The war on corporate greed and fraud continues. On the front lines of most of those battles aren’t trial lawyers, prosecutors or FBI agents. The true front lines are whistleblowers. Hard working men and women who try valiantly to get their bosses and companies to do the right thing.
Some are successful. Some are ignored. Some suffer retaliation. We honor the courage of all whistleblowers. All are heroes. The most effective whistleblowers are those willing to step forward formally and make their voices heard.
Representing whistleblowers, making their voices heard, protecting them from retaliation and getting them the cash rewards they deserve are what we do. We don’t mind doing the heavy lifting but we can’t race in like the cavalry without someone on the inside taking the first step.
The genesis for this New Year’s message is a report from the American Association for Justice. The AAJ is the premier association of trial lawyers. Plaintiff’s trial lawyers meaning they take on big corporations. We are whistleblower lawyers and like the AAJ, we take on the same evil companies.
Often, we work together but our battles are different. The enemies, however, are the same.
I never really thought about how similar our enemies are until reading their report entitled the Worst Corporate Conduct of 2018.
Before looking at all the evil that has transpired over the last 12 months, let’s remember the good news. In many instances these evil doers were caught because of our clients and the many whistleblowers throughout our society. Some of them aren’t even in the United States!
Back in the 1800’s Congress got wise to corporate greed. They passed the False Claims Act which allows private people – whistleblowers and their attorneys – to prosecute corporate fraud cases. Better yet, they can receive multi-million dollar rewards for their efforts.
That single law has leveled the playing field and makes victory possible. In more recent years, Congress has passed several other whistleblower reward laws, more on that later. Let’s look at the most shameful and worst corporate conduct of 2018.
Number One on the AAJ list, Navient.
Americans are swimming in student loan debt. For many borrowers, it is probably better to say “treading water” or even drowning in school debt.
In 2018, Americans owed $1.48 trillion in student loan debt. 8 million borrowers are in default while an estimated 4,950,000 borrowers are considered in serious default meaning at least 90 days in arrears. The Brookings Institute believes that by the time the current freshman college class graduates, the default rate will be 40%!
We have established that student loan debt is crushing for many people. Now let’s look at Navient and their role in the crisis.
Navient is a for-profit company spun off from Sallie Mae. Folks my age may remember Sallie Mae back when it was formed in the 70’s. Back then, it was a government agency. No more.
Sallie Mae is one of the three largest student loan servicers. According to the AAJ, it is the “poster child for student loan abuses.”
What have they done wrong? According to the AAJ, everything! Here is what they say:
- Steering borrowers into forbearance rather than more affordable repayment plans when they had trouble making payments, allowing interest to accumulate on the loans. Navient made at least $4 billion this way;
- Reporting severely and permanently disabled borrowers, including veterans, as having defaulted on their loans when in fact they had had them forgiven through federal disability programs;
- Placing borrowers into repayment plans that made them ineligible for public service forgiveness programs;
- Sending borrowers $0 due bills when they chose to overpay in a particular month, but then counting the absence of additional payments as a failure to make on-time payments (for instance, if a borrower owed $100, but paid $300, Navient would send $0 due bill for the next two months, but would count those two months as a failure-to-pay if no additional payments were made);
- Overcharging service members in violation of the Servicemembers Civil Relief Act (SCRA), which caps the interest rate such borrowers must pay at 6 percent (Navient was forced to pay $60 million in restitution to the service members);
- Putting up arbitrary barriers to prevent co-signers from being released from loans even when eligible;
- Failing to adequately warn borrowers on income-based plans that they needed to annually certify their income to avoid significant repayment hikes;
- Collecting more than was owed when borrowers fell behind on payments;
- Going after the families of deceased borrowers despite promises such loans would be forgiven (Navient also charged interest on such efforts).
