Alex Cherpuko was just 21 years old when he faced off against a $100 million nationwide criminal enterprise. The first whistleblower to simultaneously file claims under the qui tam provisions of the False Claims Act, Dodd-Frank Act, and IRS whistleblower law, the lead prosecutor called him “the hero” for documenting numerous criminal violations. In April 2020, Cherpuko obtained a $69.6 million judgment on behalf of the United States under the False Claims Act. His claim to obtain an award from the Government is still pending. In 2018, CBS TV profiled his case in their show “Whistleblower.”
Alex “Sasha” Chepurko was hired as a financial trader by Caravan Trading, a New Jersey-based company that purchased and sold biodiesel. Biodiesel, derived from products like soybean, corn, and recycled cooking oil, is regulated by the Environmental Protection Agency’s alternative fuel program. To promote the use of biofuels, the federal Government offered generous tax credits for companies that used this alternative fuel.
Chepurko realized that his company was engaged in a massive fraud. They were part of a conspiracy with a producer, and they pretended to manufacture new biofuels in order to qualify for millions in tax credits. But instead, they were simply selling unused biofuels obtained from sources for which tax credits had already been cashed-in. When Chepurko realized that his employer and business partners were operating a shell and not creating any new products, he became suspicious and confronted his boss. Chepurko’s boss admitted that the entire business enterprise was a big scam and described the process as “Alchemy.” Chepurko started secretly recording his boss and other fraudsters involved in the conspiracy in order to obtain proof of these frauds.
After retaining a qui tam whistleblower law firm, Chepurko filed three separate whistleblower claims. Because one of the companies involved in the scam was publicly traded, Chepurko first filed as an anonymous whistleblower under the SEC Dodd-Frank Act whistleblower reward law. Next, because the fraudsters were profiting from an environmental tax credit program, Chepurko filed a claim under the confidential IRS tax evasion whistleblower law. The third case was filed in federal court “under seal” pursuant to the False Claims Act qui tam law. The False Claims Act covers false claims made to the federal Government, including the Environmental Protection Agency’s alternative fuel program.
Once Chepurko’s information was provided to federal law enforcement officials, he became the key confidential informant in a number of federal investigations. He and his attorneys met secretly with agents from the Justice Department, Environmental Protection Agency, Securities and Exchange Commission and Internal Revenue Service and turned over his tapes (all of which could be used as evidence against the fraudsters) and other critical evidence. Chepurko’s whistleblowing ended the scam, resulted in millions of dollars collected in fines and penalties, shutting down the companies that committed the frauds, and resulted in numerous criminal convictions and long jail sentences for the ringleaders.
Although most of the fraudsters pled guilty, a major securities fraud case went to trial under the criminal provisions of the Sarbanes-Oxley Act and other laws. Both Chepurko and his lead attorney, David Colapinto, testified before the jury. In an unprecedented move, the Government called Colapinto to testify about the importance of the whistleblower reward laws. Mr. Colapinto explained to the jury that the False Claims Act was also known as “Lincoln’s Law,” empowers “any citizen” to file a lawsuit “in the name of the United States” in order to bring those who have “defrauded the United States” to justice. The False Claims Act was passed during the Civil War and was fully supported by President Abraham Lincoln, who signed it into law on March 2, 1863.
The Government also asked Mr. Colapinto whether the reward provisions of the IRS and SEC whistleblower laws were a “good thing.” Colapinto answered with an unequivocal “yes,” and informed the jury how these laws work: The “express purpose” of these whistleblower reward laws is to “encourage people to come forward to report” crimes, as happened in the Alex “Sasha” Chepurko case.
In closing arguments to the jury, the lead prosecutor described Alex Chepurko’s whistleblowing in detecting the frauds and helping the Government prove its case. Simply stated, the prosecutor explained that Chepurko was “the hero in the story.”
The jury came back finding the defendant, Jeffrey Wilson, guilty on nineteen counts of criminal securities fraud and making false statements to the Securities and Exchange Commission. He received a sentence of 10 years in jail.
The main kingpin behind the frauds, Joseph Furando, pled guilty to wire fraud, false statements to federal investigators, engaging in prohibited financial transactions and conspiracy.” He was sentenced to 20-years in prison. Another defendant, Craig Ducey, pled guilty to wire fraud, false statements under the Clean Air Act, false claims against the IRS, obstruction of justice, engaging in prohibited financial transactions with criminal proceeds, and conspiracy.” He was sentenced to 6 years in jail. Still another defendant, Chad Ducey, pled guilty to charges of wire fraud, false statements to the EPA and IRS, and conspiracy.” He was sentenced to 7 years behind bars.
On April 30, 2020, U.S. District Court Judge Tanya Walton Pratt issued a $69.6 million judgment on behalf of Mr. Chepurko and the United States. In that case, U.S. ex rel. Chepurko v. e-biofuels, LLP, et al., the court ordered the defendants to pay the United States $69.6 million, of which Mr. Chepurko is entitled to a reward of between 25-30% of whatever the Government can collect on the judgment. Under the False Claims Act, taxpayers do not pay any of the whistleblower rewards. All proceeds paid to whistleblowers come directly from the fines and penalties obtained from the wrongdoers.
In granting Mr. Chepurko’s motion for judgment, Judge Pratt acknowledged that it was “because of Chepurko’s whistleblowing efforts. The Government was able to criminally prosecute” various wrongdoers “for their roles in a multi-state scheme to defraud biodiesel buyers and U.S. taxpayers by fraudulently selling biodiesel incentives.” In its decision, the Court recognized that Chepurko had “voluntarily contacted the Government to disclose information about false claims” and provided the Government with “extensive information.” The court properly credited Chepurko with providing the “information that allowed the Government to conduct criminal and civil investigations,” permitted the EPA to issue “notices of violation,” and permitted the Government to successfully prosecute “at least one civil action, one administrative action, and two criminal actions.”
His whistleblower attorneys continue to press the SEC whistleblower program, the IRS whistleblower program and the Justice Department to pay Chepurko a fair relator’s share, or whistleblower award, from the collected proceeds of the multiple judgments the Government also obtained in several civil and criminal enforcement proceedings.
Relevant Alex “Sasha” Chepurko Case Files:
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