While millions of Americans were glued to their televisions last night waiting to see if Hillary or Donald Trump won the presidential election, there were over $200 billion of transportation referendums on local ballots nationwide. I watched the election from my hotel room in Los Angeles where a $100 billion ballot measure passed with 70% of the vote. In Indianapolis, voters passed a smaller transportation bill with 57.8% of the vote. Other measures were on the ballot in Charleston, Seattle, the Detroit metropolitan area, Flagstaff, Spokane and Atlanta. (Early election results suggest that measures in Sacramento and San Diego narrowly failed.)
Beyond the local ballot referenda, we also heard President Elect Donald Trump say in his early morning victory speech that he was planning on spending billions to fix America’s road, bridges and other infrastructure.
With all that new spending, fraud is bound to follow. In transportation projects, we have already seen massive fraud involving foreign steel. U.S. law requires that American made raw materials must be used in construction projects funded with tax dollars. The Buy America Act, Buy American Act, and transportation spending bills all require U.S. made goods including steel.
Earlier this year, the Justice Department obtained $3 million from Novum Structures LLC for using Chinese steel in various government projects and mislabeling it as made in America. The whistleblower who first reported the company was awarded $400,000. [MahanyLaw served as lead counsel for the whistleblower in the Novum case.]
Why do contractors use Chinese steel? Because it is cheaper!
Why should we care? With 95 million Americans out of work or underemployed, preserving and developing American jobs is critical. When Novum was prosecuted, Acting U.S. Attorney Gregory Haanstad said,
“Domestic preference statutes are designed to promote American businesses and to protect U.S. economic interests. When companies subvert those interests by violating ‘Buy American’ provisions – and when they undertake efforts to conceal that they have done so – all in an effort to improperly advance their own private financial interests, the U.S. Attorney’s Office will pursue all appropriate criminal and civil sanctions.”
Many would-be whistleblowers have been afraid to step forward. Even though the federal False Claims Act has powerful anti-retaliation provisions, people remained afraid. Until now. Whatever your political stripe, this election made it clear that Americans are angry and they are willing to stand up for what their beliefs.
Whistleblowers and the False Claims Act
Whistleblowers who file claims under the False Claims Act may be eligible to earn an award of up to 30% of whatever the government collects from wrongdoers. Earning an award requires inside information about fraud involving federal programs or tax dollars.
Because transportation and other infrastructure spending involves federal tax dollars, any type of fraud involving these projects is most likely eligible for an award.
To receive an award, one must retain a lawyer and file a sealed lawsuit in federal court. These cases are usually brought on a contingent fee basis meaning whistleblowers don’t have to advance any money. The lawyers only get paid if their clients collect an award.
Once the case is filed, the Justice Department is afforded an opportunity to investigate the claim. Ultimately prosecutors must either intervene or allow the whistleblower’s own lawyers to pursue the claims.
Other Frauds Involving Transportation Projects
Whistleblowers have other opportunities to stop fraud and greed. We have seen cases where contractors have cut corners on quality, used inferior materials, paid below prevailing wages, or used inflated hours or overhead charges on hourly contracts. We have also prosecuted cases where businesses misuse a DBE (“disadvantaged business enterprise”) designation.
When billions of dollars are involved, fraudsters can be quite resourceful in coming up with new ways to cheat taxpayers and Uncle Sam.
We believe that whistleblowers are the new American heroes. With billions of new transportation spending on the horizon, we believe that when fraudsters appear with their new schemes, so will whistleblowers and this time in record numbers.
Because the False Claims Act has a first to file requirement, we encourage would be whistleblowers to take action immediately, especially if they hope to earn an award.
For more information, visit our foreign steel / Buy American whistleblower page or contact attorney Brian Mahany at or by phone at (direct). In the last several years, our whistleblower clients have received over $100 million in awards.
Worried about coming forward? Our consultations are free and confidential. All inquiries are protected by the attorney – client privilege.
MahanyLaw – America’s Whistleblower Lawyers