Perhaps the most effective and least emotional way to cover government budget deficits is not to collect more taxes, but rather to collect more damages from massive fraud by government contractors. Could it be that the conflicts within the Department of Justice (DOJ) and local prosecutors nationwide in the United States Attorney’s Offices (AUSA) have been far too lenient over the years despite the False Claims Act ( FCA)? There is more money to be had and, in the process, could serve as a deterrent for fraud and waste.

The FCA has been an effective weapon in the fight against fraud. President Lincoln signed the FCA Act on March 2, 1863. Also known as “Lincoln’s Law,” the original FCA prohibited various acts aimed at fraudulently obtaining government money. Congress initially adopted the FCA with the intention of combating fraud against the Union Army during the Civil War. Although the legislative history of the Act has focused on fraud committed by military contractors, it applies to all types of fraud committed by anyone doing business with the government.

I spoke with Joel Androphy, Berg and Androphy about FCA and ways to improve it. “The law is obviously well-intentioned and it worked, but it was more of a cost to doing business than the deterrent it was meant to be,” Androphy told me. The FCA now covers a wide range of businesses that have signed contracts directly with or receive money through government funds. Besides military fraud, fraud involving Medicare, Medicaid has been one of the biggest areas of application. Far from having large government labor agencies at the head of the prosecution, individuals have been the cornerstone of this type of enforcement by becoming whistleblowers, giving inside information to the government not only to right the wrong of the company, but to share the reward of a fine or penalty. These types of whistleblower lawsuits, known as “qui tam,” provide a clawback to the government while sharing a percentage of that clawback with the person talking about the business. While one would expect the targeted companies to have a negative, or hostile, opinion of the individual who disclosed their corrupt secrets, one would not expect the government agents dealing with of cases have the same opinion. Androphy told me that is exactly what happened.

In the biggest whistleblower case of all time, the US government actually jailed the lead whistleblower, Bradley Birkenfeld, in what became the biggest Internal Revenue whistleblower case ever … Birkenfeld worked for UBS and its testimony and cooperation led to the return of billions of dollars to the US Treasury. The results of this investigation have borne fruit not only in recovered dollars, but also thanks to the dissuasive effect which has repercussions on the 1% of the largest American employees.

Despite the enormous repayment potential of our treasury and providing much needed services to pay for infrastructure, police reform, and the health needs of the poor, US Senator Charles Grassley (R-Iowa) is the only voice in Congress supporting the efforts of taxpayers to recover for fraud. Beyond him is a small boutique law firm that represents whistleblowers, usually on a contingent basis, meaning the lawyers themselves pay the legal bills for a chance at a big turnaround. This can be a risky business since some of these litigation can cost millions of dollars before there is a judgment … if there is a judgment. Androphy said: “While there are some big cases that can be rewarding, the payoff is not guaranteed and is certainly paltry compared to the money the US government receives for fines and penalties.”

Some of these cases can take 3 to 5 years, many due to government delays. There is also an inherent conflict. Androphy said: “As much as Senator Grassley has been a great leader in this process to support this cause, so many of our politicians, backed by lobbyists, are busy on the sidelines looking for campaign contributions. from the same entrepreneurs who are involved in the qui tam cases. Unfortunately, that is how the system is set up. Delays in the qui tam process are costing us billions, and the reasons for these delays are perhaps more sinister.

If a government contractor falsifies prices or fails to deliver what was promised, the whistleblower on behalf of the government will bring a confidential (under seal) action against the violator. While the general intention of Congress was to encourage more private prosecutions, the government feared that the FCA’s actions, if not sealed, could warn defendants of potential criminal investigations. This retaliation and the likely prospect of a lost career are the main motivating factor in encouraging someone to come forward.

Congress estimated that an initial period of 60 days would be sufficient for the government to make decisions with the prospect of some extensions in limited circumstances. Today, the Justice Department is simply shuffling the documents for the 60-day period, fully expecting the courts to give it years to pull itself together and investigate properly. Despite these inefficiencies, billions of dollars fraudulently transferred have been clawed back by the US government.

There are excellent attorneys for the Department of Justice in Washington, and US assistant prosecutors across the country, but there is conflict surrounding it as well. The same government prosecutors will likely one day quit their posts and turn to a private, established law firm that represents those same fraud-torn industries. This conflict alone should make us think that the system needs to be improved.

Androphy said he too often hears the same excuses as to why his business is not moving so fast; (1) we should not collect more money for fear of harming the government agency relationship with the fraudulent company. Let us punish a few, but keep them in business since they do some service, even dishonestly; (2) the victim support organization approved the payment knowing that the service was not provided; (3) there may have been a misunderstanding or confusion leading to overcharging or cheating; (4) the wrongdoers will force us to stand trial and we could lose, risking our advancement or our career; or (5) we don’t want to plead anything and will close the best and fastest deal.

If the DOJ simply followed the law and behaved ethically and responsibly, several billions more could be clawed back each year and enough to provide a solid down payment to President Biden’s agenda to rebuild the United States, both morally and structurally.

Over the past 10 years, the Justice Department has raised an average of FCA business $ 2.9 billion annually from companies totaling nearly $ 29 billion. I asked Androphy if he thought it was a lot of money, “I would estimate the United States is cheated at least 7 times that amount for not recovering all of the actual damage, tripling that amount and penalties. That’s an additional $ 20 to $ 30 billion each year that would go a long way to put money into the Consolidated Revenue Fund while deterring fraud, no more waste.

One solution offered by Androphy to correct the process is a suggestion that Congress reorganize the FCA to allow private attorneys to work with local U.S. prosecutors’ offices to independently conduct all cases and investigations, leaving the Department of Justice in a role. monitoring / status. “This,” Androphy said, “would help with case development while keeping the government in the loop, as it collects an average of 75 to 85% of any recovery.”

No more money in American coffers.


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