President Abraham Lincoln had had enough. His troops at the front of the bloody Civil War were ill from rancid food, receiving lame mules and horses, faulty rifles and ammunition, all because of unscrupulous contractors to the U.S. government. As a result, Congress passed the False Claims Act (FCA) on 2 March 1863 which they hoped would provide a remedy for such abuse of the government and put a stop to the abuse of its troops.
Over time, the FCA has, indeed, proven a valuable remedy for the government against entities seeking improper payment for goods or services rendered; however, only in recent years has the government exercised the “reverse” provision of the statute which allows redress from anyone who avoids or decreases the amount owed to the government. This statute wouldn’t be nearly as successful without the help of whistleblowers. They are not a new phenomenon; there were whistleblowers as far back as Medieval times. America’s first, or at least most famous, whistleblower was Benjamin Franklin, who blew the whistle on the governor of Massachusetts, appointed by the English monarchy, who intentionally misled Parliament to “promote a military buildup in the Colonies.” Since that time, whistleblowers have had an uneven history and reputation, at least until the last several decades.
Our last blog, “The Catastrophe of a Blind Eye on Trade Violations”, covered the disastrous results of turning a blind eye to trade violations committed by suppliers. Byer California, Inc. was given as an example of a company who settled a fraud case with the CBP in March 2019 for $325,000 for turning a blind eye to a supplier’s undervaluing merchandise imported from Vietnam for years. They were finally brought to the CBP’s attention by the actions of a whistleblower who brought justice to the government and a tidy sum to their pocket.
But before we go into the agony or ecstasy of whistleblowing, let’s look a little deeper into the FCA.