Archive for March, 2017

Proposed Improvements to IRS Whistleblower Program

Sen. Chuck Grassley and Sen. Ron Wyden today introduced bipartisan legislation to improve IRS communication with tax fraud whistleblowers and protect those whistleblowers from workplace retaliation, they announced in a news release.

“Whistleblowers have helped the IRS recover more than $3 billion for the taxpayers that otherwise would have been lost to fraud,” Grassley said.  “Whistleblowers have the potential to help even more.  They need assurances that putting their jobs at risk carries protections.  They also need better communication about where their cases stand so they’re not sitting in limbo.  This bill will offer a welcome mat to those who are too often treated like skunks at a picnic.”

“Whistleblowers are a crucial line of defense against waste, fraud and abuse,” said Wyden. “This legislation will strengthen protections for employees of companies who come forward to report tax evasion.  Empowering these whistleblowers is key to rooting out bad actors who are breaking the law by dodging their taxes.”

The IRS Whistleblower Improvements Act of 2017 is based on the Grassley-Wyden amendment included in the Taxpayer Protection Act of 2016.  The Taxpayer Protection Act, along with the Grassley-Wyden amendment, passed the Finance Committee in April 2016 but was never considered by the full Senate.

The measure would: (1) increase communication between the IRS and whistleblowers, while protecting taxpayer privacy, and (2) provide legal protections to whistleblowers from employers retaliating against them for disclosing tax abuses.

To increase communication, the bill specifically would allow the IRS to exchange information with whistleblowers where doing so would be helpful to an investigation.  It would further require the IRS to provide status updates to whistleblowers at significant points in the review process and allow for further updates at the discretion of the IRS.  It does this while ensuring that the confidentiality of this information is maintained.  Whistleblowers have expressed concern and frustration in their inability to receive information from the IRS on the status of their cases, which may take years to resolve.  Since these individuals often put their livelihoods on the line to come forward, poor communication adds to their anxiety and is a disincentive to others with knowledge of high dollar tax fraud.

To protect whistleblowers from employer retaliation, the bill extends anti-retaliation provisions to IRS whistleblowers that are currently afforded to whistleblowers under other whistleblower laws, such as the False Claims Act and Sarbanes-Oxley.  Tax whistleblowers may be easily identified within their firms as having specific knowledge of tax fraud.  Extending the protections to tax whistleblowers that apply to whistleblowers in other fields is a matter of fairness and in the interest of U.S. taxpayers who benefit from such whistleblowing, Grassley and Wyden said.

The IRS Whistleblower Improvements Act of 2017 will be assigned to the Finance Committee, where Grassley is a senior member and former chairman, and Wyden is ranking member.

Grassley successfully enacted much-needed updates to the IRS whistleblower program in 2006.  The improvements have led to the recovery of more than $3 billion in taxes that otherwise would have been lost to fraud.  The IRS has made some progress in improving its treatment of whistleblowers, due to congressional oversight, but challenges remain.  The potential is strong to recover much more in fraud proceeds if the IRS continues to improve its procedures, and Congress delivers the improvements in the Grassley-Wyden legislation.

Two well-known pro-whistleblower groups endorsed the legislation.

“Honest taxpayers are the true victim of every tax fraud.  This reform provides critical protection for those courageous enough to risk losing their jobs to report illegal tax schemes.  The legislation closes a loophole in whistleblower law that currently fails to provide any protection for those who report tax fraud. This bill is urgently needed,” said Stephen M. Kohn, Executive Director, National Whistleblower Center.

“These amendments will significantly strengthen the fraud-fighting potential of the IRS Whistleblower statute and promote the public-private partnerships that the law was originally enacted to foster,” said Robert Patten, President and CEO of Taxpayers Against Fraud.  “In particular, the anti-retaliation provisions will encourage more citizens to come forward and will result in the recovery of significant funds that would otherwise be lost to tax fraud.”

Grassley and Wyden are among the founding members of the bipartisan Senate Whistleblower Protection Caucus.  Grassley is chairman and Wyden is vice-chairman.


Possible Pennsylvania False Claims Act?

Pennsylvania False Claims Act

Pennsylvania False Claims ActAlthough a vast majority of states (and the District of Columbia) have False Claims Acts to protect their taxpayer dollars, twenty states still have not enacted effective anti-fraud legislation. Pennsylvania is one of those states lacking a False Claims Act law. Despite various lawmakers – on both sides of the aisle – introducing versions of a False Claims Act to the Pennsylvania legislature for nearly two decades, none have yet made it into law. Read More…


Can you be a whistleblower against a state agency?

Whistleblower Case

Whistleblower CaseIs a state or state agency a “person” for False Claim Act (FCA) whistleblower purposes?  This question is important because the language attaches liability to “any person who knowingly presents….false or fraudulent claims.” Since its inception in 1863, the FCA has been used by whistleblowers to recover money from individuals, corporations, and government contractors. Over the years, Congress has made several substantive changes to the Act; however, the issue of whether a state or state agency can be a “person” remained an open question. Read More…


James Hoyer Investigator Speaks at Investigative Reporters & Editors Conference

Boston University Assoc. Professor Maggie Mulvihill, James Hoyer law firm investigator Jim Ross & attorney Jennifer Mansfield

(From L to R) Boston University Associate Professor Maggie Mulvihill, James Hoyer law firm investigator Jim Ross and attorney Jennifer Mansfield

James Hoyer law firm investigator Jim Ross was featured on a panel at the Investigative Reporters and Editors regional conference in Jacksonville, this weekend.  Jim shared his expertise on negotiating for public records with journalists from around the world.

