Does Whistleblowing Work?
Is whistleblowing an effective tool for the detection and prosecution of tax evasion, securities fraud, foreign bribery, money laundering, government contract frauds, or other significant economic crimes?
Yes. Whistleblowing has proven to be the single most effective tool in the detection of waste, fraud, and abuse in the public and private sectors. Public statements by responsible law enforcement officials, regulators, Congressional leaders, and independent experts confirm its effectiveness.
Regarding the qui tam and the False Claims Act, what information demonstrates that the qui tam whistleblower reward law works?
All of the top officials within the Department of Justice has praised the False Claims Act qui tam reward law. For example:
“Because those who defraud the government often hide their misconduct from public view, whistleblowers are often essential to uncovering the truth.”
- Acting Assistant Attorney General Chad A. Readler, Department of Justice, Civil Division, in a press release titled, “Justice Department Recovers Over $3.7 Billion From False Claims Act Cases in Fiscal Year 2017” (December 2017).
The False Claims Act whistleblower law is “the most powerful tool the American people have to protect the government from fraud.”
- Former Assistant Attorney General Stuart Delery – Remarks at American Bar Association’s 10th National Institute on the Civil False Claims Act and Qui Tam Enforcement (2014)
“[T]he False Claims Act has provided ordinary Americans with essential tools to combat fraud, to help recover damages, and to bring accountability to those who would take advantage of the United States government – and of American taxpayers.”
- Former Attorney General Eric Holder, U.S. Department of Justice, Remarks at the 25thanniversary of the False Claims Act (January 31, 2012).
“The False Claims Act and its [whistleblower] provisions remain the government’s most effective civil tool in protecting vital government programs from fraud schemes.”
- Acting Associate Attorney General Bill Baer, Remarks at American Bar Association’s 11th National Institute on the Civil False Claims Act and Qui Tam Enforcement (2016)
Whistleblower laws are “the government’s most potent civil weapon in addressing fraud against the taxpayers.” Acting Assistant Attorney General, Civil Division Department of Justice (Statement before the American Bar Association’s Ninth National Institute on the Civil False Claims Act and Qui Tam Enforcement, June 7, 2012)
“The taxpayers owe a debt of gratitude to those who often put much on the line to expose such [fraudulent] schemes.”
- Assistant Attorney General Jody Hunt – Remarks on the False Claims Act, DOJ Press Release (2018)
Blogs and reports:
Does the Dodd-Frank Act’s whistleblower reward law covering securities frauds, commodity frauds, and violations of the Foreign Corrupt Practices Act work?
Yes. All of the top officials responsible for these programs have recognized the tremendous impact and positive results of whistleblowing under the Dodd-Frank Act’s reward programs. For example:
The SEC “whistleblower program . . . has rapidly become a tremendously effective force-multiplier, generating high-quality tips, and in some cases, virtual blueprints laying out an entire enterprise, directing us to the heart of the alleged fraud.”
- Chairman Mary Jo White, Securities and Exchange Commission, Remarks at the Securities Enforcement Forum, Washington DC (October 2013)
“The Securities and Exchange Commission’s whistleblower program . . . has resulted in investigative staff receiving a substantial volume of high-quality information about potential securities law violations. It has allowed our investigative staff to work more efficiently and permitted us to better utilize agency resources.” Securities and Exchange Commission Chairman Mary Jo White, Testimony on “Oversight of the [Securities and Exchange Commission]’s Agenda, Operations and FY 2015 Budget Request” April 29, 2014
Whistleblower reward laws are “attracting high-quality tips and cooperation we might not otherwise receive.” Acting Director of the Commodity Futures Trading Commission’s Enforcement Division quoted in The Wall Street Journal, “CFTC Hands Out First Whistleblower Award” (May 20, 2014)
“[I]t makes no difference whether . . . the claimant was a foreign national, the claimant resides overseas, the information was submitted from overseas, or the misconduct comprising the U.S. securities law violation occurred entirely overseas.”
- Kevin M. O’Neill, Deputy Secretary, Securities and Exchange Commission, Order Determining Whistleblower Award Claim
“Whistleblowers, whether they are located in the U.S. or abroad, provide a valuable service to investors and help us stop wrongdoing… This award recognizes the continued, important assistance provided by the whistleblower throughout the course of the investigation.”
- Jane Norberg, Chief of the Office of the Whistleblower, Securities and Exchange Commission, Press Release on an award to an overseas whistleblower
Blogs and Reports:
Does the IRS Whistleblower Program cover tax evasion, money laundering, and illegal offshore banking work?
Yes. The IRS whistleblower program has resulted in the most significant tax fraud cases ever successfully prosecuted and billions of dollars in recoveries.
