Former Bank Internal Auditor Brings Interesting Whistleblower Case

This week a former Bank of Internet USA internal auditor brought forth a whistleblower law suit alleging that the bank hid information from the government and then threatened, harassed, and fired him for speaking up about the wrongdoing.    The bank, located in San Diego, boasts that it is “America’s Oldest and Most Trusted Internet Bank.”   The Complaint alleges otherwise.

The Whistleblower, Charles Matthew Erhart, claims that the bank submitted false reports to the Securities and Exchange Commission (SEC) and omitted from disclosing required reports about loans it made to criminals and foreign nationals.  When Erhart claims that he uncovered these illicit financial activities, the bank, in an egregious manner, discredited him and even threatened to have him arrested in retaliation (a clear violation of the Sarbanes-Oxley and Dodd-Frank Acts).

In one of the allegations, Erhart claims that the bank had accounts with no tax identification numbers while attesting to federal regulators that it did not have these accounts.  These types of required disclosures, especially for high-risk customers who may participate in illegal and criminal activities, went unreported.

Whistleblowers are protected under the Deficit Reduction Act (DRA), False Claims Act (FCA), Fraud and Enforcement Recovery Act (FERA), and the Patient Protection and Affordable Care Act (ACA) against retaliation.  For instance, the FCA protects whistleblowers from retaliation by the employer in terms and conditions of employment as result of an employee, contractor or agent’s lawful act aimed to stop an FCA violation.  Relief may include reinstatement, two times back pay, interest, special damages, litigation costs and reasonable attorneys’ fees.  (31 U.S.C. 3730(h).)  See the following link for a list of laws protecting workers against retaliation.

In addition, Title VII prohibits employers from retaliating against employees based on their opposition to employment discrimination or complaint of discrimination. (42 U.S.C. § 2000e-2, 3(a).) Other types of anti-retaliation statutes are included in the Fair Employment and Housing Act (Gov. Code 12940 et seq.) and the Fair Labor Standards Act. (29 U.S.C. 201 et seq.)  See these other blogs for examples of retaliation and whistleblower protections.

If you suffered an employment-related action related to your employee rights, or know of possible retaliation after reporting illegal or discriminatory conduct to government regulators, prompt action to preserve your rights is crucial.  Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.