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SEC Expects Higher Whistleblower Payouts and Other Whistleblower News – October 7, 2013

The whistleblower attorneys at Goldberg Kohn are committed to fighting fraud against the government and protecting the rights of whistleblowers. Below are summaries of recent developments pertaining to whistleblower, qui tam, and False Claims Act actions throughout the United States.

Whistleblowers serve a crucial role in the fight against fraud – a role that is recognized, respected, and rewarded by the federal government. Although only a small number of whistleblower awards have been paid out in the two years since the SEC and Commodity Futures Trading Commission launched their Dodd-Frank whistleblower programs to encourage whistleblowers to report instances of corporate fraud, federal regulators reiterate that whistleblower cases simply take time to run their course. Officials have indicated that they are ramping up their enforcement efforts and, as a result, they predict more lucrative payouts for whistleblowers in the future.

"We have some very interesting ongoing investigations that, depending on how they play out, could, given our historical recovery in these kinds of cases, mean very big numbers," SEC Whistleblower Office Director Sean McKessy told Reuters.

Federal regulators say that they had hoped the whistleblower incentive programs would encourage whistleblowers to come forward more frequently, but they say that tips of corporate fraud have been relatively sparse to date. On October 1, the SEC announced its largest award yet – $14 million to an anonymous whistleblower.

It is important for employees who suspect or detect instances of fraud to understand the important role that they play in the market. Whistleblower cases can take several months or years to see resolution, but whistleblowers can and do see their efforts rewarded.

Ty Warner, creator of the popular Beanie Babies toys, pled guilty last Wednesday to federal tax evasion charges that allegedly involved an illegal offshore account in Switzerland. Warner previously agreed to pay a $53 million civil penalty in the case, and he now faces up to five years in prison. The lawsuit alleged that Warner hid from his accountants and the IRS more than more than $3.1 million in foreign income that was generated from a secret Swiss account – a fraud that resulted in the evasion of $885,000 in income taxes that he would have had to pay for 2002.

Florida’s infamous “Rock Doc” Christopher Wayne is in the limelight once again – this time involving accusations of Medicare fraud. Christopher Wayne was featured in the Wall Street Journal in 2010 that called into question the millions of dollars that he was collecting from Medicare each year.

Not only is Wayne well-known for his spiky bleach blonde hair, lavish lifestyle, and celebrity acquaintances, but he is also known for his failure to obey health care laws. In 2011, his medical license was revoked by the state surgeon general for running a pill mill that prescribed Oxycodone and Xanax – an operation that placed at least two patients at risk for a fatal overdose. Wayne was arrested last week from his $1.7 million home in Miami Beach. He previously filed for Chapter 13 bankruptcy in February 2011.

Please contact us at (312) 863-7222 if you would like to learn more about any of the aforementioned whistleblower news updates or would like to schedule a free, confidential appointment with one of our nationally-recognized whistleblower attorneys.

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