Wednesday, December 25, 2013

Slip & Fall Litigation with Brent M. Cordell

"Slip and fall injury" or "trip and fall injury" is the generic term for an injury that occurs when someone slips, trips or falls as a result of a dangerous or hazardous condition on someone else's property. These cases fall under the broader category of cases known as "premises liability" cases. The term "premises liability" refers to a situation when an individual is injured on a property, or "premises" owned or maintained by someone else, and the owner or possessor of the property is held liable for such injury.
"Slip and fall" injuries often result from slippery conditions caused by water, paint, food or other slick substances on a walking surface. "Trip and fall" injuries may be caused by hidden hazards, poor lighting, uneven walkways or missing handrails.

Slip and fall accidents are covered by the law of negligence, and a key issue is what duty the property owner had towards the injured person in terms of protecting him or her from injury. Traditionally, the law distinguished among four categories of people who might be on someone else's property:

  • invitees (for example, a delivery person); 
  • social guests; 
  •  licensees (someone who is on the property solely for their own benefit); and
  • trespassers (for example, a vandal). 
The responsibility of the property owner to protect a person from injury depends on how the person was categorized. In most cases, the injured party must prove that the premises was in a "dangerous condition" when the injury occurred, and that the owner of the property knew (or should have known) of the dangerous condition. To establish this it usually must be shown that the owner created the condition, knew the condition existed and negligently failed to correct it, or that the condition existed for such a length of time that
the owner should have discovered and corrected it prior to the incident.

For a plaintiff to be successful in a slip and fall accident, they must typically prove the following:
  • there was a condition of the defendant's (landowner) property which presented an unreasonable risk of harm to persons on the premises;
  •  the defendant knew or should have known that the condition of his property involved an unreasonable risk of harm to persons on the premises;
  • the defendant should have anticipated that persons on the premises would not discover or realize the danger, or would fail to protect themselves against it;
  •  the defendant was negligent;
  •  the plaintiff was actually injured;
  •  the condition of the defendant's property was a direct cause of the injury to the plaintiff.
In addition, a plaintiff may prove negligence by showing that the property owner violated a relevant statute. For example, a building owner must ensure that his or her building's structure is in compliance with applicable building codes.

An injured person who slips and falls due to the negligence of another may be able to recover the costs of lost income and medical bills, as well as compensation for any pain and suffering or physical disability, among other damages. If you have been injured due to a dangerous condition or negligence on behalf of another party, contact Brent M. Cordell at or call (713) 248-5265 for a free consultation. 

Monday, December 23, 2013

The Foreign Corrupt Practices Act with Dee McWilliams

In 1973 America was gripped by the Watergate scandal, one of the largest and most infamous in the Nation's history. Beginning with the arrest of five men for breaking and entering into the Democratic National Committee (DNC) headquarters at the Watergate complex on June 17, 1972, it would ultimately result in the trials and convictions of dozens of President Richard Nixon's top administration officials and the resignation of Nixon himself.

In February 1973 the Senate created the Select Committee on Presidential Campaign Activities (Resolution S.60) to investigate Watergate and other Nixon campaign abuses, and in May Special Prosecutor (Archibald Cox) was sworn in by the U.S. Department of Justice to direct the investigation. During the course of their work, the Office of the Special Prosecutor charged several corporations and CEOs with using corporate funds for illegal political contributions. The U.S. Securities and Exchange Commission (SEC) soon recognized the significance to public investors, and their own subsequent inquiry revealed falsifications of corporate financial records as well as secret “slush funds” being used for illegal foreign payments and other purposes.

The SEC eventually exposed further corporate abuses ranging from the outright bribery of high foreign officials to so-called "facilitating payments" made to government functionaries for certain ministerial or clerical duties. Major examples included officials of the Lockheed Aerospace Company paying over $14 million in bribes to various foreign officials in the process of negotiating the sale of aircraft, and the "Bananagate" scandal in which Chiquita Brands paid over $2.5 million in bribes to the President of Honduras to lower taxes on banana exports. By the culmination of the SEC investigation, over 400 U.S. companies had admitted making questionable or illegal payments in excess of $300 million to foreign government officials, politicians and political parties.

