While there is a lot of reasonable debate about whether the current version of the False Claims Act strikes the right balance to deter fraud against the government, I’ve never heard anyone really make the case that the qui tam provisions of the False Claims Act–which allow private citizens to earn a reward for reporting fraud–should be abandoned. Although there are certainly examples of whistleblowers abusing the system, the role that whistleblowers have played in exposing some of the country’s biggest frauds has cemented their place in the enforcement scheme.
I have argued for some time that one of the primary shortcomings in the current enforcement efforts is the general lack of awareness about how to report fraud against the government. Fraud against the government is rampant, but the current laws designed to encourage whistleblowers to come forward catch only a tiny fraction of that fraud.
Take as an example the recent news that Washakie Renewable Energy, a Utah company that received millions of dollars from the government for renewable energy grants, never produced a single drop of biofuel. Instead, news reports suggest that the company, which has ties to a local polygamous sect and many local politicians, used 9 year-old kids to create fake forms showing the company in compliance.
The kind of massive fraud alleged to have occurred means that dozens of people had to have known–but nobody said anything. Just one well-placed insider with some integrity could have saved taxpayers millions of dollars, but instead no one said anything and the fraud was allowed to continue.
If those with knowledge of what was going on had known of the avenues available to them to report the fraud, and the possible rewards for doing so, I have to believe that at least one person would have stepped forward to alert the government. But so often, I believe, people who know that what’s going on is wrong don’t know where to turn to report it. We need to make sure that potential whistleblowers know of their rights and where they can go to stop the frauds they witness. Otherwise, we’ll continue to see more fraud against the government.
In short, we don’t need more punishment for wrongdoers, we need more consistent enforcement. And the history of the False Claims Act seems to suggest that whistleblowers are the key to that strategy.