What You Can Do to Stop Fraud (and Even Get Paid!)
The war on corporate greed and fraud continues. On the front
lines of most of those battles aren’t trial lawyers, prosecutors or FBI agents.
The true front lines are whistleblowers. Hard working men and women who try
valiantly to get their bosses and companies to do the right thing.
Some are successful. Some are ignored. Some suffer
retaliation. We honor the courage of all whistleblowers. All are heroes. The most
effective whistleblowers are those willing to step forward formally and make
their voices heard.
Representing whistleblowers, making their voices heard, protecting
them from retaliation and getting them the cash rewards they deserve are what
we do. We don’t mind doing the heavy lifting but we can’t race in like the
cavalry without someone on the inside taking the first step.
The genesis for this New Year’s message is a report from the American Association for Justice. The AAJ is the premier association of trial lawyers. Plaintiff’s trial lawyers meaning they take on big corporations. We are whistleblower lawyers and like the AAJ, we take on the same evil companies.
Often, we work together but our battles are different. The
enemies, however, are the same.
I never really thought about how similar our enemies are
until reading their report entitled the Worst Corporate Conduct of 2018.
Before looking at all the evil that has transpired over the
last 12 months, let’s remember the good news. In many instances these evil
doers were caught because of our clients and the many whistleblowers throughout
our society. Some of them aren’t even in the United States!
Back in the 1800’s Congress got wise to corporate greed.
They passed the False Claims Act which allows private people – whistleblowers and
their attorneys – to prosecute corporate fraud cases. Better yet, they can
receive multi-million dollar rewards for their efforts.
That single law has leveled the playing field and makes
victory possible. In more recent years, Congress has passed several other whistleblower
reward laws, more on that later. Let’s look at the most shameful and worst
corporate conduct of 2018.
Navient
Number One on the AAJ list, Navient.
Americans are swimming in student loan debt. For many borrowers,
it is probably better to say “treading water” or even drowning in school debt.
In 2018, Americans owed $1.48 trillion
in student loan debt. 8 million borrowers are in default while an estimated
4,950,000 borrowers are considered in serious default meaning at least 90 days
in arrears. The Brookings
Institute believes that by the time the current freshman college class
graduates, the default rate will be 40%!
We have established that student loan debt is crushing for
many people. Now let’s look at Navient and their role in the crisis.
Navient is a for-profit company spun off from Sallie Mae.
Folks my age may remember Sallie Mae back when it was formed in the 70’s. Back then,
it was a government agency. No more.
Sallie Mae is one of the three largest student loan
servicers. According to the AAJ, it is the “poster child for student loan
abuses.”
What have they done wrong? According to the AAJ, everything!
Here is what they say:
- Steering borrowers into forbearance rather than
more affordable repayment plans when they had trouble making
payments, allowing interest to accumulate on the loans. Navient
made at least $4 billion this way;
- Reporting severely and permanently disabled
borrowers, including veterans, as having defaulted on their loans
when in fact they had had them forgiven through federal disability
programs;
- Placing borrowers into repayment plans that made
them ineligible for public service forgiveness programs;
- Sending borrowers $0 due bills when they chose
to overpay in a particular month, but then counting the
absence of additional payments as a failure to make on-time payments (for
instance, if a borrower owed $100, but paid $300, Navient would send $0 due
bill for the next two months, but would count those two months as a
failure-to-pay if no additional payments were made);
- Overcharging service members in violation of the
Servicemembers Civil Relief Act (SCRA), which caps the
interest rate such borrowers must pay at 6 percent (Navient was forced to
pay $60 million in restitution to the service members);
- Putting up arbitrary barriers to prevent
co-signers from being released from loans even when eligible;
- Failing to adequately warn borrowers on
income-based plans that they needed to annually certify their
income to avoid significant repayment hikes;
- Collecting more than was owed when borrowers
fell behind on payments;
- Going after the families of deceased borrowers
despite promises such loans would be forgiven (Navient also
charged interest on such efforts).