Unfortunately, the current Secretary of Education hasn’t done much to curb the abuses by Navient. In August of last year, Seth Frotman, then the Consumer Financial Protection Bureau’s (CFPB) Student Loan Ombudsman, quit the agency. In his resignation letter, he said, “It is clear that the current leadership of the Bureau [CFPB] has abandoned its duty to fairly and robustly enforce the law… The Bureau has abandoned the very consumers it is tasked by Congress with protecting. Instead, you [CFPB director Mulvaney] have used the Bureau to serve the wishes of the most powerful financial companies in America.”
Powerful words. Whether or not those words are true, it is more difficult today to bring a whistleblower reward case in the education arena.
Difficult but not impossible.
Whistleblower Rewards and Student Loan Servicers
Because Navient and the other loan servicers handle loans backed by the United States government, these entities are subject to the False Claims Act, America’s number one whistleblower reward program.
Even Navient acknowledges that it is subject to the Act. In its annual SEC filings Navient says,
“If improper or illegal activities are found in the course of government audits or investigations, the contractor may become subject to various civil and criminal penalties, including those under the civil U.S. False Claims Act, and administrative sanctions, which may include termination or non-renewal of contracts, forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with other agencies of that government. Due to the inherent limitations of internal controls, all improper or illegal activities may not be prevented or detected.”
“If improper or illegal activities are found”? To us, it is only a question of how many times they will be caught and how many of such “illegal activities” will be found.
Prosecuting Navient and the other loan servicers won’t be easy but it is possible. First, given the current politics within the Department of Education and CFPB, it will take a very strong case to succeed.
That doesn’t scare us because the strongest cases are based on those brought forward by whistleblowers. The people within Navient have the “smoking guns” (proof) to bring these cases.
Recently, the U.S. Supreme Court said that violations must be “material” to be prosecuted under the False Claims Act. That makes sense. For example, if a Medicare rule says that Medicare prescriptions must be signed in blue ink and a hospital allows black ink, that doesn’t mean that the prescriptions are fraudulent. The violation probably isn’t material.
This materiality discussion is critical since it is the government agencies that largely determine what is material. Under the False Claims Act we can prosecute student loan servicing fraud but the CFPB and Department of Education have big influence on what is considered a material act or omission.
What this means is that for us to prosecute Navient or any other loan servicer we need an insider, with solid information and the wrongdoing must be significant.
There is also a public knowledge requirement. We need inside information. If what you have is already in the press or within the CFPB, there probably is no reward.
BP, ConocoPhillips, ExxonMobil and Shell
The AAJ say these four energy giants are responsible for a large percentage of the global warming crisis. Several states, cities and counties in the U.S. have filed lawsuits asking the companies both for damages and to take steps to reduce the pollution and damage caused by fossil fuels.
Whistleblowers and Eneregy Companies
There are no whistleblower opportunities under the current laws for global warming but we are always looking for insiders with any knowledge of corporate misconduct.
Although our emphasis is on whistleblowers and helping them collect rewards for stepping forward, we frequently partner with class action lawyers to help the victims of corporate wrongdoing.
Even if you wish to remain anonymous, your information about wrongdoing or fraud could help save lives and maybe even the planet.
One hot area in the energy sector where rewards are available involves violations of the Foreign Corrupt Practices Act. This law prohibits US and many foreign companies from paying bribes to foreign government officials.
We know of many instances where energy companies were prosecuted in the U.S. for trying to bribe foreign officials in order to obtain drilling rights or avoid responsibility for their environmental catastrophes. Unfortunately, bribery and corruption are the norm in many areas of the world.
Unlike the student loan industry, the government today continues to vigorously enforce the Foreign Corrupt Practices Act. If you have inside information about these schemes, call us. Our contact information is at the end of this post or you can simply contact us online. All inquiries are protected by the attorney – client privilege and kept strictly confidential.
State Farm one should be number one in our opinion. The insurance giant recently paid $250 million to settle a claim that it secretly helped elect an Illinois Supreme Court Justice who just happened to cast the deciding vote vacating a $1.06 billion judgment against the company after a trial court found the company was illegally using lower quality aftermarket parts to fix the cars of their insureds.
