In my previous post, titled "Key Factors in the Rise of Whistleblower Claims", I discussed some basic facts about, among others, what a whistleblower is and why someone might engage in whistleblowing. Reasons provided ranged from exposing criminal and unethical behavior for the good of society to making a small fortune in the process. Today we will get into exactly what steps must be taken to "blow the whistle".

As a brief recap, a whistleblower, in a broad sense, is one who speaks out against an illegal or unethical practice performed generally by a company.  In order to qualify as a whistleblower, an individual (note:  need not be an employee of such company, can be accountant, CPA, contractor or subcontractor) must have first-hand knowledge and the company's conduct generally must be fraudulent, willful or at least grossly negligent.

As with many laws, most whistleblower laws also explain the specific process of how to blow the whistle in the text of the law. Below are three examples of common whistleblower laws and a brief overview of what each law requires in order to begin to pursue a successful whistleblower claim.

False Claims Act (“FCA”), Qui Tam

The FCA applies to any company that does any kind of business with the federal government and commits fraud while doing so.  Some examples include, any companies that utilize Medicare and Medicaid, defense contractors, affordable housing developers, Section 8 recipients, ambulance companies, pharmaceutical companies, nursing homes, hospitals and medical labs.  It’s that simple.  It allows a private citizen, i.e., a whistleblower or “relator”, to file a lawsuit against the company on behalf of him/herself and the U.S. Government and who:  has first-hand knowledge of the fraud, is the FIRST to file the suit, files it under seal (unlike other law suits) and with the United States Attorney.  There are a few other requirements as well.  A successful financial recovery can range from several hundred thousand to several hundred million dollars.

Securities and Exchange Commission ("SEC") and Dodd-Frank

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The Sarbanes-Oxley Act of 2002, was amended by  the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank prohibits illegal behavior such as lying on a publicly-traded company’s financial disclosure statements, insider trading, otherwise failing to comply with the federal securities laws and compliance fraud. Retaliation is actionable against not only the employer-public company, but also by its officers, contractors, subcontractors, employees or agents.

To blow the whistle, one must have original information that s/he volunteers, which results in an SEC action exceeding $1M. A claim is filed by simply filling out a form on the SEC's website or faxing a specific form to the SEC's whistleblower's office.  Although an easy process, it can be fatal to the claim is done incorrectly. A whistleblower in this program is eligible to receive between 10 per cent and 30 per cent.

Internal Revenue Service ("IRS")

The IRS Whistleblower Office pays money to individuals who report companies or other individuals who fail to pay their taxes. To file a claim, one needs to file both a form reporting the tax fraud and then a second document to claim the award. In order for a tax fraud whistleblower to be successful, the fraud must generally exceed $2M, with exceptions.  Depending on whether the defendant is a company or individual and the specific IRS whistleblower program, the financial recovery can range from 15 per cent to 30 per cent.

Each one of these claims is very technical and requires the assistance of a knowledgeable and experienced whistleblower lawyer to maximize the chances of recovering a large financial reward.