Originally the SEC wasn't directly concerned with the legal implications of bribery: the international business climate of the time had seen such payments as a necessity in order to remain competitive in a rapidly growing corporate environment. Rather, the specific concerns of the SEC were directed at the nondisclosure of such massive payments to investors; the hidden "slush funds" clearly undermined the integrity and reliability of corporate books and records, and the very foundation of the disclosure system established by federal securities laws.

Congress, however, was seriously concerned with the implications these payments had on U.S. foreign policy. The 1975 Senate Select Committee to Study Governmental Operations with Respect to Intelligence Activities, chaired by Senator Frank Church, had been conducting their own investigation and in a series of hearings that year outlined the involvement of various government organizations including the FBI and CIA. And beyond issues of foreign policy, a "post-Watergate morality" was rapidly coming into play, causing concerns over international perceptions of the U.S. economic stability and the Nation's position as a global leader.

Between June 1975 and September 1977 approximately twenty bills were introduced to address the issue of foreign corporate payments: in March 1976 President Gerald Ford issued a memorandum to various federal agencies establishing a “Task Force on Questionable Corporate Payments Abroad”. Finally, after more than two years of deliberation, Congress passed the first law in the world governing domestic business conduct with foreign government officials in foreign markets.
The Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§ 78dd-1) was signed into law by President Jimmy Carter on December 19, 1977 with the intended purpose of ending corporate bribery of foreign officials, and the restoration of public confidence in the American business system. It was amended in 1998 by the International Anti-Bribery Act of 1998 to implement the anti-bribery conventions of the Organization for Economic Co-operation and Development.


 The Foreign Corrupt Practices Act (FCPA) essentially addresses a) accounting transparency requirements under the Securities Exchange Act of 1934 and b) the bribery of foreign officials by persons connected to the United States, including:
  • U.S. businesses • Foreign corporations trading securities in the United States 
  • American nationals or citizens 
  • Residents acting in furtherance of a foreign corrupt practice whether or not they are physically present in the United States 
  • Foreign natural and legal persons in the United States at the time of the corrupt conduct 
  • Foreign firms and/or persons who take any act in furtherance of such a corrupt payment while in the United States.
Regarding accounting transparency, 15 U.S.C. § 78m requires companies with securities listed in the United States to meet specific accounting practices intended to operate in tandem with the FCPA anti-bribery provisions. Corporations covered by these provisions are required to keep books and records that accurately reflect transactions and to maintain adequate internal accounting controls.

The anti-bribery provisions of the FCPA are not restricted to monetary exchanges (the focus is on the intent of bribery rather than the amount), and may include anything of value given to a foreign official for the purpose of obtaining, retaining or directing business to any person or company covered by the law. Specifically, the anti-bribery provisions of the FCPA prohibit:

"...the willful use of the mails or any means of instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly, to a foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty, or to secure any improper advantage in order to assist in obtaining or retaining business for or with, or directing business to, any person." 

The definition of "foreign official" is broad; examples may include doctors at government-owned or managed hospitals or anyone working for a government managed institution. Employees of international organizations such as the United Nations are also considered to be foreign officials under the FCPA. The Act also governs payments to any recipient if any part of the bribe is ultimately attributable to a foreign official, candidate, or party. It does draw a distinction between "bribery" and "facilitation" payments, which are made to an official to expedite performance of the duties they are already bound to perform. Payments may also be legal if they are permitted under the written laws of the host country, or if they relate to product promotion. 


The U.S. Department of Justice is chief enforcement agency for the FICA, with the Securities and Exchange Commission (SEC) acting in a coordinating role. DOJ involvement in an FCPA matter is guided by the Principles of Federal Prosecution in the case of individuals, and the Principles of Federal Prosecution of Business Organizations in the case of companies. Generally, the following circumstances may trigger an FCPA investigation:
  • Unusually large commissions, retainers or fees 
  • Refusal to make FCPA-related representations 
  • Unusual methods of payments 
  • Promises of business by or from a government official 
  • Family or business relationships with a government official 
  • Payments of unusual contingent fees 
  • Political contributions 
Penalties for corporations and other business entities found in violation of the FCPA may include fines of up to $2 million; individual directors, officers, stockholders, employees and agents can be subject to fines of up to $100,000 and imprisonment for up to five years, although individuals are only subject to the FCPA’s criminal penalties for violations if they acted “willfully". These fines are imposed per occurrence, and individuals fined for violations of the Act may not be indemnified by their employer.

