When Reporting Fraud Pays Big

by ShelbyW on December 17, 2012

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The old saying goes that honesty is always the best policy. This is a simple yet true fact, and being honest can actually garner a person much more than a clear conscious. Many individuals have taken notice of all of the ‘whistleblower’ press that has been in the news as of late. It would seem as if all of these whistleblowers are reporting fraud out of the goodness of their hearts, and this may very well be the case. However, the rewards for being truthful in this situation can be immense.

What is a Whistleblower?

With all of the whistleblowing cases in the media lately, there is little chance that anyone doesn’t know what a whistleblower is. Cases have ranged from individuals who report banking fraud to military corruption. A whistleblower is a person who recognizes that these immoral activities are going on and reports them to the press, government or other sources that have the power to end the illegal or decadent activities.

Some whistleblowers, however, receive compensation for their actions. The False Claims Act was passed during President Lincoln’s tenure with the aim of ending fraud against the federal government. It promises anyone who reports fraud (a whistleblower) a fifteen to thirty percent reward of whatever compensation the government receives for pursuing a case against the entity that is committing fraud.

How much do Whistleblowers Get?

As previously mentioned, whistleblowers receive a portion of the money that the government recovers from the organization or individual that is perpetrating a scheme. Bradley Birkenfeld, for instance, received $104 million for reporting ongoing fraud at UBS, a foreign bank that he worked for. This was a huge reward, but the attorneys of Goldberg Kohn who secured the largest judgment in False Claims Act history tell us that depending on the fraud that is being committed, rewards of this size are obviously not out of the range of possibility.

The United States Justice Department recovered nearly $3 billion due to tips related to fraud in 2011. The entire federal government recovered closer to $5 billion due to reports of whistleblowers. Whistleblowers got a large chunk of this money, but for some reason, some individuals are still hesitant to come forward and take on the title of ‘whistleblower’.

Why some People refuse to blow the Whistle

There are those out there who look at the chance of becoming a whistleblower as a lose-lose situation. The possible rewards are great, but there are risks involved. One huge risk is that of becoming a social pariah, especially as it relates to a person’s working relationships. If a company survives a scandal of this scale, it is very likely that the whistleblower will never again be trusted within their company. This is of course assuming that they retain their job.

There are legal protections that can prevent a whistleblower from losing their job, but this likely won’t stop them from losing friends over the event. A company that has to pay out huge sums to the U.S. government will likely be crippled, and this will always lead to downsizing. Regardless of how close of friends two co-workers are, if one takes an action that directly leads to the job loss of another, the relationship will not likely be recovered.

It’s also important to note that some whistleblowers may have trouble finding future employment. If an employer believes that a former whistleblower is looking for any perceived mistruth to get rich off of, they will likely forego hiring them. Luckily, the compensation received for reporting this type of fraud is often substantial enough that a person won’t have to worry about maintaining employment in their chosen field.

Becoming a whistleblower is a great responsibility that brings along with it great risks, but the rewards involved are significant. The federal government doesn’t like when individuals or organizations commit fraud against it, and it is willing to pay huge rewards to those who bring fraudulent activities into the light of day.

Shelby Warden is a legal researcher and contributes this post for those who are interested in learning about the financial rewards that are paid to those who report fraud. Regardless of whether a person wants to be heavily rewarded or simply wants the truth to come out, the attorneys of Goldberg Kohn have the experience and resources needed to take on even the largest corporations on behalf of their clients.

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