The IRS Whistleblower Program shows signs of improvement, but still has a long way to go

IRS Building in Washington DC. IRS Whistleblower Program.

The IRS whistleblower program paid $61 million in whistleblower awards in 2016. (Photo via Flickr)

While the director of the IRS Whistleblower Office has given his program good reviews in the latest annual report about the IRS whistleblower program, the reality isn’t so positive.

In the FY2016 annual report for Congress, IRS Whistleblower Office Director Lee D. Martin noted that  the IRS paid 418 whistleblower awards in FY2016, compared to 99 awards in FY2015. Those awards totaled more than $61 million. The number of claims also increased, showing an increased public awareness about the program.

But that good news has a flip side: The amount of whistleblower awards for 2016 ($61 million) – was less than two-thirds of the total whistleblower award amount for 2015 ($103 million).

Audacity costs medical device company Biomet $30.5 million in second FCPA settlement

The Securities and Exchange Commission seal

Biomet, a medical device company, will pay a second multi-million dollar FCPA penalty after paying $22 million in 2012.

Medical device company Biomet will once again pay tens of millions of dollars to settle violations of the Foreign Corrupt Practices Act.

In 2012, Biomet agreed to pay more than $22 million to settle allegations it violated the FCPA by bribing public doctors in Argentina, Brazil and China for nearly a decade.

This week, Biomet agreed to pay $30.5 million for interacting with a known prohibited distributor in Brazil and using a third-party customs broker to pay bribes to Mexican customs officials to smuggle in unregistered and mislabeled dental products, according to the Securities and Exchange Commission.

‘Made In America’ violations settled as part of whistleblower case against medical equipment manufacturer

Mount Rushmore - ICP Medical made in china false claims act

ICP Medical allegedly removed “Made in China” designations from supplies like body bags, and then relabeled the products as made in the U.S.

A whistleblower helped uncover a scheme by a Missouri-based government contractor where the company not only allegedly overcharged the government for its products, but also allegedly violated country of origin labeling requirements.

ICP Medical, which manufactures medical equipment like gloves and curtains for hospitals, agreed to pay $4 million to settle the “qui tam” (whistleblower) lawsuit.

The former company employee, who originally brought the lawsuit in 2014, alleged that ICP Medical submitted false claims to the government in two ways:

SEC shows willingness to waive rules for whistleblowers when fairness dictates

SEC whistleblower award rule

The SEC chose to waive a rule that normally would have prevented a whistleblower from receiving an award. (Photo via Flickr)

When it comes to whistleblower claims, things are rarely ever black and white.

That proved true once again when the Securities and Exchange Commission’s first whistleblower order of 2017 was issued Friday. In the order, the SEC said it waived its requirement that whistleblower information provided before program rules were adopted in May 2011 be submitted “in writing.” Citing “highly unusual circumstances,” the anonymous whistleblower was granted an award of more than $5.5 million.

This is a promising development for whistleblowers. It shows that the SEC is willing to examine the totality of the circumstances and use its discretion in favor of fairness when determining an award.

Whistleblowers helped the US government recover more than $4.7 billion in FY2016

false claims act whistleblower settlements

Nearly $3 billion was returned to taxpayers thanks to whistleblower claims brought under the False Claims Act.

With whistleblowers leading the way, lawsuits filed under the federal False Claims Act helped return more than $4.7 billion to taxpayers in FY2016.

Nearly $3 billion of that amount came from lawsuits initiated by whistleblowers.

More than half ($2.5 billion) of that was recovered from the health care industry, according to the Justice Department.

Recoveries related to the mortgage and housing crisis were the next largest, bringing in $1.6 billion in the fiscal year. Since the release of the FY2016 numbers, even more False Claims Act settlements have come down for Federal Housing Authority lending violations, like United Shore’s $48 million case.

IRS Whistleblower Program Needs Several Core Improvements: Report

IRS Building in Washington DC. IRS Whistleblower Program.

The IRS whistleblower program has helped recover more than $2 billion, yet the program still has several key operational deficiencies. (Photo via Flickr)

The Treasury Inspector General for Tax Administration’s (TIGTA) latest report on the IRS whistleblower program confirms what many in the field have long lamented: The IRS whistleblower program suffers from major problems that have significantly hurt the program’s effectiveness.

Two of TIGTA’s findings in the report, released in late October, stood out as particularly worrisome for the program.

First, the report says many rejection and denials of whistleblower claims do not have proper support and documentation explaining why whistleblower awards were rejected. This makes it extremely difficult for whistleblowers and their attorneys to build a case to challenge the IRS’s decisions on awards.

Insider trading enforcement receives a boost from the Supreme Court

Phone on the New York Stock Exchange. Thanks to a recent Supreme Court ruling, whistleblower tips about insider trading submitted to the Securities and Exchange Commission might see greater success.

A recent Supreme Court ruling could be a boon for potential whistleblowers with knowledge of insider trading. (Photo via Flickr)

Enforcement of insider trading charges received a significant boost last week when the Supreme Court ruled that government prosecutors do not need to show that money or other valuable benefits were provided in exchange for insider information when it comes to friends and family.

The decision overturned a 2013 Second Circuit decision that had hindered insider trading prosecutions in that Circuit when it ruled that a person providing inside information had to receive something of “pecuniary or similarly valuable nature” for there to be a violation of insider trading laws.

Supreme Court rules in favor of whistleblowers in State Farm Katrina case

Supreme Court state farm whistleblower decision

The Supreme Court ruled that a jury verdict in a whistleblower case against State Farm should not be automatically thrown out over a seal violation. (Photo via Flickr)

The Supreme Court issued on Tuesday its second decision in the past six months that recognizes the broad purpose of the False Claims Act to root out fraud against the government.

In a unanimous decision, the court held in State Farm v. United States ex rel. Rigsby that violating the “seal” of a case is not cause for automatic dismissal. The False Claims Act requires that “qui tam” (whistleblower) cases be filed under seal, meaning that they are kept confidential from the public while the government investigates the allegations.

The fight against global corruption and bribery will continue in new US administration, top enforcement officials say

DOJ SEC enforcement trump administration

No matter who runs agencies like the DOJ and SEC in the new administration, current top officials think key enforcement priorities will carry on in the coming years. (Photo via Flickr)

Recent enforcement initiatives aimed at tackling global corruption will likely continue no matter who ends up in leadership at the Justice Department and the Securities and Exchange Commission, two top officials at those agencies said this week.

Speaking at the 33rd annual International Conference on the Foreign Corrupt Practices Act, Deputy Attorney General Sally Yates and SEC Enforcement Director Andrew Ceresney expressed confidence that policies like the DOJ’s new focus on prosecuting individuals rather than just settling for corporate punishments, and offering benefits to companies who self-report misconduct, will continue with Donald Trump as president.

SEC whistleblower program has banner year in FY2016

sec whistleblower program report

In FY2016, the SEC paid out more than $57 million to whistleblowers while also continuing its efforts to punish companies who sought to silence or retaliate against whistleblowers.

The Securities and Exchange Commission took significant actions in FY2016 that made it a “historic” year for the SEC whistleblower program, according to a new report from the agency.

The SEC paid out more than $57 million in whistleblower rewards during the last fiscal year, which ended Sept.30, and took major enforcement actions against companies that retaliated against whistleblowers or tried to silence them.