The company settled without admitting wrongdoing but come on, who pays $250,000,000.00 unless they were guilty as sin? That certainly isn’t a nuisance value settlement.
The case was settled before trial and jury verdict but the evidence certainly appears to show that State Farm funneled millions into Justice Karmeier’s campaign.
Karmeir is still sitting on the Illinois Supreme Court. He was not formally charged or accused of any wrongdoing.
This is another case in which there are few whistleblower reward opportunities but we are certainly always willing – and wanting – to listen.
Takata and General Motors
Anyone who regularly reads this blog know that we have posted more original content regarding Takata than any other law firm. [See our Takata Airbag Injury Claim Center cornerstone post as well as our more specific Takata General Motors Defective Airbags post.]
We have helped lead the cases against VW, Audi and several other automakers for their knowing and continued use of highly dangerous airbags. Airbags are supposed to save lives. The propellant used in many of the Takata airbags, however, degrades in heat and humidity and transforms the airbag’s metal cannister into a grenade.
Read our posts and you will certainly see why Takata made the AAJ’s list and is on our worst corporate citizen list. But why GM?
All of the car manufacturers recalled their Takata airbag equipped cars, although some reluctantly so. We were upset at VW and Audi for recalling older Takata equipped vehicles while still using their defective airbags in newer cars.
Why would they do that? Takata airbags are cheap. When you make millions of cars, a few bucks per airbag adds up quickly.
We said all the major automakers recalled their vehicles. The AAJ says that there is a notable exception, General Motors.
GM filed several petitions in the last couple years trying to avoid the recall. They say that despite overwhelming evidence to the contrary, the Takata airbags are “not likely to pose an unreasonable risk to safety.”
Why would they say that? Probably because they told the SEC that avoiding the recall would save the company $1 billion.
Profits over people. It is a theme we see in every one of these cases.
Whistleblowers, Auto Safety Defects and Takata
Very recently Congress passed the Motor Vehicle Safety Whistleblower Act which allows the Department of Transportation to pay whistleblower awards to insiders working at automakers or OEM companies.
Three whistleblowers were awarded a combined total of $1.7 million in the Takata case for stepping forward and letting regulators know just how deadly these airbags were and how the company was covering its tracks.
Normally, the rewards under the new Motor Vehicle Safety Whistleblower rewards are between 10% and 30% of whatever the government collects. In this case the rewards were much lower because Takata is bankrupt.
Elizabeth Holmes and Theranos
If you thought the old snake oil salesmen of the frontier days were gone forever, think again. Elizabeth Holmes was hailed as the next Steve Jobs. At the tender age of 19 she created a company called Theranos that promised to revolutionize healthcare.
Instead of time consuming and expensive blood tests that often required multiple vials of blood, Holmes said her new technology could determine anything from cancer to diabetes with a simple pinprick and drop of blood. And the cost? Just $2.99!
Her company Theranos soon blossomed into a giant valued at $10 billion. Walgreens signed on as a partner.
Everything looked great until an employee of the company blew the whistle and called Theranos and Holmes a fraud.
Unfortunately, the whistleblower in that case was originally branded a liar by Holmes. Her wrath didn’t last long, however.
Almost immediately Holmes fraud began to unravel. She and the company faced numerous lawsuits from patients, investors, and several state attorneys. The SEC jumped in and charged her with fraus. Medicare took away the company’s ability to claim Medicare or Medicaid benefits. And in June of 2018, Holmes was indicted for criminal wire fraud and conspiracy charges.
Whistleblowers, Healthcare Providers and Medicare Fraud
The first known whistleblower in the Theranos case to step forward was Tyler Shultz, a new hire assigned to the company’s assay validation team. That meant his job was to insure tests run by the lab were accurate. They weren’t even close.
Shultz sent an anonymous letter to New York state officials and wrote an email to Holmes. His actions earned him a $400,000 legal bill.
Being a whistleblower isn’t easy and not everyone suffered like Tyler. Unfortunately, he didn’t avail himself of either the federal or New York State False Claims acts nor did he use the anti-retaliation provisions available by law.