Unfortunately, the current Secretary of Education hasn’t
done much to curb the abuses by Navient. In August of last year, Seth Frotman,
then the Consumer Financial Protection Bureau’s (CFPB) Student
Loan Ombudsman, quit the agency. In his resignation letter, he said, “It is
clear that the current leadership of the Bureau [CFPB] has abandoned its duty
to fairly and robustly enforce the law… The Bureau has abandoned the very consumers
it is tasked by Congress with protecting. Instead, you [CFPB director Mulvaney]
have used the Bureau to serve the wishes of the most powerful financial
companies in America.”
Powerful words. Whether or not those words are true, it is
more difficult today to bring a whistleblower reward case in the education arena.
Difficult but not impossible.
Whistleblower Rewards
and Student Loan Servicers
Because Navient and the other loan servicers handle loans
backed by the United States government, these entities are subject to the False
Claims Act, America’s number one whistleblower reward program.
Even Navient acknowledges that it is subject to the Act. In
its annual SEC filings Navient says,
“If improper or illegal activities are found in the course
of government audits or investigations, the contractor may become subject to
various civil and criminal penalties, including those under the civil U.S.
False Claims Act, and administrative sanctions, which may include termination
or non-renewal of contracts, forfeiture of profits, suspension of payments,
fines and suspensions or debarment from doing business with other agencies of
that government. Due to the inherent limitations of internal controls, all
improper or illegal activities may not be prevented or detected.”
“If improper or illegal activities are found”? To us, it is
only a question of how many times they will be caught and how many of such “illegal
activities” will be found.
Prosecuting Navient and the other loan servicers won’t be
easy but it is possible. First, given the current politics within the
Department of Education and CFPB, it will take a very strong case to succeed.
That doesn’t scare us because the strongest cases are based
on those brought forward by whistleblowers. The people within Navient have the “smoking
guns” (proof) to bring these cases.
Recently, the U.S. Supreme Court said that violations must
be “material” to be prosecuted under the False Claims Act. That makes sense.
For example, if a Medicare rule says that Medicare prescriptions must be signed
in blue ink and a hospital allows black ink, that doesn’t mean that the
prescriptions are fraudulent. The violation probably isn’t material.
This materiality discussion is critical since it is the government
agencies that largely determine what is material. Under the False Claims Act we
can prosecute student loan servicing fraud but the CFPB and Department of Education
have big influence on what is considered a material act or omission.
What this means is that for us to prosecute Navient or any
other loan servicer we need an insider, with solid information and the
wrongdoing must be significant.
There is also a public knowledge requirement. We need inside
information. If what you have is already in the press or within the CFPB, there
probably is no reward.
BP, ConocoPhillips,
ExxonMobil and Shell
The AAJ say these four energy giants are responsible for a
large percentage of the global warming crisis. Several states, cities and
counties in the U.S. have filed lawsuits asking the companies both for damages
and to take steps to reduce the pollution and damage caused by fossil fuels.
Whistleblowers and
Eneregy Companies
There are no whistleblower opportunities under the current
laws for global warming but we are always looking for insiders with any
knowledge of corporate misconduct.
Although our emphasis is on whistleblowers and helping them
collect rewards for stepping forward, we frequently partner with class action
lawyers to help the victims of
corporate wrongdoing.
Even if you wish to remain anonymous, your information about
wrongdoing or fraud could help save lives and maybe even the planet.
One hot area in the energy sector where rewards are
available involves violations of the Foreign Corrupt Practices Act. This law
prohibits US and many foreign companies from paying bribes to foreign
government officials.
We know of many instances where energy companies were
prosecuted in the U.S. for trying to bribe foreign officials in order to obtain
drilling rights or avoid responsibility for their environmental catastrophes.
Unfortunately, bribery and corruption are the norm in many areas of the world.
Unlike the student loan industry, the government today
continues to vigorously enforce the Foreign Corrupt Practices Act. If you have inside
information about these schemes, call us. Our contact information is at the end
of this post or you can simply contact us online.
All inquiries are protected by the attorney – client privilege and kept
strictly confidential.
State Farm
State Farm one should be number one in our opinion. The
insurance giant recently paid $250 million to settle a claim that it secretly helped
elect an Illinois Supreme Court Justice who just happened to cast the deciding
vote vacating a $1.06 billion judgment against the company after a trial court
found the company was illegally using lower quality aftermarket parts to fix the
cars of their insureds.