Both companies and individuals can also be held civilly liable for aiding and abetting FCPA anti-bribery violations if they knowingly or recklessly provide substantial assistance to a violator. The attorney general or the SEC may bring a civil action for violation of the FCPA, resulting in fines of up to $10,000 per violation against any firm, its directors, officers, employees, agents and stockholders. In addition, the SEC may seek to impose fines not to exceed (1) the gross amount of the pecuniary gain to the defendant as a result of the violation, or (2) an amount of up to $100,000 for individuals and $500,000 for business entities.
Under federal law, individuals or companies that aid or abet an FCPA violation are as guilty as if they had directly committed the offense themselves.


The FCPA contains an exception for "facilitating payments" for "routine governmental action," (also known as "grease" payments) intended as a defense for payments, gifts or tips made in facilitation of non-discretionary acts of lower-level officials as long as they have no discretion to award business to the party making the payment. If a defendant can assert that a payment was legal under the laws of the foreign country in which the payment was made, or that a payment was a reasonable expenditure directly related to promotion, demonstration, or explanation of products or services this may also be used as an affirmative defense.

Enforcing anti-corruption laws has become a major focus of law enforcement and regulatory authorities in the U.S. and other nations. Parnham and McWilliams represents clients in FCPA internal investigations, government enforcement and regulatory actions, and other international white-collar defense matters. For more information visit or call (713) 224-3967 for a free consultation.

Sunday, December 22, 2013

Workplace Injuries with Houston, Texas Personal Injury Attorney Brent Cordell

On-the-job injuries are always difficult. In addition to the pain, stress and possible loss of income, the injured employee often has to communicate with the employer under the cloud of suspicion, anger and resentment. Many times, the employee feels pressured into receiving care from the company doctor. Other times, an injured employee may be hesitant to do anything at all, out of fear of retribution or termination.

Workers' Compensation provides benefits to workers who are injured on the job, or suffer an occupational disease arising out of and in the course of employment. The problem is that the compensation is often not sufficient to address the extent of the injuries.

In addition, not all employers in Texas subscribe to a workers' compensation insurance plan. Business that have chosen to "self-insure" and do not pay compensation are required to prove that 100% of the liability for an injury lies in the hands of the injured worker, or that the injury was caused by the negligence of a third party.
Even if you may have been partially responsible for your own accident and injury at work the insurance defense attorneys will not be allowed to enter your own negligence into evidence: a jury would only be required to consider any amount of liability on the part of your employer.
This opens up your workplace injury case to possible significant compensatory and punitive damages that workers' compensation insurance benefits might not cover.

Often, those injured at work will get inadequate compensation through Workers' Compensation and should look into third-party lawsuits for greater compensation.
Third-party lawsuits involve another party (other than the employer). For example, if you were injured by a saw, there may be a products liability case against the saw's manufacturer. Also, if a worker was injured on a construction site, another contractor could be liable. These cases require immediate attention and expertise because the responsible third party is often difficult to locate and the evidence (such as a piece of defective machinery) may need to be preserved. In more complex cases, the legal principles of Agency and analysis of corporate law can lead to sophisticated determinations as to who is technically an "employee" and who the "third parties" are in a given situation.

When you go to work, you expect that you are reasonably safe as long as you perform your job in the way you should, taking all reasonable precautions. This is true even when you are in a somewhat hazardous occupation. But accidents happen in the workplace as well, and sometimes the accidents are caused by existing unsafe conditions.
If you were injured on the job, you may be thinking about whether or not you should file suit. To take action, you need to be informed about your legal options. For more information contact Brent M. Cordell at or call (713) 248-5265 for a free consultation.

Thursday, December 19, 2013

Business Torts with Brent M. Cordell

Business litigation involving tort claims can arise in many contexts, ranging from counterclaims in contract or employment litigation to shareholder rights disputes upon the departure of a key equity partner, executive, or professional employee. Tort claims can also figure significantly as an original claim or counterclaim in litigation related to the purchase or sale of a business or any other major event in the course of the operation of your business.

