The unprecedented $5 trillion dollars approved in recent federal stimulus packages will undoubtedly help millions of people in need, but it also attracts shady operators looking to defraud the government and make a quick buck.
As a former federal and state prosecutor, I’m familiar with whistleblowers’ critical role in uncovering government fraud.
Related: Jacksonville Daily Record: Whistleblowers can save us
Whistleblowers’ Impact
Whistleblowers have consistently been the main enforcement mechanism in detecting and reporting fraud, even more successful than law enforcement, internal auditing, management review, and other reporting mechanisms combined. The U.S. Department of Justice’s (DOJ) statistics show that whistleblowers uncover 70% of the civil frauds recovered by the United States. In 2019 alone, of the $3 billion recovered from fraudsters, $2.1 billion is attributed to whistleblowers who first detected and reported the fraud.
Yet whenever emergency funding is provided, fraud rates increase because the government isn’t able to implement complete anti-fraud systems before distributing the money. This leaves the government in a “pay and chase” scenario where whistleblowers are more vital than ever.
How it Works
Anyone with personal knowledge of a fraud committed on the government can be a whistleblower as long as their information is not previously known to the government.
Whistleblower cases are typically filed under seal by a private attorney, and the DOJ then has the option to intervene and prosecute the case on behalf of taxpayers.
Why Come Forward?
Whistleblowers are entitled to a percentage of the financial recovery obtained from the fraudster. Under the most commonly used authority, the False Claims Act, whistleblowers are typically awarded 15-30% of the amount recovered.
There are also various laws in place to protect whistleblowers from being unfairly retaliated against by employers.
In my experiences, most whistleblowers just want to do the right thing and are very relieved after reporting the suspected fraud.
Common Coronavirus Schemes
While new schemes are always being developed, three types of government funding are especially susceptible to fraud right now.
First, many companies have taken advantage of the Paycheck Protection Program (PPP). The DOJ has already criminally charged 57 people for defrauding the PPP program.
The number of civil prosecutions is expected to be exponentially higher; former California banking commissioner, Walter Mix, estimated that 10% to 12% of the PPP applications submitted were fraudulent in some fashion. The schemes vary, but some have fraudulently certified the number of employees, the necessity for the loan, or made improper use of the funds.
Second, medical billing fraud committed on government health insurers: Medicare, Medicaid, and Tricare. Some of the most common scenarios are overbilling for healthcare services such as telehealth visits, or billing for inadequate or worthless medical services. The DOJ recently rolled out a new nursing home enforcement initiative to combat this latter type of fraud.
Third, procurement fraud, which is only as limited as the creativity of fraudsters, but it often involves the delivery of inferior goods, price gouging, kickbacks or bribery, or collusive efforts to undermine a fair bidding process. Procurement fraud was the catalyst for creating the False Claims Act during the Civil War because contractors were supplying the Union Army with inferior weapons and horses.
Taking Action
The DOJ is making coronavirus-related fraud schemes a top priority by designating a prosecutor in each district around the country to serve as a Coronavirus Fraud Coordinator.
If you believe you might be able to save taxpayer money and serve as a whistleblower, time is of the essence. Every dollar recovered from fraud can be redistributed to those who need it most. Consider contacting our firm for a complimentary consultation.
Jacksonville Daily Record: Whistleblowers can save us
