fraud whistleblowers under SOX.

Expanding the definition of “employee” under the Defense Contractor Whistleblower Protection Act.

Case No. 91-ERA-9 (U.S. Dept. of Labor). First ever decision applying “hostile work environment” doctrine in nuclear whistleblower case

Established key precedent governing when a whistleblower can engage in one-party taping to document misconduct. The whistleblower was reinstated with full back pay after being fired for taping conversations of corporate executives conspiring to violate safety rules. One-party taping, which is often utilized by whistleblowers to prove their cases, was upheld as a protected disclosure.

First successful constitutional challenge under the 16th Amendment to the taxation of compensatory damages. Decision vacated and reversed on other constitutional grounds, 493 F.3d 170 (D.C. Cir. 2007), rehearing, en banc, denied by Murphy v. IRS, 2007 U.S. App. 05-5139 (D.C. Cir., 2007), certiorari denied by Murphy v. IRS, 2008 U.S. 05-5139 (U.S., Apr. 21, 2008).

This case was one of several instances in which the law firm has successfully represented employees in challenging restrictive non-disclosure agreements. In this case, the U.S. Securities and Exchange Commission used its authorities under the Dodd-Frank Act to sanction a company for having employees sign restrictive NDAs. NeuStar had included language in employee severance agreements prohibiting employees from “disparaging” the company in statements to government officials, including the SEC, as a condition of accepting a severance payment. The SEC found such clauses illegal, and the company agreed to pay a $180,000 fine and adequately inform employees of their right to blow the whistle.

This case was a very early case in which whistleblower attorney Stephen Kohn represented Howard Samuel Nunn while still employed as Director of Corporate Litigation at the Government Accountability Project. Nunn had contacted public interest groups regarding his concerns that Duke Power was violating safety standards. The issue concerned the scope of protected activity and whether or not contacting a public interest advocacy group would be protected under federal law. In 1987, Howard Nunn won his case and set an important precedent.

Represented the “mystery witness” in the O.J. Simpson criminal trial. This included negotiations with the FBI regarding the right of the whistleblower-witness to testify and representation of this Supervisory Special Agent and forensic science expert in two days of depositions conducted by the prosecution and the defense. Case obtained widespread national publicity.

First-ever successful employment-related whistleblower case on behalf of federal prisoner who exposed hazardous asbestos removal from prison work area. Guards provided confidential supporting information.

The False Claims Act case filed by Dr. Aaron Westrick concerned the Japanese manufacturer who marketed and sold defective fabric for use in body armor sold to police departments across the United States. However, Westrick also asserted his rights as a qui tam whistleblower to obtain compensation in the bankruptcy proceedings related to his former employer, Second Chance Body Armor (SCBA). Second Chance had been the United States’ largest bulletproof vest company. Still, after Westrick filed his False Claims Act lawsuit and demonstrated that the company had knowingly sold defective vests to police officers that placed the officer’s lives at risk, the company was forced into bankruptcy. The company admitted it was liable to the United States for contracting fraud of approximately $300 million, but due to its bankruptcy was only able to pay a fraction of this liability. The bankruptcy proceeding ensured that a company that profited from selling defective and life-threatening products to police officers was held accountable. Dr. Westrick asserted his rights as a whistleblower throughout the bankruptcy proceeding and obtained a 20% qui tam award on the multi-million dollar recovery obtained by the United States.

KKC represented a qui tam whistleblower in bankruptcy proceedings against the former largest U.S. bulletproofs vest-manufacturing company. The company knowingly sold defective body armor to police departments, the United States Army, and the Secret Service. It admitted to liability for fraud of approximately $300 million against the United States. The whistleblower received a 20% qui tam award on the multi-million dollar recovery obtained by the United States.

The whistleblower lawyers at Kohn, Kohn and Colapinto represented, pro bono, the National Whistleblower Center as an amicus curiae in a significant False Claims Act case before the U.S. Supreme Court. The Chamber of Commerce and their industry allies were pushing the Court to require the automatic dismissal of qui tam cases whenever there was a minor violation of the sealing requirement. This violation would have resulted in the dismissal of numerous valid government fraud cases and would have stopped judges from issuing lesser sanctions in such cases. The Supreme Court rejected the arguments of the Chamber and ruled for the whistleblower.

The Sylvester case was the most important corporate whistleblower case the Department of Labor decided on under the Sarbanes-Oxley Act. The precedent is followed by every district court and the court of appeals that have ruled on SOX SEC-whistleblower cases since it was issued.

As the attorneys who worked with Congress in drafting the Sarbanes-Oxley whistleblower law, the whistleblower lawyers at Kohn, Kohn and Colapinto fully understood what was at stake in the Sylvester case. It would determine the standard courts would apply in determining whether a concern raised by a corporate employee would be considered a securities violation of criminal fraud covered under SOX.

The Chamber of Commerce and the entire business community was arguing for a high standard. Representing, pro bono, the National Whistleblower Center as a public interest amicus curie, the Kohn firm was granted permission to argue the case on behalf of the whistleblower at oral argument. The Labor Department ruled in favor of the whistleblower on all of the critical issues. A national precedent was set, creating realistic standards of proof for corporate whistleblower cases going forward.