Journalists play a unique and valuable role in helping to expose fraud against the government. False Claims Act litigation is a helpful source of stories for all journalists. The FCA gives private citizens who become aware of fraud against the government the right to sue on behalf of taxpayers to return that money to the public coffers. These cases can become important stories to hold corporations accountable when they receive taxpayer money, whether it’s in healthcare, defense contracting, for-profit colleges, or Big Pharma.

Public Records Expertise

Jim is the law firm’s go-to person for all things related to public records.  His background as the former head of the Tampa Tribune’s investigative unit and a certified fraud examiner for the Florida Attorney General’s office make him uniquely qualified to share tips and techniques to negotiate for public records.  Jim offered valuable advice on the most effective ways to get records from reluctant public officials and how to make sure journalists target the right records to get the most valuable information.

Joining Jim on the IRE Open Records panel were Maggie Mulvihill, an Associate Professor of Computational Journalism at Boston University and the founder of BU’s Storytelling with Data Workshop and John Bones, Managing Director at SKUP, the Norwegian Foundation for Investigating Reporting.

Jim also participated in a legal Question and Answer session with journalists, along with Professor Mulvihill and attorney Jennifer Mansfield, to offer advice on topics ranging from open records to investigative techniques.





Military Contractor PTP Settles Whistleblower Case

James Hoyer Partner Jillian Estes interviewed by ABC Action News

James Hoyer Partner Jillian Estes interviewed by ABC Action News about the PTP whistleblower case settlement

People Technology & Processes, LLC (“PTP”), a defense contractor based in Lakeland, Florida, agreed to settle a whistleblower case in which the company was accused of billing for work never performed for the U.S. Army in Afghanistan, the James Hoyer law firm announced today.  The company was also accused of falsifying records to cover up the fraud.  PTP paid the U.S. government $320,000 to resolve the allegations of improper billing and fraud.

Click here to watch the ABC Action News story on the whistleblower case by Investigative Reporter Adam Walser .

Improper Billing & Cover up

The allegations were exposed in a whistleblower lawsuit filed by former PTP employee Aidan Tamer Toprakci, a James Hoyer client.  Toprakci is a billing and accounting software specialist for PTP and discovered multiple billing discrepancies and efforts to cover them up. He resigned from the company in November of 2012, after efforts to get PTP to address the problem were rebuffed.  In 2013, Toprakci filed suit under the False Claims Act, which allows private citizens to act on behalf of taxpayers when they discover fraud against the government.

“I was auditing the records to make sure billings were done correctly, when I discovered they were billing for an employee who had been fired,” Toprakci said.  “I brought it to their attention, but they were not interested in correcting the problem. They started retaliating against me for raising the issue. It upset me greatly that I believed the U.S. Army was being ripped off, and I did not want to be a part of that.”

PTP- ABC Aidan intv

James Hoyer Client Adain Toprakci interviewed via FaceTime by ABC Action News

The government’s investigation after Toprakci filed suit confirmed that PTP was not only billing for an employee who had been fired, but also for an employee who was on vacation for a month and others even before they started working for the company.  Toprakci also provided evidence that the Defendants falsified records to cover up the fraudulent conduct.

The Defendants

PTP was a U.S. Army subcontractor for ManTech International, one of the prime U.S. contractors providing services in Afghanistan.  PTP billed ManTech for false hours, which U.S. taxpayers ultimately paid for.

Victor Buonamia is the President and CEO of PTP, and Nicole Buonamia, his daughter, is the CFO. The improper invoices submitted by PTP from November of 2011 through June of 2012,   were signed by Victor Buonamia, Nicole Buonamia, or both.

Stiff Penalty Sends Message

PTP was required to pay two-and-a-half times damages in this case, a penalty rarely sought by the government and an indication of the severity of the allegations.

“The level of disregard and abuse of taxpayer money is astonishing here,” said James Hoyer partner Jillian Estes who represents Toprakci. “It was very important for the government to seek the most severe damages to send a message that this behavior will not be tolerated by government contractors and subcontractors.”

“All contractors and subcontractors, who are ultimately paid with American taxpayer dollars, will be held accountable for submitting fraudulent claims to the Government,” said Special Agent in Charge of Defense Criminal Investigative Services, Southeast Field Office, John F. Khin, in a news release by the U.S. Department of Justice.

Past Problems with PTP

This is not the first time PTP has had a problem with performance.  In a suit with primary contractor SAIC, the company was chided for putting troops in danger in Afghanistan. According to the lawsuit between SAIC and PTP:

On August 28, 2013, the Army and several Defendants personnel had a meeting, during which the Army stated it was ‘fed up’ with PTP’s poor performance, lack of management, hostile work environment with a pattern of EEO violations/racial discriminations, and practices which endangered the lives of military personnel.

“This company was not only endangering the lives of soldiers, but also stealing money intended to keep them safe.  It’s a pattern of bad behavior that has to stop,” said attorney Estes.

The False Claims Act

The False Claims Act is the government’s most successful tool in fighting fraud.  In 2016 alone, the Justice Department recovered more than $4.7 billion from False Claims Act cases, the 3rd highest annual recovery in FCA history.  It would not be possible without brave whistleblowers like Aidan Toprakci, a native of Turkey who became a United States citizen in 2016.

“Like so many other courageous whistleblowers, Aidan put his livelihood on the line to come forward and expose fraud on behalf of American taxpayers,” said Estes.

“I am grateful to this country, and I want to give back for the many opportunities I have received here.  I am proud that my efforts returned money to U.S. taxpayers,” Toprakci said.

As an incentive to come forward to expose fraud against the government, whistleblowers receive a percentage of the money recovered as a reward.  In this case, Toprakci received 20% of the government’s recovery as a reward for his efforts.

Click here to read a news story on the settlement in the Lakeland Ledger.