Business torts are civil wrongs that are committed by or against an organization, frequently involving harm done to the organization’s intangible assets, such as its business relationships with clients or its intellectual property. 
Misrepresentation is also a common type of business fraud, transpiring when one party intentionally falsifies a material fact in order to induce another party to perform or refrain from performing in a certain manner. In order to prove misrepresentation, the plaintiff must show that he or she relied on the defendant’s misrepresentation and was harmed as a result. Other types of business fraud include embezzling company assets, falsifying financial statements, and forging work hours.

Wednesday, December 18, 2013

Product Liability Claims With Brent Cordell

Defective products cause more than 29.5 million injuries and around 22,000 deaths in the United States each year, according to the U.S. Consumer Product Safety Commission (CPSC).

Any manufactured product can be defective, however all accidents associated with the product are not necessarily grounds for personal injury lawsuits.

Products are evaluated by the following agencies:
  • The CPSC is responsible for approximately 15,000 types of consumer products, from baby strollers to coffee makers.
  • Department of Transportation handles automobiles and related products.
  • The FDA covers food, cosmetics, and drugs.
  • The Department of the Treasury monitors tobacco, alcohol, and firearms 
If a product is found to be unreasonably dangerous, the appropriate agency works with the manufacturer to institute either a voluntary or mandatory recall. 

Examples of Defective Products:
  • Design defects, ranging from defective harness systems on child car seats to hair dryers that dangerously overheat, cause million of injuries annually. These occur in the initial planning phase, before the product is created. Manufacturers often discover these defects after products have been distributed for sale and have to launch a recall. The problem with recalls, however, is that they often occur too late or product owners may not know of the recall.
  • Defective Manufacturing results from mistakes or problems that take place during production, and may affect only a few items out of many properly working products. Like products with design defects, products with manufacturing def ects are frequently recalled, albeit too late, in many cases.
  • Inadequate Testing is a common issue in safety testing. Many corporations test crashworthiness, safety belt effectiveness and other elements at only 40 miles per hour and only in front-end crashes, rendering these tests inconclusive. Other examples include silicone breast implants (long-term effects were not yet known at the time of FDA-approval), faulty electrical wiring, or inefficient child restraint systems.
  • Marketing Misrepresentation can include everything from confusing instructions to incomplete warning labels, such as those on prescription drugs.

For more information on defective product liability visit our website at

Tuesday, December 17, 2013

Federal Tax Fraud With Richard Kuniansky

Tax fraud (or tax evasion) is the general term for efforts by individuals, firms, trusts and other entities to evade taxes by illegal means. Tax evasion usually entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities to reduce their tax liability, and includes, in particular, dishonest tax reporting (such as declaring less income, profits or gains than actually earned; or overstating deductions).
In the United States "tax evasion" is evading the assessment or payment of a tax that is already legally owed at the time of the criminal conduct. Tax evasion is criminal, and has no effect on the amount of tax actually owed, although it may give rise to substantial monetary penalties.

In the case of U.S. Federal income taxes, civil penalties for willful failure to timely file returns and willful failure to timely pay taxes are based on the amount of tax due; thus, if no tax is owed, no penalties are due. The civil penalty for willful failure to timely file a return is generally equal to 5.0% of the amount of tax "required to be shown on the return per month, up to a maximum of 25%. By contrast, the civil penalty for willful failure to timely pay the tax actually "shown on the return" is generally equal to 0.5% of such tax due per month, up to a maximum of 25%. The two penalties are computed together in a relatively complex algorithm, and computing the actual penalties due is somewhat challenging.

Friday, December 13, 2013

Bank Fraud with Richard Kuniansky

Bank fraud is a federal criminal offense that involves any scheme to obtain money, assets or other property that is owned or in the control of a financial institution by fraudulent means. Defrauding any institution insured by the federal government is an offense which is taken very seriously.

One of the most common frauds against financial institution involves loan or mortgage applications. During the last decade many representatives of bank and mortgage companies are reported to have surreptitiously encouraged individuals and businesses to misrepresent their income or other information on mortgage applications: if these borrowers don't make their payments the bank's financial departments will look for misrepresentations and if they find anything they will often turn the case over to the feds for prosecution. In essence, the banks and mortgage lenders are trying to use the government  to collect on bad loans they encouraged people to take in the first place.

