Whistleblowers watch from inside when a business receives stimulus money.  Whistleblowers, with their unique access to business operations, follow the money to learn whether the business abides by the strings attached to that money.  Whistleblowers look for an opportunity to cash in on what they consider fraudulent conduct.  What’s a business to do?

Strings Attached

We recently advised about the many strings attached to the trillions of dollars available from the stimulus packages.  Government watchdogs aggressively will scrutinize what happens to that money from the outside.  If they find fraudulent conduct, they will seek recovery under the federal False Claims Act (FCA) not just for the amount of loss to the government but for up to three times that amount (known as treble damages).

Whistleblower Incentives

Whistleblowers are employees on the inside who know what procedures are in place, what procedures they think should be in place, and the people to who make decisions about those procedures.  The FCA incentivizes whistleblowers to capitalize on their invaluable insight by filing a lawsuit (a qui tam suit) reporting what appears to be fraudulent conduct to the government watchdogs.  The rewards are great.  Whistleblowers receive 15% to 30% of the amount of any recovery.  In addition, the business is required to pay attorney’s fees to the whistleblower.

Those incentives work.  Whistleblowers are the source of most recoveries under the FCA.  We reported that qui tam law suits in 2019 were being filed at the rate of more than 12 per week.  Whistleblowers personally recovered more than $271 million in payments.  The government itself recovered more than $2.2 billion in those qui tam suits. This far outstrips direct enforcement actions brought by the government without a whistleblower.  Now that trillions of dollars are flowing, whistleblowers know the rewards are even greater.

Proactive Action

A business that needs a recovery stimulus should obtain the relief that is available. From small businesses, nonprofits, venture-backed startups, higher education institutions, and healthcare to trade, supply chains and defense, and other regulated industries, Squire Patton Boggs attorneys are here to help you receive the much-needed assistance.

But vigilance also is needed.  Prepare to account for the money received by, for example, ensuring

  • Protocols are established to handle the money
  • Compliance programs are in place
  • Compliance programs operate effectively
  • Clear and readily available channels handle complaints remotely
  • Tone at the top encourages employees to report problems to leadership

Our Government Investigations & White Collar team, with a combined decades-long experience can help you ensure the sufficiency of compliance programs now.  This proactive action will lessen the likelihood of scrutiny or, if there is scrutiny, minimize the negative fallout.