Can I Serve as a Whistleblower if I Participated in Fraud or Other Wrongdoing?

If you participated in fraud or other wrongdoing and are now interested in coming forward, can you still serve as a whistleblower? Or, does your involvement preclude you from qualifying as a whistleblower under federal law?

In most cases, participating in the fraud or other wrongdoing you are prepared to disclose does not disqualify you from securing protected whistleblower status. The federal government relies heavily on whistleblowers to come forward, and it is willing to overlook transgressions by “culpable whistleblowers” in many cases.

What You Need to Know About Serving as a “Culpable Whistleblower”

If you are prepared to serve as a culpable whistleblower, it will be critical for you to make informed decisions about your next steps, and there are several important facts you need to know. Most importantly, if you are eligible to serve as a culpable whistleblower:

• You are entitled to confidentiality;
• You are entitled to protection against retaliation; and,
• You may be entitled to a monetary award if your whistleblower complaint leads to a successful enforcement action.

The U.S. Department of Justice (DOJ) makes this latter point clear, stating, “If your minimal role in the criminal activity was sufficiently limited that you could be described as ‘plainly among the least culpable of those involved in the conduct of a group,’ . . . you may be eligible for an award.” Under its under Corporate Whistleblower Award Program, the DOJ accepts whistleblower complaints involving financial fraud, healthcare fraud, and domestic and international corruption.

Similarly, the U.S. Securities and Exchange Commission (SEC) has stated, “while there are safeguards . . . to ensure that whistleblowers do not profit from their own misconduct, including where they substantially directed, planned or initiated the misconduct of an entity, or conduct for which they are criminally convicted, culpable whistleblowers can still get paid for eligible information they report that falls outside of these limitations.” This applies to all forms of securities fraud committed by issuers, broker-dealers, and other parties.

The Internal Revenue Service (IRS) goes one step farther. Under the IRS’s whistleblower program, “[t]he award percentage decreases . . . [only] if the whistleblower planned and initiated the actions that led to the noncompliance.”

Thus, not only can individuals who participated in fraud or other wrongdoing serve as whistleblowers, but they can still qualify for monetary awards under a wide range of circumstances. While culpability can be a factor in determining a whistleblower’s award amount, it is just one factor of many, and whistleblower awards have the potential to be substantial in nearly all cases.

To be clear, culpability does not impact your eligibility for the confidentiality and anti-retaliation protections that are available to federal whistleblowers. If you qualify to serve as a whistleblower—and if you come forward through the appropriate means—you will be entitled to these protections regardless of your level of involvement in the underlying misconduct.

Blowing the Whistle Can Also Mitigate (or Eliminate) Individuals’ Exposure to Civil or Criminal Penalties

What about facing prosecution for your role in the underlying misconduct? If you voluntarily disclose your involvement to the government, can the government use the information you provide to seek civil or criminal liability?

While individuals who are eligible to come forward under the DOJ’s Corporate Whistleblower Award Program will not be at risk of facing prosecution in most cases, the DOJ also clarifies that, “[i]f the Department determines that you are ineligible for the Corporate Whistleblower Awards Pilot Program on account of your culpability in the reported scheme, the Department will assess whether you . . . qualify for a non-prosecution agreement . . . .” Similarly, in cases involving whistleblower complaints filed under the SEC’s whistleblower program, the SEC, “will take [a culpable whistleblower’s] cooperation . . . into consideration in deciding what remedies, if any, are appropriate in any action we determine should be brought against the whistleblowers for their role in the scheme.”

If you may be at risk of facing civil or criminal liability, our whistleblower lawyers can communicate with the appropriate federal authorities on your behalf before disclosing your identity and filing your whistleblower complaint. This way, we can help you feel confident in your decision to come forward (if this is ultimately what you choose to do); and, if necessary, we can negotiate with the appropriate federal authorities to seek a proactive resolution that protects you against the risk of facing charges.