Bank fraud is also sometimes perpetrated an employee; this constitutes embezzlement, in which a person entrusted with funds or bank property appropriates it for his or her own use or benefit. For example, a bank employee may borrow funds during a personal emergency and then attempt to replace the missing funds undetected, a move that seldom works.

If you have been accused of bank fraud, your defense depends largely on pre-trial research, the defense strategies employed by your attorney and the motivations of the prosecution. While banks may be eager to press charges in these cases, they are generally more interested in recovering the missing funds. In many cases it may be possible to reach a financial settlement that can minimize or avoid entirely prison time. 

Insider Trading with Richard Kuniansky

Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the company.
"Corporate insiders" are defined as a company's officers, directors or any beneficial owners of more than 10% of a class of the company's equity securities. By accepting employment these insiders have undertaken the legal obligation to put the shareholders' interests before their own in matters related to the corporation. This means that any trades in the company's own stock made by these  insiders, if based on material non-public information, are considered fraudulent since the insiders are violating the fiduciary duty that they owe to the shareholders.
In addition, this duty may be imputed; for example, when a corporate insider "tips" a friend about non-public information likely to have an effect on the company's share price, the duty that insider owes the company may now be imputed to their friend. When allegations of a potential inside deal occur, all parties that may have been involved are at risk of being found guilty.
The Securities and Exchange Commission prosecutes over 50 cases of Insider Trading each year, with many being settled administratively out of court. The SEC and several stock exchanges actively monitor trading and can refer serious matters to the U.S. Attorney's Office for further investigation and prosecution.

US insider trading prohibitions are based on English and American common law prohibitions against fraud: as early as 1909 the United States Supreme Court ruled that a corporate director who bought company stock knowing it was about to jump in price committed fraud by not disclosing his inside information.
The Securities Exchange Act of 1934 was enacted after the stock market crash of 1929 to prohibit short-swing profits (from any purchases and sales within any six-month period) made by corporate directors, officers, or stockholders and to prohibit fraud related to securities trading. The Insider Trading Sanctions Act of 1984 and the Insider Trading and Securities Fraud Enforcement Act of 1988 provide for penalties as high as three times the profit gained or the loss avoided from the illegal trading.

Monday, December 9, 2013

The Dodd-Frank Act and Whistleblowers with Dee McWilliams

While conducting research on ecological issues in the early 1970's, author and activist Ralph Nader coined the term "whistleblower" for citizens who expose misconduct occurring within an organization. Prior to that the press had used terms such as "informers" or "snitches", which carried obviously negative connotations. Attitudes towards whistleblowers still vary widely; they may be seen either as selfless martyrs for public interest, or as traitors solely pursuing personal glory and fame. Nonetheless, whistleblowers perform a vital role in helping the government maintain public safety, corporate transparency and financial regulation.
Most whistleblowers are internal whistleblowers, employees who report misconduct by a fellow employee or superior within their company. External whistleblowers report misconduct to outside persons or entities such as attorneys, the media, law enforcement agencies or specific watchdog groups.
In some cases whistleblowers have been subjected to criminal prosecution in reprisal for reporting wrongdoing; because of these repercussions faced from the organizations or groups they have accused, specific laws have been enacted to protect whistleblowers acting in the interest of the government or public. Private organizations such as the National Whistleblowers Center have also formed legal defense funds and support groups to assist whistleblowers.

The False Claims Act: 

The False Claims Act (31 USC § 3729) is the foundation of the U.S. whistleblower system. It is the most widely used statute employed by whistleblowers to report on corporate fraud and misconduct, and the model for other federal and state whistleblower provisions.
In the midst of the American Civil War, the Union Army found itself facing a horde of unscrupulous contractors passing off rancid food, ailing livestock and defective weapons. Recognizing that the embattled government lacked the capabilities to control the widespread fraud on its own, Congress passed the first US law adopted specifically to protect whistleblowers, the False Claims Act (also known as the "Lincoln Law") on March 2, 1863.
This law establishes liability when any person or entity improperly receives payments from -or avoids payment to- the Federal government (tax fraud is excepted). Importantly, it revived the thirteenth-century English legal tradition of qui tam (derived from a Latin phrase meaning "he who sues on the King's behalf as well as his own"); allowing a private citizen (known as a "relator") to not only bring a lawsuit on the government's behalf, but also to be rewarded with a percentage of any proceeds recovered by the government.
The False Claims Act prohibits: 
  • Knowingly presenting, or causing to be presented a false claim for payment or approval; 
  • Knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim; • Conspiring to commit any violation of the False Claims Act; 
  • Falsely certifying the type or amount of property to be used by the Government; 
  • Certifying receipt of property on a document without completely knowing that the information is true; 
  • Knowingly buying Government property from an unauthorized officer of the Government, and; 
  • Knowingly making, using, or causing to be made or used a false record to avoid, or decrease an obligation to pay or transmit property to the Government. 
The most commonly used provisions are the first two, prohibiting the presentation of false claims to the government and the fabrication of records to get a false claim paid: these cases frequently involve situations in which a corporation or individual overcharges the federal government for goods or services. Other typical cases entail failure to test a product as required by government specifications, or selling defective products. The key factor in determining whether conduct is covered by the False Claims Act is whether that conduct caused the government to suffer a financial loss.

