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False Claims Act & Whistleblower Cases

Every year, our federal, state and local governments are defrauded out of billions of dollars by dishonest contractors, business people and other cheats. To combat this fraud, lawmakers have enacted laws to encourage people who know about government fraud to “blow the whistle” by reporting this wrongdoing.

Companies who cheat the government are subject to penalties of up to three times the amount of their fraudulent billings. Moreover, the whistleblower who reports the fraud can receive a reward of up to 15% to 30% of the funds recovered by the government.

False Claims Act

There are three laws that whistleblowers commonly use to report fraud to the Government.

The False Claims Act

First, the False Claims Act, 31 USC §§ 3729 – 3733, prohibits government contractors and other persons or companies who do business with the government from submitting false claims for payment, making false statements in connection with false claims, knowingly retaining or keeping any overpayments of government money, or conspiring to do any of the above.

If a whistleblower knows about government fraud, the False Claims Act allows that whistleblower to file a lawsuit against the wrongdoer under seal. The Government then investigates the whistleblower’s allegations and makes a decision to either (a) take over the lawsuit, or (b) allow the whistleblower to continue the lawsuit on his or her own. In either event, if the lawsuit is successful, the whistleblower receives a share of any proceeds recovered in the lawsuit. To learn more, see the Frequently Asked Questions below.

The SEC Whistleblower Law

The Securities and Exchange Commission, also known as the SEC, has its own whistleblower law at 15 U.S.C. § 78u-6.   If a whistleblower knows about a person, business or company that is committing securities fraud, the whistleblower can report that information to the SEC and earn a reward.

Unlike the False Claims Act, the whistleblower need not file a lawsuit to report the information. Instead, the SEC has established a Whistleblower Office to receive and review reports of fraud. If the whistleblower’s information leads to a penalty or fine against the fraudster, the whistleblower can be entitled to a share of any fines or penalties recovered. To learn more, see the Frequently Asked Questions below.

The IRS Whistleblower Law

The Internal Revenue Service, also known as the IRS, has its own whistleblower law at 26 USC § 7623. Under that law, the IRS is authorized to pay rewards to whistleblowers who help detect and prosecute tax cheats, when the amount of unpaid taxes in dispute is more than $2 million. The IRS has established a Whistleblower Office to collect and evaluate information received from IRS whistleblowers. These whistleblowers must report their information using IRS Form 211. If the whistleblower’s information leads to a recovery, the whistleblower may be entitled to a portion of that recovery as a reward. To learn more, see the Frequently Asked Questions below.

Frequently Asked Questions

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