We are reluctant to criticize Shultz. His actions in stepping forward make him a hero. Had he done things a bit differently, however, he may have earned a large check and avoided some of the heartache.
Because Medicare and Medicaid reimbursed Theranos for its testing, taxpayers were footing the bills on many of these tests. If you defraud a government program, the False Claims Act allows whistleblowers to collect between 10% and 30% of the monies collected by the government from the wrongdoers. 29 states, including New York, have similar laws for the state funded portion of Medicaid programs.
The Theranos case teaches another lesson. The False Claims Act is designed to protect taxpayers from fraud. But often these cases involve more than money.
Shultz told regulators that the tests performed by Theranos’ miracle machines could miss a serious disease 35% of the time. That kind of shaky science has no business in healthcare.
Nestlé and Modern Day Slavery
Nestlé products are household names. Nestlé chocolates. Purina. Little Friskies. Nestea. Hot Pockets. The list goes on. What many don’t know, however, is the company has been accused of aiding slavery.
The AAJ says that the company’s seafood, coffee and cocoa business lines are “blighted with forced labor.” To be clear, Nestlé doesn’t employ slaves. But it purchases much of raw product from West Africa, an area known for slavery and child labor violations.
A lawsuit is pending right now by six people who said they were kidnapped as children in Mali and brought to a cocoa plantation in the Ivory Coast and forced to work 14 hours per day without pay.
Is this illegal under US law. We are not international employment lawyers but a federal appeals court ruled that if the six can prove their case, both Nestlé USA and another U.S. company, Cargill, can be held responsible.
While we know of no whistleblower reward laws, we are always willing to listen to insiders and see if we can help.
The 2017 Worst Offenders
Let’s take a brief look at the 2017 worst corporate offenders. Many of those companies have seen successful whistleblower reward cases.
United Airlines was the number one company on the AAJ’s list year. Probably for the way they repeatedly mistreat passengers. [While reading this post you may want to play the now infamous and viral United Destroys Guitars song.]
And who can forget the viral video of Dr. David Dao being unceremoniously and wrongfully dragged off a United flight. If the video wasn’t bad enough, United’s pathetic excuses were worse. [The author of this post was quoted in Forbes about the illegal manner in which Dr. Dao was removed from the plane.]
These actions certainly earned United a spot on the AAJ 2017 worst corporate conduct list but there is far more to the story. United has many contracts with the United States government. And a string of whistleblower complaints suggests United Airlines is committing outright fraud and even endangering U.S. military pilots and crews.
Anyone working for or with an airline that has inside information about fraud involving government contracts may be eligible for a whistleblower reward. Other rewards may also be available through the SEC or IRS whistleblower programs. Scroll to the end of this post in order to learn more and how to contact us.
Monsanto, Glyphosate, Roundup and Bayer
Once again, we and the AAJ are in agreement on Monsanto. Makers of Roundup and Ranger Pro herbicides, Monsanto has been accused of causing cancer in thousands of Americans.
The active ingredient in Monsanto’s flagship weed killer is a product called glyphosate. The World Health Organization and the State of California say there is a probable link between certain deadly cancers (lymphoma, leukemia and myeloma) and glyphosate.
The company, of course, disagrees. Recently a California jury socked the company with a record $289 million verdict after linking Monsanto Ranger Pro to a former school groundskeeper stage four cancer. The company, now owned by Bayer AG, has appealed.
MahanyLaw is actively seeking both Monsanto whistleblowers and cancer victims. (The links are to two specially prepared short videos. We have many, many posts on Monsanto, just use the search feature in our blog.)
Wells Fargo is number three on the AAJ 2017 list and for good reason. There is so much wrong with Wells Fargo that they we don’t even know where to begin. The good news, however, is that many of the successful prosecutions of Wells Fargo started with insiders – company whistleblowers.
You can find many stories on Wells Fargo on our blog (just search the name “Wells Fargo”). We also have successfully sued the company on behalf of embattled employees working there.
