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We Should Be Encouraging More Whistleblowing Businesses

Those of us who advocate for the False Claims Act and whistleblower law like to say that we believe in business and we believe in the fairness of the capitalist system. Yet somehow whistleblower laws get attacked as being anti-business or that they somehow go too far. The biggest critics and attackers of these laws like to claim that whistleblower laws are anti-business.

Maybe those of us on the whistleblower side have a responsibility to seek out business clients to make clear that we are on the side of legitimate commerce. We need to see more business related whistleblowers come forward when they learn of real fraud and we need to work with these kinds of clients to foster support for these laws.

It is worth remembering that there is nothing that prevents someone in business who legitimately learns about fraud being conducted by a competitor from blowing the whistle on that competitor. In fact, there have been a few successful cases that have resulted from exactly this kind of whistleblowing under the False Claims Act. Let’s call it business to business whistleblowing.

Do not be confused – all the usual requirements still apply. Only the most meritorious cases are going to make it through the arduous process of blowing the whistle and attempting to gain a reward. There could be additional hurdles in that a company insider is usually in a very strong position to know about fraud within their own company. Establishing a competitor as the original source of information may not be as easy, but then again the competitor may be privy to inside information as well.

What I mean to point out in raising this prospect is that business motivations are perfectly legitimate with respect to blowing the whistle on fraud. If it is fraud that you are aware of and your competitor gets to commit that fraud, that puts your business at a competitive disadvantage.

Whistleblowers who find fraud and report it to the government should be rewarded because they get results for the United States and because of the public interest in protecting all of us. Businesses reporting fraud may also care about their competitors gaining an unfair advantage, but really what is wrong with them being concerned about that?

It may seem strange to people in business to want to blow the whistle on competitors, but why should it be as long as the facts are really so egregious as to constitute fraud, not just poor performance or contract violations, but actual illegality. Why should those in business be willing to put up with it? Why should they lose business to fraudsters? If we allow companies to cheat and thrive, it ultimately will weaken U.S. businesses against global competitors that deliver.

We should encourage the legitimate businessperson who wants to stop a competitor from ripping off customers. If one of those customers is the United States or one of several States in this country, a False Claims Act case may be a very sensible way to combat such fraud.

In addition, of course, securities fraud may be very likely to come to light because of the knowledge of people in the business, but who may work for a competitor.

Again, only those with knowledge of actual fraud should consider this. Nobody is talking about using the extensive powers of Whistleblower laws to go after minor contractual issues. It is easy enough to discuss the merits of a potential case with any counsel, and businesspeople are not going to waste time pursuing a matter that has no chance of success, so this does not seem like a big problem.

Why should legitimate business suffer at a disadvantage relative to those companies who seek to rip off everyone else?

I think it is crucial for those of us who handle these kinds of cases to take this position and work with businesses. We do not want to see the good guys get pushed out of commerce.