Whistleblower Qui Tam Reward Programs Designed to Combat Financial Fraud Are Ignored By FBI In Hollywood Campaign To Attract Whistleblower Tips on Fraud

March 1, 2012 – The FBI has cast Hollywood actor Michael Douglas in a new Public Service Announcement asking whistleblowers to report financial fraud to the FBI. However, the FBI’s ad campaign leaves out some key information as the FBI tries to attract tips from whistleblowers about corporate and financial fraud.

KKC partner David K. Colapinto told the Washington Post if whistleblowers “just go to the FBI, they are probably going to get zero. The FBI’s not obligated to do anything for them.”

The FBI needs corporate insiders to blow the whistle to help detect financial fraud and boost its record in fighting corporate fraud. But curiously, the FBI fails to inform potential whistleblowers about the robust financial incentives in the whistleblower award programs that exist for reporting corporate fraud to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), or for reporting tax fraud to the Internal Revenue Service (IRS). In its ad campaign and web site asking for tips on financial fraud, the FBI even fails to use the word “whistleblower.”

In recent years, Congress has created multiple whistleblower qui tamaward programs at the SEC, CFTC and the IRS as additional tools to combat corporate fraud. These whistleblower programs also complement the most successful whistleblower law, the qui tamprovisions of the False Claims Act. Under all of these qui tam laws, whistleblowers have been responsible for helping the United States recover untold billions of dollars that have been stolen from taxpayers and shareholders by Wall Street fraudsters.

Blowing the whistle on corporate crime is not simply based on greed. In addition to returning billions of dollars to the U.S. Treasury that have been literally stolen by large corporations and government contractors, these qui tam whistleblower cases have resulted in significant reforms that have helped consumers, shareholders, taxpayers and retirees.
There should not be a competition waged by the FBI with these other government agencies (such as the SEC, CFTC and IRS) over whistleblowers.

As a practical matter, anyone who has information about financial or corporate crime or tax fraud should contact an attorney first to help navigate through the complex web of overlapping laws in this area. The best practice is to obtain competent legal advice in this area of the law before attempting to navigate this legal maze.

There are many things that a whistleblower can potentially do when faced with the problem of reporting an employer for committing fraud or violating the law. The first thing a whistleblower should do is contact a lawyer with expertise in whistleblower protection to ensure that your rights are protected before blowing the whistle. Many of these laws carry criminal penalties and the consequences for wrongdoers can be serious. One of the familiar tactics by some who are accused of wrongdoing is to accuse the whistleblower of misconduct so it is important to get good legal advice before taking action, if that is possible.

For additional information, it is a good idea for anyone interested in blowing the whistle to learn about the evolving law in this area. KKC partner Stephen M. Kohn has written, The Whistleblower’s Handbook, which provides important rules to follow, such as how to understand the maze of laws, how to find the best law that will work for you, what you need to know about the Dodd-Frank whistleblower laws at the SEC and CFTC, how to consider use of the IRS tax fraud law, and many other useful rules to follow.