by Brian Mahany
Last week I was in Detroit for business. As I drove by the U.S. courthouse, I remarked at the half dozen news vans parked outside the building. The taxi driver reminded me of the on-going criminal corruption trial of former Detroit Mayor Kwame Kilpatrick. Detroit residents know all about corruption. Unfortunately, Detroit is not alone. Growing up I remember when both of Jersey City, New Jersey’s mayoral candidates were under indictment. It doesn’t inspire confidence in government.
There is a difference between inept politicians and those truly corrupt. Corruption usually means insider deals, payoffs and bribes. In the end, the taxpayers always suffer.
Usually we write whistleblower articles about the federal false claims act. The federal law, introduced in 1863 by Abraham Lincoln, was passed during the Civil War era when the national treasury was broke (times haven’t changed much). The government needed help pursuing vendors that sold rancid rations and bad ammunition to the Union army. The law allowed ordinary citizens with inside information to become “mini attorney generals” and file suits in the name of the government. If successful, they were able to keep a portion of the recovery.
To date, most whistleblowers filing claims under the federal false claims act are private sector employees who have grown tired of double billing or fraud. Given that more than half the states and several major cities (DC, Chicago and New York City) have their own whistleblower laws, we believe that those local false claims act laws can be a powerful tool against corruption.
Although I have not followed the Kilpatrick trial (he wasn’t the first Detroit mayor to be indicted and probably isn’t the last), I am familiar with the facts of the case. The U.S. Attorney and IRS say he had hundreds of thousands of dollars in unreported income. Income that probably came from bribes and kickbacks. (Kilpatrick has various explanations including birthday presents.)
Whenever corruption exists there is a good chance that the city or state is being billed for services not provided or for substandard services. The money to pay for the kickbacks is coming from someplace. Each of these incidents is a potential false claims act filing for an alert and community minded whistleblower.
So how does this work? The state and local acts vary widely. In Michigan’s case, the law is applicable to health care claims only. Note that although some local laws are quite limited, we have found that whenever state money is involved, federal funds are probably implicated as well.
To qualify for the false claims act, whistleblowers generally need information not available to the general public. That means you can’t file a claim based on something you read about in the paper.
The second requirement is that there must be a loss to taxpayers. If state or federal funds are involved, it’s a good bet that you have a claim.
Why should anyone consider being a whistleblower? Civic duty and cash.
We believe that whistleblowers are the new American heroes. Honest, hard working people tired of watching others cheat the system. If that isn’t motivation enough, whistleblowers can receive an award of up to 30% of what the government gets back. With some laws allowing triple damages, the size of the award can get pretty big.
How big? Some whistleblowers have received over $100,000,000!
The Michigan false claims act wasn’t designed to clean up government corruption. But by going after the companies that participate in the corruption, it can be a powerful tool in the right circumstances.
If you think you have a potential false claims case, contact attorney Brian Mahany. Our whistleblower lawyers are involved in a wide variety of cases from cases against hospitals to major banks and mortgage lenders. Brian can be reached at or by telephone at (direct). All calls are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and coming soon San Francisco, California. Fraud recovery available in many jurisdictions.
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