The company settled without admitting wrongdoing but come
on, who pays $250,000,000.00 unless they were guilty as sin? That certainly isn’t
a nuisance value settlement.
The case was settled before trial and jury verdict but the
evidence certainly appears to show that State Farm funneled millions into
Justice Karmeier’s campaign.
Karmeir is still sitting on the Illinois Supreme Court. He
was not formally charged or accused of any wrongdoing.
This is another case in which there are few whistleblower
reward opportunities but we are certainly always willing – and wanting – to listen.
Takata and General
Motors
Anyone who regularly reads this blog know that we have posted
more original content regarding Takata than any other law firm. [See our Takata
Airbag Injury Claim Center cornerstone post as well as our more specific Takata
General Motors Defective Airbags post.]
We have helped lead the cases against VW, Audi and several
other automakers for their knowing and continued use of highly dangerous
airbags. Airbags are supposed to save lives. The propellant used in many of the
Takata airbags, however, degrades in heat and humidity and transforms the
airbag’s metal cannister into a grenade.
Read our posts and you will certainly see why Takata made
the AAJ’s list and is on our worst corporate citizen list. But why GM?
All of the car manufacturers recalled their Takata airbag
equipped cars, although some reluctantly so. We were upset at VW and Audi for
recalling older Takata equipped vehicles while still using their defective
airbags in newer cars.
Why would they do that? Takata airbags are cheap. When you
make millions of cars, a few bucks per airbag adds up quickly.
We said all the major automakers recalled their vehicles.
The AAJ says that there is a notable exception, General Motors.
GM filed several petitions in the last couple years trying
to avoid the recall. They say that despite overwhelming evidence to the
contrary, the Takata airbags are “not likely to pose an unreasonable risk to
safety.”
Why would they say that? Probably because they told the SEC
that avoiding the recall would save the company $1 billion.
Profits over people. It is a theme we see in every one of
these cases.
Whistleblowers, Auto
Safety Defects and Takata
Very recently Congress passed the Motor Vehicle Safety
Whistleblower Act which allows the Department of Transportation to pay
whistleblower awards to insiders working at automakers or OEM companies.
Three whistleblowers were awarded a combined total of $1.7
million in the Takata case for stepping forward and letting regulators know
just how deadly these airbags were and how the company was covering its tracks.
Normally, the rewards under the new Motor Vehicle Safety
Whistleblower rewards are between 10% and 30% of whatever the government
collects. In this case the rewards were much lower because Takata is bankrupt.
Elizabeth Holmes and
Theranos
If you thought the old snake oil salesmen of the frontier
days were gone forever, think again. Elizabeth Holmes was hailed as the next
Steve Jobs. At the tender age of 19 she created a company called Theranos that
promised to revolutionize healthcare.
Instead of time consuming and expensive blood tests that often
required multiple vials of blood, Holmes said her new technology could determine
anything from cancer to diabetes with a simple pinprick and drop of blood. And
the cost? Just $2.99!
Her company Theranos soon blossomed into a giant valued at $10
billion. Walgreens signed on as a partner.
Everything looked great until an employee of the company
blew the whistle and called Theranos and Holmes a fraud.
Unfortunately, the whistleblower in that case was originally
branded a liar by Holmes. Her wrath didn’t last long, however.
Almost immediately Holmes fraud began to unravel. She and the
company faced numerous lawsuits from patients, investors, and several state attorneys.
The SEC jumped in and charged her with fraus. Medicare took away the company’s
ability to claim Medicare or Medicaid benefits. And in June
of 2018, Holmes was indicted for criminal wire fraud and conspiracy charges.
Whistleblowers,
Healthcare Providers and Medicare Fraud
The first known whistleblower in the Theranos case to step
forward was Tyler Shultz, a new hire assigned to the company’s assay validation
team. That meant his job was to insure tests run by the lab were accurate. They
weren’t even close.
Shultz sent an anonymous letter to New York state officials
and wrote an email to Holmes. His actions earned him a $400,000 legal bill.
Being a whistleblower isn’t easy and not everyone suffered
like Tyler. Unfortunately, he didn’t avail himself of either the federal or New
York State False Claims acts nor did he use the anti-retaliation provisions available
by law.