Options for Coming Forward as a Culpable Whistleblower

Like all prospective whistleblowers, individuals who participated in the fraud or other wrongdoing they are prepared to disclose have several potential options for making their disclosures to the federal government. Depending on the nature of the fraud or other wrongdoing you are prepared to disclose, your options may include one or more of the following:

• Filing a Qui Tam Lawsuit Under the False Claims Act – The False Claims Act covers all “false and fraudulent claims” submitted under federal contracts, grants, and programs. This includes claims submitted under Medicare and Medicaid, other government benefit programs, and contracts and grants awarded by all federal agencies. It also covers “reverse false claims,” such as failure to pay U.S. customs duties and tariffs when required.
• Filing a Whistleblower Complaint with the DOJ – Under its Corporate Whistleblower Award Program, the DOJ accepts whistleblower complaints in cases involving fraud perpetrated by and against financial institutions and healthcare providers, as well as cases involving both domestic and international corruption. As is the case with all federal whistleblower programs, both current and former employees are eligible to come forward.
• Filing a Whistleblower Complaint with the SEC – The SEC accepts whistleblower complaints involving securities law violations committed by corporate entities, brokerage firms, and other entities and individuals involved in the U.S. securities markets. It relies heavily on whistleblowers, and it has paid many of the largest whistleblower awards in U.S. history.
• Filing a Whistleblower Complaint with the IRS – The IRS accepts whistleblower complaints involving all forms of corporate tax evasion and tax fraud. Tax-related offenses are generally excluded from the False Claims Act, so whistleblowers who have information about these offenses must generally come forward under the IRS’s whistleblower program.
• Filing a Whistleblower Complaint with Another Federal Agency – The U.S. Commodity Futures Trading Commission (CFTC), Financial Crimes Enforcement Network (FinCEN), and several other federal agencies maintain active whistleblower programs as well. These agencies are also generally willing to work with culpable whistleblowers, and our whistleblower lawyers have experience working with agencies across the federal government.

Our whistleblower lawyers can help you decide whether to blow the whistle; and, if you decide to come forward, we can communicate with the appropriate federal authorities on your behalf throughout the process. We represent all whistleblowers on a contingency-fee basis, which means that you will not have to pay out-of-pocket for our legal advice and representation.

Factors Considered in Determining Culpable Whistleblower Awards

As we discussed above, one of the primary differences between cases involving culpable and non-culpable whistleblowers is that culpable whistleblowers may only be eligible for reduced monetary awards. Under all federal whistleblower programs, monetary awards are calculated as a percentage of the funds the government recovers (if a whistleblower’s case is successful).

These percentages generally range from 10% to 30% of the amount recovered, and a whistleblower’s culpability can lead to a reduced reward. However, federal authorities consider several other factors when calculating whistleblower rewards as well. This means that regardless of the circumstances of your case, there are steps you can take to help maximize your award eligibility (if you choose to do so).

Examples of factors that can increase the amount of a whistleblower award include:

• How quickly the whistleblower comes forward;
• Whether the whistleblower took any steps to report the fraud or other wrongdoing internally;
• The value of the taxpayer losses involved or the severity of the public health or safety issue in question;
• The volume of information provided in the whistleblower’s initial filing; and,
• The whistleblower’s level of cooperation and involvement during the government’s investigation.

Along with a whistleblower’s culpability, factors that can decrease the amount of a whistleblower award include:

• Any unnecessary delays in reporting the fraud or other wrongdoing;
• The extent to which any unnecessary delays led to additional harm;
• Any failures to comply with the procedural requirements for serving as a whistleblower;
• Any material oversights or omissions in the whistleblower’s initial filing; and,
• Any other oversights or mistakes that compromise the government’s ability to pursue a successful enforcement action.

Once you get in touch, our lawyers will be able to work with you to help ensure that you feel confident in your next steps; and, if seeking a monetary award is among your priorities, we will take this into account throughout the course of our representation. To start the process, contact us for a free and confidential consultation today.

Need to Know More? Schedule a Free and Confidential Consultation with a Senior Whistleblower Lawyer Today

Do you need to know more about serving as a whistleblower after participating in the fraud or other wrongdoing you are prepared to disclose? If so, we encourage you to contact us promptly. Call 888-680-1745 or contact us online to speak with one of our senior lawyers in confidence as soon as possible.