Whistleblower Cases on the Rise

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The number of whistleblower cases against large corporations is on the rise. The Justice Department has collected over $8 billion in these types of cases over the past three years. Some experts expect the number of civil fraud cases and the related settlements to more than double in the next year

Establishing an exact dollar figure for these cases is challenging, but in the 2010-2011 fiscal year, the Justice Department settled about $3 billion in cases that were started at the hands of a whistleblower.

That number has already been passed in the 2011-2012 fiscal year, and there are still a few weeks left before the year is over. Also, this figure does not include the February foreclosure settlement, which is an unprecedented $25 billion from various banks across the country.

Healthcare and financial services companies seem to be at the heart of these cases. The $3 billion settlement from GlaxoSmithKline in July was one of the largest of these. The company agreed to pay this sum to settle accusations of drug marketing nod pricing fraud. Merck settled charges of drug marketing and securities fraud last fall for the sum of $950 million.

Some of the cases involve companies that work directly with the government. For example, Oracle paid $199.5 million in a settlement after being accused of billing too much for their government software packages, while ATK Launch Systems settled for $37 million against accusations that they sold defective products to the military.

Why are whistleblower cases bringing in such large sums to the government? The answer is a combination of the increase emphasis on corporate responsibility, increased fines for those companies found guilty and an increased awareness in the general public of the presence of fraud. These trends seem to indicate that people are no longer going to be tolerant of corporate fraud.

Source: New York Times, "Corporate Fraud Cases Often Spare Individuals," Michael S. Schmidt and Edward Wyatt, August 7, 2012