We are reluctant to criticize Shultz. His actions in
stepping forward make him a hero. Had he done things a bit differently, however,
he may have earned a large check and avoided some of the heartache.
Because Medicare and Medicaid reimbursed Theranos for its
testing, taxpayers were footing the bills on many of these tests. If you
defraud a government program, the False Claims Act allows whistleblowers to
collect between 10% and 30% of the monies collected by the government from the
wrongdoers. 29 states, including New York, have similar laws for the state funded
portion of Medicaid programs.
The Theranos case teaches another lesson. The False Claims
Act is designed to protect taxpayers from fraud. But often these cases involve
more than money.
Shultz told regulators that the tests performed by Theranos’
miracle machines could miss a serious disease 35% of the time. That kind of
shaky science has no business in healthcare.
Nestlé and Modern Day
Slavery
Nestlé products are household names. Nestlé chocolates.
Purina. Little Friskies. Nestea. Hot Pockets. The list goes on. What many don’t
know, however, is the company has been accused of aiding slavery.
The AAJ says that the company’s seafood, coffee and cocoa
business lines are “blighted with forced labor.” To be clear, Nestlé doesn’t employ
slaves. But it purchases much of raw product from West Africa, an area known
for slavery and child labor violations.
A lawsuit is pending right now by six people who said they
were kidnapped as children in Mali and brought to a cocoa plantation in the
Ivory Coast and forced to work 14 hours per day without pay.
Is this illegal under US law. We are not international
employment lawyers but a federal appeals court ruled that if the six can prove
their case, both Nestlé USA and another U.S. company, Cargill, can be held
responsible.
While we know of no whistleblower reward laws, we are always
willing to listen to insiders and see if we can help.
The 2017 Worst
Offenders
Let’s take a brief look at the 2017 worst corporate
offenders. Many of those companies have seen successful whistleblower reward cases.
United Airlines
United Airlines was the number one company on the AAJ’s list
year. Probably for the way they repeatedly mistreat passengers. [While reading
this post you may want to play the now infamous and viral United Destroys Guitars
song.]
And who can forget the viral video of Dr. David Dao being unceremoniously
and wrongfully dragged off a United flight. If the video wasn’t bad enough,
United’s pathetic excuses were worse. [The author of this post was quoted in Forbes
about the illegal manner in which Dr. Dao was removed from the plane.]
These actions certainly earned United a spot on the AAJ 2017
worst corporate conduct list but there is far more to the story. United has
many contracts with the United States government. And a string of whistleblower
complaints suggests United
Airlines is committing outright fraud and even endangering U.S. military
pilots and crews.
Anyone working for or with an airline that has inside
information about fraud involving government contracts may be eligible for a
whistleblower reward. Other rewards may also be available through the SEC or
IRS whistleblower programs. Scroll to
the end of this post in order to learn more and how to contact us.
Monsanto, Glyphosate,
Roundup and Bayer
Once again, we and the AAJ are in agreement on Monsanto.
Makers of Roundup and Ranger Pro herbicides, Monsanto has been accused of
causing cancer in thousands of Americans.
The active ingredient in Monsanto’s flagship weed killer is
a product called glyphosate. The World Health Organization and the State of California
say there is a probable link between certain deadly cancers (lymphoma, leukemia
and myeloma) and glyphosate.
The company, of course, disagrees. Recently a California
jury socked the company with a record $289 million verdict after linking Monsanto
Ranger Pro to a former school groundskeeper stage four cancer. The company, now
owned by Bayer AG, has appealed.
Katers & Granitz is actively seeking both Monsanto whistleblowers and cancer victims. (The links are to two specially
prepared short videos. We have many, many posts on Monsanto, just use the
search feature in our blog.)
Wells Fargo
Wells Fargo is number three on the AAJ 2017 list and for good
reason. There is so much wrong with Wells
Fargo that they we don’t even know where to begin. The good news, however, is that
many of the successful prosecutions of Wells Fargo started with insiders –
company whistleblowers.
You can find many stories on Wells Fargo on our blog (just
search the name “Wells Fargo”). We also have successfully sued the company on
behalf of embattled employees working there.
