The U.S. Securities and Exchange Commission approved rules on May 25, 2011 that could make it very lucrative for Wall Street and other corporate insiders to alert the agency to securities fraud. Under the new rules, whistleblowers will be entitled to receive 10 to 30 percent of the money they help the S.E.C.
In a recently-unsealed filing, California became the second state to join in a False Claims Act whistleblower lawsuit originally brought in 2007 against Education Management Corporation (“EMC”), a for-profit college company that operates 14 campuses in California under the “Argosy University” and “Art Institute” brands.
In a speech delivered on Monday, May 24, 2011, California Attorney General Kamala Harris promised that her newly-formed Mortgage Fraud Strike Force would employ the state’s “robust” False Claims Act to hold those who commit mortgage fraud accountable.
On May 13, 2011, in a case of apparent first impression, Judge John Gleeson of the United States District Court for the Eastern District of New York held that medical services defendants may not implead their billing company where the Government, after intervening in a False Claims Act suit, asserts claims for unjust enrichment and payment by mistake.
With great anticipation, the SEC adopted its final regulations governing the new whistleblower program under the Dodd-Frank financial reform legislation. Most significantly, the SEC did away with a proposed requirement that whistleblowers first report wrongdoing internally before reporting to the SEC, despite strong opposition from corporate lobbyists.
Allegheny County, Pennsylvania became the first municipal government in Pennsylvania and the fourth nationwide to adopt a false claims act. The new ordinance, based generally on the Federal False Claims Act allows a private individual to file a complaint for false claims after the county Solicitor has investigated the allegations of the complaint and declined to intervene.
According to a report in the Huffington Post, recent confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans.
In Schindler Elevator v. United States ex rel. Kirk, the United States Supreme Court held that a federal agency’s written response to a FOIA request for records constitutes a “report” within the meaning of the False Claims Act’s public disclosure bar.
Changes to the law in 2006 guaranteed whistleblowers between 15 and 30 percent of any IRS recovery based upon information provided by a whistleblower. More recent changes guarantee that the IRS receives its cut of these whistleblower payouts. The IRS has announced that it intends to withhold taxes from the whistleblower award payments that it makes.
United States Attorney Stephen J. Murphy and the Department of Justice announced that ABN AMRO Mortgage Group, Inc. (ABN) has agreed upon a settlement with the United States government valued at over $41 million evolving from a False Claims Act case in connection with over 28,000 federally insured mortgages. This payment by ABN is one of the largest ever acquired in a civil settlement by the U.S.
If you are aware of any person, corporation or entity that you think may be violating the Federal False Claims Act or a State False Claims Act, contact us today.