The False Claims Act was amended in 1943, (most notably to reduce the relator's share of recovered proceeds) but its qui tam provisions were largely ignored until an increase in military spending during the Reagan presidency. Amid widespread reports of $1,000 bolts, $7,000 coffee pots and other outrageous abuses by government contractors, the law was amended in 1986 to impose fines of up to $10,000 for each false claim. The amendment also tripled damages on wrongdoers, rewards whistleblowers with up to 30 percent of the government's recovery, and includes significant anti-retaliation protections for employees who blow the whistle.

Yet despite being the primary tool used by the government and whistleblowers to combat fraud, the False Claims Act is limited in scope: primarily, it only applies when the fraud or misconduct has caused the government to lose money. Other congressional Acts which have been passed to strengthen protection for federal whistleblowers include the Lloyd–La Follette Act (5 U.S.C. § 7211) of 1912 which confers job protection rights on federal employees who criticize their superiors, and similar protections included in subsequent federal environmental, health and safety laws.
The Sarbanes–Oxley Act (Pub.L.107–204,116,Stat.745), also known as SOX, was enacted in 2002 in reaction to a number of major corporate and accounting scandals and Section 1107 provides criminal penalties for retaliation against whistleblowers. Until recently however there was no real financial incentive or legal protection available to encourage whistleblowers to expose other types of fraud; i.e., frauds such as those perpetrated against private investors.

The Dodd-Frank Act: 

The Dodd–Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203, H.R. 4173) was signed into law by President Barack Obama on July 21, 2010 as a response to the late-2000s recession, implementing the most significant changes to U.S. financial regulation since the Great Depression. This Act made changes in the American financial regulatory environment that affect all federal financial regulatory agencies along with virtually every part of the nation's financial services industry.
Dodd-Frank proposed eight areas of regulation, primarily:
  • Regulation of credit cards, loans and mortgages is consolidated under The Consumer Financial Protection Bureau. 
  • Establishment of the Financial Stability Oversight Council to oversee Wall Street. 
  • Establishment of the Volcker Rule banning banks from using or owning hedge funds for the banks' own profit. 
  • Requiring that the riskiest derivatives, like credit default swaps, be regulated by the Securities Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
  • Requiring hedge funds to register with the SEC and provide data about their trades and portfolios so the SEC can assess overall market risk. 
  • Creation of an Office of Credit Ratings at the SEC to regulate credit ratings agencies. 
  • Creation of a new Federal Insurance Office under the Treasury Department, which identifies insurance companies that create risk to the entire system. 
  • Allowing the Government Accountability Office(GAO) to audit the Fed's emergency loans during the financial crisis. 

The Dodd-Frank Act also includes important whistleblower provisions in section 922, largely modeled after the False Claims Act; however, a compelling difference between the False Claims Act and the Dodd-Frank whistleblower provisions is that Dodd-Frank does not require the fraudulent activity be committed against the government.
In fact, although the False Claims Act allows whistleblowers to pursue a qui tam action even if the government chooses not to intervene, Dodd-Frank does not supply whistleblowers with the “private right of action” required to bring a lawsuit on behalf of the United States government. If the government opts not to pursue a case under the Dodd-Frank Act, the whistleblower’s claim is terminated.

