Attorney-at-Law

QUI TAM?

In Uncategorized on 09/12/2012 at 12:46

Or, The Whistleblower Gets Supremely Blown

I am in favor of whistleblowers. If they didn’t exist, much skullduggery would go un-dug. Unhappily, many whistleblowers are also among the unrighteous, as it is rare for saints to be present when the skullduggers are plotting or doing the nasty.

Now I was at a CLE this morning at which representatives of our State Attorney General’s Taxpayer Protection Bureau lectured us on Section 194 of our State’s Finance Law. This is our version of the Federal Statute, and it differs from the Federal False Claims Act (“Lincoln Law”), in that taxes are part of the State Finance Law’s scope, unlike the Federal, where tax whistleblowing is found in IRC Section 7623 (and see my blogposts “The Whistleblower Blows It”, 6/20/11, “IRS Loses a Double-header”, 7/12/11, and “Whistleblowers, Beware!”, 9/7/11).

You’ll remember that one of the sharpest arrows in IRS’ quiver for shooting down whistleblowers is that the information tendered is public.  The Supremes said “Amen”, 5 to 3, with Justice Elena Kagan, daughter of my old friend and colleague the late Bob Kagan, Esq., sitting it out, on 5/16/12, in Schindler Elevator Corp. v. US ex rel. Kirk, 10-188.

Kirk spilled the beans on Schindler’s supposed hiring of veterans that never happened, he said, relying on his wife’s Freedom of Information Act request to US Department of Labor. He used the results to back-check Schindler’s list of hires, as he worked for Schindler and was himself a veteran.

The Supremes said that the DOL information was public, available through FOIA, therefore constituted a “report” as defined by FFCA, thus barring any recovery by Schindler.

Now the problem is obvious: it needs the whistleblower to connect the dots. Some dots may be public, some private, some hidden, some in plain sight. But in the immortal words of the late great Bill Klem, “Some is balls and some is strikes, but they ain’t nuthin’ till I calls ‘em.” Somebody has to call ‘em, or at least put it all together, so the party charged with “callin’ ‘em” can in fact call ‘em.

Does no one remember Edgar Allen Poe’s classic short story “The Purloined Letter”? The essential document was in plain sight all along, but disguised. It took an expert’s eye to find it, and an expert’s hand to recover it for the true owner.

If the public policy of the United States is to create a disincentive to the knowledgeable coming forward, who will connect the dots? The Supremes saved pennies, and threw away dollars.

Fortunately, New York State does not bar whistleblowers who use public disclosure in addition to their own knowledge to connect the dots.

But a word of caution. If the whistleblower needs to make a NYS Freedom of Information Law request, let them first craft a disclosure and check in with the Taxpayer Protection Bureau at the Attorney General’s Office, and apply for some “cold comfort” before proceeding.

And in any event beware of the Federal FOIA; here be dragons.

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