Many people think we hate big banks and everyone who works there. That statement is only partially true. There are tens of thousands of great people who work at all these horrible companies. It isn’t that the workers are bad. It is senior management and the systems they put in place. Systems that are destined to fail and put profits ahead of customers
Johnson & Johnson
Johnson & Johnson is the world’s largest healthcare products company. According to the AAJ, its products are responsible for 11 of the 17 top products liability verdicts over the last two years.
Since October, we have been hot on the trail of Johnson & Johnson for its baby powder. To this day the company still refuses to acknowledge that its powder is contaminated with asbestos. When applied to the genital area, women can suffer from ovarian cancer.
Already juries have awarded billions of dollars against the company to cancer victims (or their families, many victims have already died) for its baby powder.
Johnson & Johnson and Bayer (parent of Monsanto) get a special mention since they are the joint developers of an anti-coagulant drug Xarelto that has been linked to thousands of deaths. The AAJ says that not only is Xarelto dangerous, it is also no more effective than a low dose aspirin.
Thus far, Bayer and Johnson & Johnson have been able to beat back the lawsuits against them. That includes getting a Pennsylvania judge to set aside a $27 million verdict after a woman says she was injured by the drug.
We believe there are another 20,000+ lawsuits pending.
This is a case where we seek a whistleblower both with the potential of earning an award (Xarelto is a Medicare covered drug) and to help patients harmed by the product.
Whistleblower Reward and Anti – Retaliation Laws
There are several whistleblower reward laws, all of which are explained in detail on our website.
First is the False Claims Act. This law covers losses suffered by federally funded programs. Government backed residential mortgages, pharmaceuticals (Xarelto), defense contracts (United) and federally backed student loans (Navient) are all examples where the False Claims Act may apply. Under that law, whistleblowers may receive between 15% and 30% of whatever is recovered from wrongdoers. Because the law carries huge penalties and triple damages, large rewards are common.
The False Claims Act also has strong anti-retaliation provisions including double damages and legal fees for employees who suffered from retaliation.
Many states also have similar False Claims Acts for loss of state and local funds.
We especially like the False Claims Act cases (often called Qui Tam lawsuits) because they allow us to privately prosecute in the name of the government even the Justice Department or state declines prosecution.
Another large whistleblower program is the SEC Whistleblower Program. This law covers a wide array of corporate fraud including false books and records, foreign bribery and securities law violations.
Like the False Claims Act, the SEC Whistleblower program has strong anti-retaliation provisions. The law is also favored by whistleblowers because they can usually remain completely anonymous.
The IRS Whistleblower Program applies to cases in which companies or individuals intentionally evade, fail to report or fail to pay taxes. Like the SEC program, whistleblowers can usually remain anonymous.
FIRREA, short for the Financial Institutions Reform Recovery and Enforcement Act, allows whistleblowers to receive a reward of up to $1.6 million. The law applies whenever someone defrauds a federal insured bank or if the bank itself engages in illegal behavior.
We love the law because it has a 10 year statute of limitations.
The Motor Vehicle Safety Whistleblower law allows workers at auto manufacturers or parts makers to receive rewards for reporting auto safety defects or attempts to conceal those defects.
How to Become a Whistleblower
If you made it this far, clearly you care about seeing justice prevail and doing the right thing. We believe that whistleblowers are true American heroes. We are successful only when you step forward. A simple phone call can save lives, recover millions for taxpayers, help underwater homeowners and often, put a check in your pocket*.
Have questions? Want to know if you have a case? We invite you to contact us online, by email at or by phone at (414) 704-6731.
All inquiries are kept completely confidential and are protected by the attorney – client privilege. There is never a fee or obligation for a consultation.
MahanyLaw handles cases nationwide. Cases are handled on a contingent fee basis meaning we don’t get paid unless we first win and collect money for you.
*Obviously not every whistleblower receives a reward. Even if you are not interested in a reward or don’t want to give your name, we still want to speak with you. Perhaps you can steer us in the right direction or provide anonymous information that will help in another case.