Whistleblowers are required to provide information that is not publicly known, but Dodd-Frank also rewards SEC whistleblowers who provide unique analysis based completely on public information. For example, if fraud can be demonstrated using public statistics or information a citizen can qualify to become a whistleblower. In further contrast to the False Claims Act, which only rewards the first whistleblower filing a complaint, whistleblowers who provide meaningful information assisting the government in combating securities fraud under Dodd-Frank may be rewarded regardless of whether they were the first to file. Dodd-Frank whistleblowers do not file formal complaints in a federal court, but within the appropriate agency. For example, securities violations are filed with the SEC and commodities violations are filed with the CFTC.
The Dodd-Frank whistleblower provisions also take important steps to protect citizens who report securities fraud with an anti-retaliation provision which prohibits “... adverse action against a whistleblower arising out of disclosures protected under Sarbanes-Oxley; the Securities Exchange Act of 1934; and any other law, rule, or regulation subject to the jurisdiction of the SEC.” 

Filing a whistleblower claim: 

Common examples of fraud or misconduct that may be targeted by a whistleblower claim may include:
  • Billing the government for products or services not provided, or that are defective, mislabeled or otherwise different from the products or services the government contracted. 
  • Failing to report government over-payments. 
  • Obtaining government funds using false certifications of compliance or through violations of law.
  • Selling or marketing drugs outside of the FDA approved uses. 
  • Accounting fraud 
  • Fraud or manipulation of trading in securities or commodities, or the improper sale of securities, bonds, or commodities. 

In order to file any whistleblower claim you must have evidence of fraud or other misconduct that directly causes a financial loss to the government (under the False Claims Act and related statutes), a financial loss to investors from securities or commodities fraud (under the Dodd-Frank Act), or harm to specific employees or the public at large (under various other laws designed to protect the environment, financial markets, health and safety and consumer welfare).

 While a whistleblower does not need to have witnessed the case of fraud or misconduct personally, they must have concrete and specific evidence: suspicions or beliefs are not sufficient. Documentation supporting a claim greatly increases the likelihood that authorities will take it seriously. In some cases public information may be used to support a whistleblower claim, but it must be information that the government does not already possess and could not otherwise obtain from any public source or its own records.

Time is an essential factor in filing a whistleblower claim. The "first to file" rule will preclude any claim if one has already been filed based on the same facts, but multiple whistleblowers may file a joint claim or separate claims based on different evidence. The claim must also be brought within the statute of limitations: generally within six years of the violation under the False Claims Act and within three years of the violation under the Dodd-Frank Act. For violations of the various state FCA and industry specific laws, claims usually must be reported anywhere from 30 days to 6 years after the violations depending on the particular statutes.

The National Whistleblower Center
OSHA's Whistleblower Protection Program
US Merit Systems Protection Board: Whistleblower Appeals
Securities and Exchange Commission: Office of the Whistleblower
US Commodity Futures Trading Commission whistleblower program

Monday, December 2, 2013

Accounting Fraud with Richard Kuniansky

While the Sarbanes-Oxley Act of 2002 enacted post-Enron reforms, accounting fraud is still rampant in both public and private operations alike. In 2010 the executives at Lehman Bros. were accused of fraud, and the actions of Ponzi schemer Bernard Madoff were widely publicized. Healthcare South shareholders plan to finalize a settlement agreement in July 2010 against accounting firm Ernst & Young and Swiss bank, UBS AG, seeking restitution for their part in a multi-billion dollar accounting fraud scandal.

Allegations of accounting fraud may cause serious damage to the reputation of any corporation or business.  The majority of accounting fraud investigations stem from authorities pursuing a case where there is suspicion of corporate fraud and there are signs indicating that evidence of falsified statements, documents, and or transactions exist.  In many cases, federal prosecutors and investigators are involved when someone is suspected of accounting fraud. In these cases the federal prosecution often casts a wide net, bringing charges against persons who may not have had any prior knowledge of the deception.

The accounting practices of smaller businesses in regulated industries are also scrutinized in a manner once reserved for public companies.  What were once viewed as honest, innocent accounting errors can be lumped into an overly aggressive investigation by prosecutors and regulators and pursued as a potential violation of the criminal law.  These sorts of investigations often turn upon very specific and technical accounting practices and decisions.  If you are under investigation for allegations of deceptive accounting methods it is important to hire a white collar criminal defense attorney who is experienced in these complex cases.