News & Cases

Do you have inside knowledge of fraud or false claims against the government? You could be in for a big cash award. America’s whistleblowers earned more than $392 million in fiscal year 2017 for helping the U.S. government reclaim $3.4 billion in stolen or misappropriated funds.
According to the Justice Department’s Civil Division, whistleblowers filed a total of 669 qui tam suits in 2017 – more than 12 cases per week on average. Over the past 31 years, whistleblowers...

The SEC does the best job of any government agency when it comes to ensuring whistleblower identities remain confidential. The recent awards are not the exception. All we know is that five different individuals submitted information to the SEC exposing misconduct by a company in the securities industry.

After careful consideration, the SEC established that only two of the whistleblowers had provided original information, which made them eligible for an award.

The two anonymous whistleblowers offered critical evidence that enabled the SEC to bring an enforcement action, including substantial monetary sanctions, against the unidentified wrongdoer. Enforcement actions of this type have now surpassed the $1 billion threshold in terms of financial remedies collected from fraudsters.

According to the SEC order that concluded the recent case, the first whistleblower alerted the agency about the misconduct, while whistleblower No 2 provided additional information that helped SEC staff bring the relevant enforcement action.

Both whistleblowers collaborated closely with the SEC to ensure the wrongdoers could be held accountable....

In the wake of hurricanes Harvey, Irma, Jose, and Maria, the Justice Department is bracing itself for a flood of disaster fraud cases.

In order to coordinate efforts to deal with this type of fraud allegations, the Department of Justice has issued a memo to every US Attorney’s Office, offering specific guidelines to enhance their fraud-fighting efforts.

“Fraud inevitably follows disasters,” criminal justice columnist Tom Jackman said in a recent Washington Post article. Post-disaster scams have multiplied after each natural catastrophe in the US. Katrina has been a notable example. In the aftermath of the hurricane that hit New Orleans in 2005, there were 1,400 federal prosecutions for fraud committed in connection with relief efforts.

In fact, the National Center for Disaster Fraud (NCDF) was created in response to the superabundance of Katrina-related fraud allegations. Only a few days after the last of a wave of hurricanes hit several US states, the Center has already received over 400 complaints....

Energy Department subcontractor Federal Engineers & Constructors (FE&C) has just reached a $2 million settlement with the Department of Justice, which resolves a whistleblower’s allegations that it created a shell company to secure a contract for work at the Hanford Nuclear Reservation that should have gone to a small or disadvantaged contractor.

FE&C worked under Washington Closure Hanford (WCH), which had received a multibillion-dollar nuclear waste cleanup contract at the Hanford Nuclear Reservation. As per the terms of the contract, WCH was required to secure the services of women-owned, small, or disadvantaged businesses to complete a portion of the tasks involved.

According to allegations, FE&C awarded a $2 million contract to Sage Tec, a company run by Laura Shikashio, the wife of the company’s former vice president....

Allied Home Mortgage Capital Corporation has lost a decade-long battle in a verdict that tripled damages from $93 million to $268 million on September 14. United States Attorney for the Southern District of New York, Joon H. Kim, announced an additional judgement of $25 million against Allied Capital President and CEO, Jim Hodge, for False Claims Act and FIRREA violations involving the Federal Housing Administration (FHA) mortgage insurance program.

Branch Manager Peter Belli Claims Allied Falsely Certified FHA-Insurance Loans

Tuesday’s verdict against Allied Capital started in 2011, when former Allied branch manager, Peter Belli, filed a qui tam whistleblower lawsuit against Allied and CEO Jim Hodge claiming the company was certifying high-risk loans as eligible for FHA insurance. Belli’s case was one of just two major post mortgage meltdown cases that went to trial (the other being a Manhattan case against Countrywide)....

Minnesota-headquartered Sightpath Medical, Inc. and a subsidiary will pay $12 million to resolve False Claims Act allegations raised in a lawsuit filed by whistleblower Kipp Fesenmaier.

The complaint stated that Sightpath and Precision Lens, a company that was targeted by another lawsuit, offered kickbacks to physicians in exchange for their use of their products and services, which include intraocular lenses, ophthalmic surgical equipment, and related services to hospitals. Some of the services and products in question were reimbursed by Medicare and other federal programs.

The alleged kickbacks paid to numerous ophthalmologists included luxury skiing, golfing, and fishing trips, improper consulting agreements. Sightpath, Precision Lens, and some of their executives allegedly used these enticements to induce physicians to use their products and services, which ultimately resulted in the submission of false claims to government programs.

The kickback scheme was exposed at length in a whistleblower lawsuit filed by Kipp Fesenmaier, a former Sightpath executive, in 2013. Fesenmaier, who is now Senior Director of Global Business Solutions at the Mayo Clinic, started working at Sightpath as National Manager in 1994. His last position with the company was VP-GM of Diagnostics, which lasted from January 2006 till December, 2007....

Virginia-based Huntington Ingalls Industries Inc. (HII), the only U.S. defense contractor capable of building nuclear-powered aircraft carriers, will pay $7.9 million to complete a $9.2 million settlement that resolves False Claims Act allegations that it overbilled the government for work on both Navy and Coast Guard ships.
According to the allegations first brought forward by whistleblower Byran Faulkner, Huntington Ingalls Industries Inc. has been mischarging and overbilling the...

The SEC recently announced it has awarded $2.5 million to a whistleblower who is also a government employee. This is the first time the SEC has publicized giving an award to an employee of a government agency.

As it is customary with the SEC, the identity of the whistleblower remains anonymous, and specific details about the wrongdoing have not been revealed. The novelty here is the fact that a government employee has been considered eligible for an award.

On paper, government agency employees can receive whistleblower awards as long as they are not employees of a law enforcement organization, the SEC itself, or a number of regulatory agencies, which include the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation.

Although we have very little information about who the whistleblower is, the SEC revealed that he or she worked for a government agency that has a law enforcement component, but not in that specific section....