Is whistleblowing an effective tool for the detection and prosecution of tax evasion, securities fraud, foreign bribery, money laundering, government contract frauds, or other significant economic crimes?
Yes. Whistleblowing has proven to be the single most effective tool in the detection of waste, fraud, and abuse in the public and private sectors. Public statements by responsible law enforcement officials, regulators, Congressional leaders, and independent experts confirm its effectiveness.
Regarding the Qui Tam and the False Claims Act, what information demonstrates that the Qui Tam Whistleblower Reward law works?
All of the top officials within the Department of Justice has praised the False Claims Act qui tam reward law. For example:
“Because those who defraud the government often hide their misconduct from public view, whistleblowers are often essential to uncovering the truth.”
The False Claims Act whistleblower law is “the most powerful tool the American people have to protect the government from fraud.”
- Former Assistant Attorney General Stuart Delery – Remarks at American Bar Association’s 10th National Institute on the Civil False Claims Act and Qui Tam Enforcement (2014)
“[T]he False Claims Act has provided ordinary Americans with essential tools to combat fraud, to help recover damages, and to bring accountability to those who would take advantage of the United States government – and of American taxpayers.”
“The False Claims Act and its [whistleblower] provisions remain the government’s most effective civil tool in protecting vital government programs from fraud schemes.”
Whistleblower laws are “the government’s most potent civil weapon in addressing fraud against the taxpayers.” Acting Assistant Attorney General, Civil Division Department of Justice (Statement before the American Bar Association’s Ninth National Institute on the Civil False Claims Act and Qui Tam Enforcement, June 7, 2012)
“The taxpayers owe a debt of gratitude to those who often put much on the line to expose such [fraudulent] schemes.”
- Assistant Attorney General Jody Hunt – Remarks on the False Claims Act, DOJ Press Release (2018)
Blogs and reports:
Qui Tam Relators Key to Recovering Billions of Tax-Payer Dollars through FCA Lawsuits
The Department of Justice’s Statistics on Fraud Recoveries from the False Claims Act 2019
Whistleblowers Responsible for More Than Sixty Percent of FCA Recoveries in 2016
Does the Dodd-Frank Act’s whistleblower reward law covering securities fraud, commodities fraud, and violations of the Foreign Corrupt Practices Act work?
Yes. All of the top officials responsible for these programs have recognized the tremendous impact and positive results of whistleblowing under the Dodd-Frank Act’s reward programs. For example:
The SEC “whistleblower program . . . has rapidly become a tremendously effective force-multiplier, generating high-quality tips, and in some cases, virtual blueprints laying out an entire enterprise, directing us to the heart of the alleged fraud.”
“The Securities and Exchange Commission’s whistleblower program . . . has resulted in investigative staff receiving a substantial volume of high-quality information about potential securities law violations. It has allowed our investigative staff to work more efficiently and permitted us to better utilize agency resources.” Securities and Exchange Commission Chairman Mary Jo White, Testimony on “Oversight of the [Securities and Exchange Commission]’s Agenda, Operations and FY 2015 Budget Request” April 29, 2014
Whistleblower reward laws are “attracting high-quality tips and cooperation we might not otherwise receive.” Acting Director of the Commodity Futures Trading Commission’s Enforcement Division quoted in The Wall Street Journal, “CFTC Hands Out First Whistleblower Award” (May 20, 2014)
“[I]t makes no difference whether . . . the claimant was a foreign national, the claimant resides overseas, the information was submitted from overseas, or the misconduct comprising the U.S. securities law violation occurred entirely overseas.”
- Kevin M. O’Neill, Deputy Secretary, Securities and Exchange Commission, Order Determining Whistleblower Award Claim
“Whistleblowers, whether they are located in the U.S. or abroad, provide a valuable service to investors and help us stop wrongdoing… This award recognizes the continued, important assistance provided by the whistleblower throughout the course of the investigation.”
- Jane Norberg, Chief of the Office of the Whistleblower, Securities and Exchange Commission, Press Release on an award to an overseas whistleblower
“[The Dodd-Frank Act’s whistleblower] program is critically important to the SEC and to the Enforcement Division. It is important to reward whistleblowers and to do it timely. Since the enactment of the program in 2011, whistleblower tips have resulted in numerous high-quality enforcement actions . . . Given the success of this program, we have been flooded with increasing numbers of quality tips.”
- SEC Director of Enforcement Stephanie Avakian (September 2020)
“Over the past ten years, the whistleblower program has been a critical component of the Commission’s efforts to detect wrongdoing . . . particularly where fraud is well-hidden or difficult to detect. Enforcement actions from whistleblower tips have resulted in more than $2.5 billion in ordered financial remedies.”
“Since its inception, the Commission’s whistleblower program has enabled us to identify and pursue fraudulent conduct, ongoing regulatory violations, and other wrongdoing that would otherwise have gone undetected. . . As a result of the success of our whistleblower program, we have been able to stop schemes in their tracks, and to return millions to victims of fraud.”
Blogs and Reports:
SEC Chairman Confirms Dodd-Frank Act Whistleblower Program is an “Invaluable Component” for Successful Securities Fraud “Enforcement Efforts”
2019 Securities Exchange Commission (SEC) Annual Report to Congress: Whistleblower Program
CFTC FY 2019 Annual Report to Congress: Whistleblower Program
Report Finds Whistleblowers Instrumental to Uncovering Financial Fraud
CFTC Whistleblower Reward Program Essential to Enforcement of Commodities Laws
Does the IRS Whistleblower Program covering tax evasion, money laundering, and illegal offshore banking work?
