by Brian Mahany
We have long called whistleblowers the new American heroes. It’s must be awful lonely to stand up against a huge multi-national corporation and defend what is right. More and more people are doing it, however. Unfortunately, sometimes big business thinks they are above the law and retaliate.
Recently, HSBC was in the news after having agreed to pay a record breaking $1.9 billion settlement for allegedly helping terrorists and drug cartels launder money. We covered that story earlier this month; you can read our thoughts here and here. It was with dismay, then, when we read that a former HSBC vice president says he was fired for blowing the whistle on the bank’s money laundering activities.
John Cruz is a former vice president of HSBC. He claims that the bank knew at least since 2008 (when he was hired) that some managers were actively helping launder money through the bank. In early 2009, Cruz claims he was assigned an account valued at $850 million. Considering that a very large account, Cruz did what any smart banker would do; he went to visit the business. Unfortunately, no one had heard of them at the address they listed on account documents. The more Cruz began to dig, the more suspicious he became. Ultimately Cruz reported his findings to senior management.
Was HSBC thankful that Cruz identified possible money laundering? Of course not. Cruz’ boss told him that he was not to ask any more questions and risk losing an $800 million account.
Lest you think this is much ado about nothing, federal law requires banks to maintain active anti-money laundering (AML) protocols and to promptly report suspicious transactions to the Treasury Department. Thousands of Mexican police officers and U.S. troops have lost their lives combatting drug cartels and terrorists. Ask the family member of a dead soldier if HSBC’s actions were much ado about nothing.
Cruz claims he was ultimately fired for trying to alert his superiors about illegal money laundering. Although his amended complaint was just filed two weeks ago, the fact that U.S. prosecutors recently settled a huge money laundering investigation with HSBC certainly lends some credence to his story. He also claims in his complaint that he taped his conversations with senior management.
We understand that being a whistleblower is not an easy burden. While good companies genuinely appreciate it when an employee comes forward and reports illegal activity or waste, very often the greedy ones do not.
Many think of whistleblowers as workers simply seeking a handout by trying to receive an award from the federal government under the false claims act or SEC whistleblower program. As the Cruz case demonstrates, however, most employees do go through company channels first before filing a formal complaint. Companies that retaliate violate federal law and may find themselves facing both government action and a civil suit. In addition to the $1.9 billion settlement with the feds, Cruz is suing for over $10 million on his retaliation claim. Hopefully these numbers will cause HSBC to think twice before ignoring warnings from employees.
The whistleblower lawyers at Mahany & Ertl help clients with federal and state false claims act filings as well as IRS and SEC whistleblower cases. Unlike many law firms, we also stand behind our clients in the event there is retaliation.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and coming soon, San Francisco, California. Services available in most jurisdictions.