(US law) Modifications of the False Claims Act over time have created a situation where employees no longer are required to be complicit in creative corporate accounting schemes that are meant to defraud any government agency. Unethical policies in the private sector are still problematic in many cases, but all businesses must deal with government agencies in some manner, such as tax filings. Tax evasion policies and company structures are a particular area where whistleblowers have been especially effective because of the universal nature of dealing with the Internal Revenue Service. As a result, many companies are much more particular about who they place in critical positions and how they assess the employee loyalty quotient.
Commercial Landscape
Companies have taken full advantage of the private company status for many years. Corporate tax rates have been reduced considerably since World War II and the function of a corporation has shifted from a means of employing people to primarily operating as a profit machine. All income not paid out in taxes eventually increases the bottom line for the business. A False Claims Act lawyer will tell you that it is important to understand that tax avoidance and tax evasion are not the same thing. Avoidance that stems from legal corporate moves to protect cash flows, such as depositing funds in international bank accounts or maintaining off-shore headquarters have been optimized by all companies doing business on a global scale. Whistleblowers can have a difficult time establishing whistleblower status when a company is acting in an apparent unethical or illegal manner that is actually well chartered by the corporate legal team. This is avoidance, but often does not qualify as tax evasion because of deception or some type of fraud. This may be the most significant chance in the commercial landscape because it has altered general company willingness to violate tax laws systematically.
Consumer Landscape
Consumers still have access to the courts using standard legal filings rules, but there is no qui tam eligibility in the consumer market. If investors are included as consumers by virtue of purchasing company stock, then this opens an entire arena of possibilities for legal recourse because companies must accurately represent the company in stock exchange filings so investors are assured of stock values. This can still be misrepresented and recent enhancements in trading transparency have encouraged companies to act ethically, but many companies are also reluctant to go public for this reason. Additionally, more and more average earners are heavily invested in the markets because of utilization of the 401(K) retirement savings exclusion as annual income. This created the rising level of the Dow over the past decade. Companies will still attempt to borrow from future sales, but this activity is closely guarded at the corporate level and usually avoided when the company numbers indicate that they will actually make their quarterly estimates.
The False Claims Act has been relatively successful in reducing illegal activity within corporations. Enhancements that allow whistleblower protections have helped eliminate any more debacles like Enron and Tyco. Government realignment of the corporate tax code clearly appears to be on the negotiation table in Congress, so there is a distinct possibility the False Claims Act will be even more effective in the near future. Any individual that may have a quit tam should always remember to hire an experienced qui tam protections attorney before beginning any whistleblowing process, because the government must establish this eligibility first. This is supposed to be a closed process, so the possibility for employee protection status will be more prevalent in the near future.
Saam Banai is a freelance writer and editor and supporter of the False Claims Act. If you find that a company you’re working for is involved in defrauding the government and the people it governs, you might contact a False Claims Act lawyer from Goldberg Kohn Ltd. The attorneys of Goldberg Kohn are always fighting to helping you combat fraud against the government, recover the largest share possible of any recovery, and protect your rights.
Saamb