“The IRS’s serious efforts to combat offshore tax evasion… [were] brought to our attention… by whistleblowers…”
- John A. Koskinen, Commissioner of the IRS, Remarks before the U.S. Council for International Business-OECD International Tax Conference
Blogs and reports:
13.769 Billion Reasons to Thank Whistleblowers on Tax Day, by Stephen Kohn.
Not Just Whistling Dixie: The Case for Tax Whistleblowers in the States, by Dennis J. Ventry Jr.
Does the Act to Prevent Pollution from Ships (APPS) whistleblower reward program Work?
Yes. The officials at the Department of Justice responsible for prosecuting APPS ocean pollution cases have confirmed that the whistleblower reward program is the backbone of the ability to successfully prosecute these cases.
“Absent crew members with firsthand knowledge of the illegal conduct coming forward, APPS violations are extremely difficult to uncover.”
- (U.S. v. Noble Drilling) Press Release: Drilling Operator Sentenced for Environmental and Maritime Crimes in Alaska, Dep’t of Just. (December 19, 2014), https://www.justice.gov/usao-ak/pr/drilling-operator-sentenced-environmental-and-maritime-crimes-alaska
“Information of this nature is otherwise difficult, if not virtually impossible to obtain [without help from the whistleblower].”
- S. v. Consultores De Navegacion, S.A., 1:08-cr-10274 (D. Mass. 2009)
It “is beyond dispute” that the whistleblower “provided substantial information that led to the investigation and conviction of all defendants in this matter,” that “[t]he government was otherwise unaware of this crime and unlikely to learn about it” and that “[t]he[ whistleblower’s] photographs and documents were essential tools in the interviews of other witnesses and in securing guilty pleas from the defendants.”
- S. v. Efploia Shipping Co., S.A., 1:11-CR-00652 (D. Md. 2012)
Blogs and Reports:
Does whistleblowing work outside of the United States?
Yes. Read Stephen Kohn’s article on The Rise Of International Whistleblowers: Qui Tam Rewards For Non-U.S. Citizens.
Have Congressional leaders acknowledged the impact whistleblowers have in fighting fraud and corruption?
Yes. Members of both parties have advocated for the continued protection of whistleblowing.
Members of Congress speak to the valuable role whistleblowers play uncovering fraud in the federal government:
“Empowering these whistleblowers to prosecute fraud proved to be smarter, faster, and more effective than just relying on the government.”
- Senator Charles Grassley, Chairman of Senate Judiciary Committee, speech given on National Whistleblower Day (July 30, 2018) — Read the Speech
“The cornerstone of democracy is still an informed public.”
- Ron Wyden (D-Oregon), Vice-chairman of the Senate Whistleblower Protection Caucus:
“We, Congress, count on Inspectors General and on whistleblowers to step up and do the right thing. You are the eye and ears on the ground. Without you, we cannot do real oversight.”
- Senator James Lankford (R-Oklahoma)
“These individuals, who are… making this nation more prosperous, safer and more secure, the least they can expect is that people hear them out, and that they won’t be retaliated against if and when they bring an issue to the (fore)front.”
- Ron Johnson (R-Wisconsin)
“And without these courageous individuals, Congress would not be able to fulfill its constitutional duty to serve as a check and balance on the executive branch, the very foundation of our democracy.”
- Representative Elijah Cummings (D-Maryland)
Have independent academic researchers confirmed that whistleblowers are essential to an effective anti-corruption program?
Yes. Multiple reports have proven that whistleblowing is highly effective in rooting out waste, fraud, and abuse.
“A strong monetary incentive to blow the whistle does motivate people with information to come forward. Monetary incentives seem to work well, without the negative side effects often attributed to them. Employees clearly have the best access to information.”
- Alexander Dyke, et al., “Who Blows the Whistle on Corporate Fraud? University of Chicago Booth School of Business
“Honest behavior is not rewarded . . . Given [the] costs [of whistleblowing] the surprising part is not that most employees do not talk, it is that some talk at all.”
- Alexander Dyck, et al., “Who Blows the Whistle on Corporate Fraud?” The University of Chicago Booth School of Business Working Paper No. 08-22 (2009).
Blogs and reports:
The Impact of Whistleblowers on Financial Misrepresentation Enforcement Actions. Andrew C. Call, Gerald S. Martin, Nathan Y. Sharp, Jaron H. Wilde.
Who Blows the Whistle on Corporate Fraud?” The University of Chicago Booth School of Business Working Paper No. 08-22 (2009)
Saving America’s “Most Important Tool to Uncover and Punish Fraud:” 25 Facts That Rebut the Chamber of Commerce’s Proposal to undermine the False Claims Act, National Whistleblower Center (July 30, 2014)
Does an effective whistleblower reward law deter fraud from being committed?
Yes. A letter to the U.S. Securities and Exchange Commission (SEC), thoroughly explains the role of whistleblowing in deterring white-collar crime. The specific acts studied demonstrates that whistleblowers play an incredibly important role in preventing major economic crimes, starting on page 5.