As we have previously reported, whistleblower cases are on the rise across the nation and throughout California. These types of cases are some of the most complicated cases in the employment law arena, largely because employers will do whatever they can to cover up the truth, fact patterns of illegal behavior often extend back years, if not decades, and in order to file a proper whistleblower claim, the participation of various government agencies is essential. And anytime a government agency is involved, a case becomes a thousand times more complicated!
The reason payouts on some of these cases are so high, is because most watchdog agencies (like the IRS, the Department of Justice, and the Securities Exchange Commission) have sharing provisions whereby whistleblowers can claim a percentage (often between 15-30%) of the final judgment or settlement.
In a recent case against GlaxoSmithKline (GSK), the company and one of its subsidiaries were ordered to pay out over $750 MILLION DOLLARS! The whistleblower in that case, an employee named Cheryl Eckard, filed the lawsuit under the Federal False Claims Act, and received approximately $96 million as her share of the settlement.
In another, now-famous case, a former banker at UBS, Bradley Birkenfeld conspired with the bank and with a wealthy California developer to evade US taxes, filed a whistleblower complaint against the bank and divulged a widespread scheme by the bank to help its US clients avoid paying taxes. The bank was required to pay out over $780 million dollars and to turn over records on approximately 4,500 American clients who had been involved in the tax evasion operation.
Mr. Birkenfeld, himself sentenced to two and a half years in prison for his part in the scheme, recovered a $104 million dollar award for his involvement in the lawsuit. I.R.S. spokesmen said that the information provided by Mr. Birkenfeld was so helpful that it justified the huge payout. His participation led to an investigation that diminished Switzerland’s status as a secret haven for American tax cheats and allowed the Treasury to recover billions of dollars in unpaid taxes, a spokesperson said.
According to the report the disclosure of closely held secrets of Swiss banking caused a fierce political debate in Switzerland and set off such a panic among wealthy Americans that more than 14,000 of them joined in a tax amnesty program. I. R. S. officials said the amnesty program helped to recover more than $5 billion in unpaid taxes.
The I. R. S. revamped its whistleblower program in 2006 to allow for higher percentage shares with potential whistleblowers. Though the Birkenfeld payout was the single largest in US history, its return on investment in this particular case came out pretty well for the Treasury Department.
Though Birkenfeld participated with, and was essential for the prosecution of the UBS case, he is hardly the poster-boy for honest, civically minded citizens. By his own admission, he recruited American clients for UBS for more than 5 years, and once smuggled diamonds for a client in a tube of toothpaste.
The staggering amount money recovered by the I. R. S., however seems to be the bottom line, as Birkenfeld is being paid approximately $4,600 per HOUR that he sits in jail for his part in the banking scandal.
Of course, I am sure the I. R. S. will be collecting its share of that taxable income on Mr. Birkenfeld’s tax return.
The healthcare and tax sectors are not the only areas that result in large whistleblower claims. In fact, any industry that has the government as a client lends itself to the potential for fraud. Stephen Danz & Associates has decades of experience in filing and managing whistleblower cases. If you think it is safe to simply rely on government prosecutors to protect your interests, you may wind up simply holding the bag. There are cases where whistleblowers have been left out in the cold by unscrupulous prosecutors who allow defendants to plead to lesser charges and pay hefty fines, but avoiding the sharing of the ultimate awards.
Stephen also has over 30 years of experience in protecting potential whistleblowers from retaliation and wrongful termination by their employers. Whistleblowers are specifically protected by statute from any type of retaliatory behavior on the part of their employers either before, during or after the investigation and prosecution of the case.