Yes. The IRS whistleblower program has resulted in the most significant tax fraud cases ever successfully prosecuted and billions of dollars in recoveries.
“The IRS’s serious efforts to combat offshore tax evasion… [were] brought to our attention… by whistleblowers…”
- John A. Koskinen, Commissioner of the IRS, Remarks before the U.S. Council for International Business-OECD International Tax Conference
Blogs and reports:
13.769 Billion Reasons to Thank Whistleblowers on Tax Day, by Stephen Kohn.
IRS Whistleblower Office Annual Report Confirms Success of Program
Not Just Whistling Dixie: The Case for Tax Whistleblowers in the States, by Dennis J. Ventry Jr.
Does the Act to Prevent Pollution from Ships (APPS) Whistleblower Reward Program work?
Yes. The officials at the Department of Justice responsible for prosecuting APPS ocean pollution cases have confirmed that the whistleblower reward program is the backbone of the ability to successfully prosecute these cases.
“Absent crew members with firsthand knowledge of the illegal conduct coming forward, APPS violations are extremely difficult to uncover.”
“Information of this nature is otherwise difficult, if not virtually impossible to obtain [without help from the whistleblower].”
It “is beyond dispute” that the whistleblower “provided substantial information that led to the investigation and conviction of all defendants in this matter,” that “[t]he government was otherwise unaware of this crime and unlikely to learn about it” and that “[t]he[ whistleblower’s] photographs and documents were essential tools in the interviews of other witnesses and in securing guilty pleas from the defendants.”
Blogs and Reports:
Paying Rewards to Marine Pollution Whistleblowers under APPS is Essential to Enforcement
Whistleblower Protections to Combat Pollution on the High Seas. Submitted to the European Commission, Public Consultation on Whistleblowing
Does whistleblowing work outside of The United States?
Have congressional leaders acknowledged the impact whistleblowers have in fighting fraud and corruption?
Yes. Members of both parties have advocated for the continued protection of whistleblowing.
Members of Congress speak to the valuable role whistleblowers play uncovering fraud in the federal government:
“Empowering these whistleblowers to prosecute fraud proved to be smarter, faster, and more effective than just relying on the government.”
- Senator Charles Grassley, Chairman of Senate Judiciary Committee, speech given on National Whistleblower Day (July 30, 2018) — Read the Speech
Watch – https://youtu.be/dVHvGBgHPbo?list=PLpw9L2pYzmPNAP2WPZRILUI9b2oH4K8lk
“The cornerstone of democracy is still an informed public.”
- Ron Wyden (D-Oregon), Vice-chairman of the Senate Whistleblower Protection Caucus:
“We, Congress, count on Inspectors General and on whistleblowers to step up and do the right thing. You are the eye and ears on the ground. Without you, we cannot do real oversight.”
- Senator James Lankford (R-Oklahoma)
“These individuals, who are… making this nation more prosperous, safer and more secure, the least they can expect is that people hear them out, and that they won’t be retaliated against if and when they bring an issue to the (fore)front.”
- Ron Johnson (R-Wisconsin)
“And without these courageous individuals, Congress would not be able to fulfill its constitutional duty to serve as a check and balance on the executive branch, the very foundation of our democracy.”
- Representative Elijah Cummings (D-Maryland)
Have independent academic researchers confirmed that whistleblowers are essential to an effective anti-corruption program?
Yes. Multiple reports have proven that whistleblowing is highly effective in rooting out waste, fraud, and abuse.
“A strong monetary incentive to blow the whistle does motivate people with information to come forward. Monetary incentives seem to work well, without the negative side effects often attributed to them. Employees clearly have the best access to information.”
“Honest behavior is not rewarded . . . Given [the] costs [of whistleblowing] the surprising part is not that most employees do not talk, it is that some talk at all.”
Blogs and reports:
The Impact of Whistleblowers on Financial Misrepresentation Enforcement Actions. Andrew C. Call, Gerald S. Martin, Nathan Y. Sharp, Jaron H. Wilde.
Who Blows the Whistle on Corporate Fraud?” The University of Chicago Booth School of Business Working Paper No. 08-22 (2009)
Saving America’s “Most Important Tool to Uncover and Punish Fraud:” 25 Facts That Rebut the Chamber of Commerce’s Proposal to undermine the False Claims Act, National Whistleblower Center (July 30, 2014)
Does an effective whistleblower reward law deter fraud from being commmitted?
Yes. A letter to the U.S. Securities and Exchange Commission (SEC), thoroughly explains the role of whistleblowing in deterring white-collar crime. The specific acts studied demonstrates that whistleblowers play an incredibly important role in preventing major economic crimes, starting on page 5.
Frequently Asked Questions
Overall, the SEC has awarded approximately $1.2 billion to 268 individuals since issuing its first award in 2012. The CFTC has awarded approximately $330 million. The Department of Justice obtained more than $2.2 billion in settlements and judgments from civil cases involving fraud and false claims. Recoveries resulting from qui tam and qui tam cases brought under the False Claims Act from 1986 to 2019 amount to more than $62 billion paid to 13,281 individuals.
Top lawmakers, leaders, and leading whistleblower experts all recognized the tremendous impact and positive results of whistleblowing. Whistleblowers are supported by all political parties who confirm it’s effectiveness in detecting and prosecuting fraud, misconduct, and abuse.
Whistleblowing is important because it helps keep the economy and justice in balance. Whistleblowers have the power to hold individuals and entities accountable for their wrongdoing by speaking up and exposing the truth. This act of courage has helped save taxpayers and investors billions of dollars, but has also helped save countless lives and the environment.