Many people think we hate big banks and everyone who works
there. That statement is only partially true. There are tens of thousands of great
people who work at all these horrible companies. It isn’t that the workers are
bad. It is senior management and the systems they put in place. Systems that
are destined to fail and put profits ahead of customers
Johnson & Johnson
Johnson & Johnson is the world’s largest healthcare products
company. According to the AAJ, its products are responsible for 11 of the 17 top
products liability verdicts over the last two years.
Since October, we have been hot on the trail of Johnson
& Johnson for its baby
powder. To this day the company still refuses to acknowledge that its
powder is contaminated with asbestos. When applied to the genital area, women
can suffer from ovarian cancer.
Already juries have awarded billions of dollars against the
company to cancer victims (or their families, many victims have already died) for
its baby powder.
Johnson & Johnson and Bayer (parent of Monsanto) get a
special mention since they are the joint developers of an anti-coagulant drug Xarelto
that has been linked to thousands of deaths. The AAJ says that not only is Xarelto
dangerous, it is also no more effective than a low dose aspirin.
Thus far, Bayer and Johnson & Johnson have been able to
beat back the lawsuits against them. That includes getting a Pennsylvania
judge to set aside a $27 million verdict after a woman says she was injured
by the drug.
We believe there are another 20,000 lawsuits pending.
This is a case where we seek a whistleblower both with the potential
of earning an award (Xarelto is a Medicare covered drug) and to help patients
harmed by the product.
Whistleblower Reward
and Anti - Retaliation Laws
There are several whistleblower reward laws, all of which
are explained in detail on our website.
First is the False
Claims Act. This law covers losses suffered by federally funded programs. Government
backed residential mortgages, pharmaceuticals (Xarelto), defense contracts
(United) and federally backed student loans (Navient) are all examples where
the False Claims Act may apply. Under that law, whistleblowers may receive
between 15% and 30% of whatever is recovered from wrongdoers. Because the law
carries huge penalties and triple damages, large rewards are common.
The False Claims Act also has strong anti-retaliation
provisions including double damages and legal fees for employees who suffered
from retaliation.
Many states also have similar False Claims Acts for loss of
state and local funds.
We especially like the False Claims Act cases (often called Qui
Tam lawsuits) because they allow us to privately prosecute in the name of the
government even the Justice Department or state declines prosecution.
Another large whistleblower program is the SEC Whistleblower Program. This law
covers a wide array of corporate fraud including false books and records,
foreign bribery and securities law violations.
Like the False Claims Act, the SEC Whistleblower program has
strong anti-retaliation provisions. The law is also favored by whistleblowers
because they can usually remain completely anonymous.
The IRS Whistleblower
Program applies to cases in which companies or individuals intentionally evade,
fail to report or fail to pay taxes. Like the SEC program, whistleblowers can usually
remain anonymous.
FIRREA, short for
the Financial Institutions Reform
Recovery and Enforcement Act, allows whistleblowers to receive a reward of
up to $1.6 million. The law applies whenever someone defrauds a federal insured
bank or if the bank itself engages in illegal behavior.
We love the law because it has a 10 year statute of
limitations.
The Motor Vehicle
Safety Whistleblower law allows workers at auto manufacturers or parts
makers to receive rewards for reporting auto safety defects or attempts to conceal
those defects.
How to Become a
Whistleblower
If you made it this far, clearly you care about seeing
justice prevail and doing the right thing. We believe that whistleblowers are
true American heroes. We are successful only when you step forward. A simple
phone call can save lives, recover millions for taxpayers, help underwater homeowners
and often, put a check in your pocket*.
Have questions? Want to know if you have a case? We invite
you to contact us online, by email at [hidden email]
or by phone at (414) 704-6731.
All inquiries are kept completely confidential and are
protected by the attorney – client privilege. There is never a fee or obligation
for a consultation.
Katers & Granitz handles cases nationwide. Cases are handled on a
contingent fee basis meaning we don’t get paid unless we first win and collect
money for you.
*Obviously not every whistleblower receives a reward. Even
if you are not interested in a reward or don’t want to give your name, we still
want to speak with you. Perhaps you can steer us in the right direction or
provide anonymous information that will help in another case.