Set a precedent recognizing the Department of Labor’s authority to review settlement agreements and prohibited the DOL from altering the material terms of an agreement. This case established precedent, which would require the DOL to strike down the enforceability of an entire settlement agreement containing a restrictive nondisclosure agreement. The case received judicial recognition of the requirement that the Department of Labor approves settlement agreements in federal nuclear whistleblower cases. KKC also obtained the first Equal Access to Justice attorney fee award against the Department of Labor under the nuclear whistleblower law.

Upholding cause of action against pharmacy under the False Claims Act.

KKC represented amicus curiae in major precedent in unanimous Supreme Court ruling upholding False Claims Act qui tam whistleblowers’ right to pursue claims even if the violations were not explicitly outlined in the contract. The firm researched the original military contracts that were at issue when the False Claims Act was signed into law by President Abraham Lincoln on March 2, 1863. The firm explained that the key issue was not what was directly in a contract, but whether the government was materially misled by when it purchased horses that were blind and useless for the Union army.

KKC represented the public interest group in the Amicus Curiae brief filed before the U.S. Supreme Court in the most critical False Claims Act case ever decided by the Court. The Supreme Court sided with the qui tam whistleblower and upheld the constitutionality of the False Claims Act.

A major precedent-setting case holding banks liable under the False Claims Act for wrongfully foreclosing on residential mortgages during the 2008 financial crisis. The United States obtained a multi-million dollar settlement against the bank, and the legal theory finding banks liable for wrongful foreclosures was affirmed. The qui tam whistleblower received his reward for filing the claim and presenting the evidence needed to win the case.

Successfully litigated an “out of seal” False Claims Act qui tam case on behalf of a former employee who worked at a for-profit university. The university had to pay the United States millions of dollars in sanctions for illegally recruiting students in violation of federal regulations. The whistleblower obtained a 27.5% “relator’s share.”

Represented leading FBI explosives expert in various proceedings related to the Oklahoma City bombing case, including confidential depositions, proceedings before the DOJ Office of Inspector General and obtaining a temporary restraining order and injunction from U.S. District Court prohibiting witness intimidation. Reported widely in the national press.

Represented the leading FBI explosives expert in meetings with the lead prosecutors for the United States, defense attorneys, during a court-ordered deposition, interviews with the Department of Justice Office of Inspector General, and during trial testimony in criminal proceedings arising from the first terrorist bombings of the World Trade Center in 1993. The FBI agent was a whistleblower within the Bureau.

This case resulted in a successful national defense qui tam action. The whistleblower provided original information about false statements in translation services paid for by the taxpayers during the War in Afghanistan. The United States intervened in the case, and the qui tam whistleblower obtained the reward for which he was entitled.

In a case litigated by Kohn, Kohn and Colapinto partner Michael Kohn, the U.S. Court of Appeals for the First Circuit held that court’s must “take a broad view on what may constitute a false or fraudulent statement” under the False Claim Act’s qui tam provisions.

Successful qui tam lawsuit on behalf of whistleblowers who exposed FEMA frauds at numerous disaster sites. Based on the whistleblowers’ evidence, the defendants were also criminally prosecuted and jailed.

False Claims Act qui tam whistleblower case brought by a former manager at a defense contracting firm alleging that the firm double-billed the government for labor and parts. Successfully settled the case and obtained a recovery for the taxpayers and qui tam award paid on behalf of the whistleblower.

This case was a highly successful False Claims Act case filed under both federal and state qui tam laws. The whistleblower’s original information demonstrated that the Washington Metropolitan Area Transit Authority had illegally awarded a 14 million dollar contract to Metaformers Inc. The governmental authorities and the whistleblower prevailed in the lawsuit, and the whistleblower obtained his qui tam award. In addition to the successful qui tam action, the whistleblower was also able to receive close to $1 million in damages in his retaliation case.

Stephen Kohn represented the American Medical Association in an amicus brief filed before the U.S. Court of Appeals for the D.C. Circuit in support of upholding a judgement against the major tobacco companies under the RICO (the federal racketeering law).

Recognized right of federal employees to obtain prospective injunctive relief in federal court (without exhausting administrative remedies with the Merit Systems Protection Board) in cases involving violation of First Amendment rights.

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Lead trial and appellate counsel under the California False Claims Act regarding the sale of defective bulletproof vests to state law enforcement officers. After Court of Appeals ruling in favor of Dr. Westrick, defendants paid settlement-compensating California for the vests and paying the whistleblower reward under state law.

Kohn, Kohn and Colapinto partner Stephen Kohn was asked to orally argue a key legal issue heard by the Court of Appeals in a Sarbanes-Oxley Act corporate whistleblower case. On behalf of the National Whistleblower Center KKC had filed an amicus brief urging the court to apply a pro-whistleblower standard for evaluating whether a corporate whistleblower acted in “good faith” when he or she alleged a securities violation. The whistleblower prevailed and the appeals court adopted the pro-whistleblower standard. That standard has been applied by every appeals court since the Wiest decision was published.