In recent months we have railed against the lack of criminal prosecutions tied to the economic meltdown. While tens of millions of Americans remain unemployed (or underemployed / working for significantly less pay / upside down on their mortgages), no executives from America’s Too Large To Fail, Too Large To Jail banks are behind bars. Yes, the FBI and the Mortgage Fraud Task Force have a few notches on their belt. Mostly low level fraudsters. The country club set has thus far been spared from prosecution.
Why? Good question. Senator Elizabeth Warren and many other have been asking that question. We think we know the answers. Not enough whistleblowers.
It’s easy to blame the FBI and federal prosecutors but that isn’t where the problem lies. (Manhattan’s U.S. Attorney Preet Bahara has been one of the shining examples of prosecutors actively targeting the upper echelons of the banking underworld.)
Early in life I was a police officer while attending law school in New Orleans. Then, as now, “beat cops” knew their neighborhoods and knew the troublemakers. FBI and IRS special agents don’t walk a beat. They rely on referrals to build their cases. A prosecutor in New York City may be thousands of miles away from the board rooms of America’s biggest banks. The inner corporate world is much more opaque as well.
The failings have been from the alphabet soup of regulatory agencies. The FDIC, OCC, Fed, etc should be the source of prosecution referrals. They are not. That leaves a huge gap in the reporting system. One that has largely been filled by whistleblowers.
Whistleblowers are an a odd lot of people. We know as we represent many of them. On the one hand they are true patriots and possess both a profound sense of right and wrong and the desire to stand up for what they believe. Unfortunately, they are also a lonely lot.
Corporate America despises whistleblowers and few want to hire one. Becoming a whistleblower could mean one is ostracized from their peers. The higher up the food chain, the more the danger of being branded a troublemaker. We know one woman who has sent out over 900 resumes since becoming a well known whistleblower – and losing her job.
The federal False Claims Act and FIRREA (the Financial Institutions Reform, Recovery and Enforcement Act) offer whistleblowers a significant cash award for coming forward. The SEC and IRS also have whistleblower programs that pay rewards, the latter offering better confidentiality and anonymity.
Federal law and most states also protect whistleblowers from retaliation. Whistleblowers who have lost their jobs, however, will tell you that those laws mean little when trying to find work with a new employer.
Until the revolving door between the regulators and regulated stops revolving, we expect to see little in the way of criminal referrals from federal regulators. Don’t blame prosecutors and the law enforcement community, however. Until things really change in Washington, expect whistleblowers to continue leading the battle.
To qualify as a whistleblower, one must have non public, “original source” information about a fraud to taxpayers or a taxpayer funded program such as Medicare or FHA mortgage insurance. If you wish to become a whistleblower and think you have a false claims case, give us a call. We represent whistleblowers and help them stop fraud and collect the largest award possible.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Minneapolis, Minnesota; Portland, Maine and San Francisco, California. Services available in many jurisdictions.
Want more information? Our Due Diligence blog has a search engine located in the upper right hand corner. We have posted hundreds of informative articles on our site.
Posted by Brian Mahany, Esq.