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30Dec/090

Go watch The Insider Today!

If you didn't get a chance to see The Insider back in 1999 when it came out, rent it today. The film has a stellar cast, including Al Pacino, Russell Crowe, and Chistopher Plummer, and it does an excellent job of depicting the personal sacrifices whistleblowers make when they stand up to corporations engaged in wrongdoing.

Russell Crowe plays Dr. Jeffrey Wigand, a biochemist, whose whistleblowing activities eventually led to the historic $368 billion settlement between the tobacco industry and the attorneys general of 40 states on June 20, 1997. Wigand served as Vice President of Research and Development for Brown and Williamson Tobacco Corporation from December 1988 to March 1993. During his time at Brown and Williamson, Wigand learned that the company enhanced the effect of nicotine in its products through the use of chemical additives. It also became clear to Dr. Wigand that the tobacco industry was deliberately misrepresenting tobacco as a non-addictive substance.

Brown and Williamson eventually fired Dr. Wigand, and it gave him a severance package and made him sign a non-disclosure agreement in the hope that he would keep quiet. However, in 1995, Dr. Wigand went public with his damning information about Brown and Williamson and the tobacco industry.

Dr. Wigand gave a deposition in 1995 for a lawsuit brought by the State of Mississippi against the tobacco industry for health care cost reimbursement. (Mississippi was the first in a long line of states to become involved in tobacco litigation). Later, in early 1996, Dr. Wigand was interviewed on 60 Minutes for what would become an enormously controversial segment. The interview did not air until 1999 due to various delays. CBS refused to broadcast it for several months because the network was concerned that Brown and Williamson would sue it for tortious interference. The network was afraid that Brown and Williamson would claim that CBS had caused Wigand to break his confidentiality agreement with his former employer by doing the interview.

The Insider does an excellent job of exploring the fallout from Wigand's revelations and its effect on his personal life. Wigand began to fear for his family's safety--justifiably--after receiving death threats. In one particularly chilling instance, someone left a bullet in Wigand's mailbox. This incident is depicted in the film with Crowe/Wigand opening his mailbox and bending down to look inside. A camera at the opposite end of the mailbox shows a bullet standing on its flat end directly on top of the mail, almost in silhouette against Wigand's face. The threats eventually required Wigand to be guarded at all times by two ex-secret service agents.

Unfortunately, the stress surrounding Wigand's public disclosures ended his marriage. Wigand also experienced a big change in socioeconomic status after he was forced out of his lucrative tobacco excutive position and became a high school teacher. To add insult to injury, Brown and Williamson mounted a disgraceful smear campaign, complete with a 500-page dossier intended to portray Wigand as a liar. The dossier was given to The Wall Street Journal, which, after an investigation, found that many of the claims made against Wigand were "backed by scant or contradictory evidence" or "demonstrably untrue."

After you've watched the film, visit Dr. Wigand's website to see what this famous whistleblower is up to now.

Tagged as: fraud, government, whistleblower No Comments

30Dec/090

Qui Tam Bites Big Oil

A prominent member of Big Oil has joined the ranks of industries entering into multi-million dollar False Claim Act settlements with the government. In the latest case, Chevron has agreed to pay more than $45 million to resolve allegations that it underpaid royalties on natural gas leases for land owned by the federal government and Native Americans. This case shows that False Claims Act violations can pop up just about anywhere, with oil companies being more than willing to defraud tax payers and Native Americans out of royalties that are rightfully theirs.

Every month, oil companies must report to the Minerals Management Service of the U.S. Department of the Interior the value of the natural gas extracted from their federal and Native American leases. The companies must then pay a percentage of the value as royalties to the leaseholders. The Chevron companies allegedly used a variety of fraudulent tactics in order to avoid paying full royalties to the federal government and Native Americans. This was no short-term fraud, either. The Chevron companies allegedly bilked leaseholders for two decades!

A major issue in this qui tam suit was whether the whistleblower plaintiff's claims would survive his death. In U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.), the court ruled that the whistleblower's claims did in fact survive his death, meaning that his heirs were entitled to what would have been the whistleblower's share of the settlement. As a result, the whistleblower's heirs will receive $12,303,787.88, plus interest.

Regarding the settlement, the U.S. Attorney for the Eastern District of Texas said,

Perhaps it is part of the human condition to take advantage of others and to not conduct business in a honorable fashion. But it will never be the right way to do business. Today’s settlement affirms the basic truth that it is never a good idea to cheat.

When will corporations and individuals realize that defrauding the government is never the "right way to do business"? Perhaps never. As long as unscrupulous corporations and individuals can get their sticky fingers on the vast amounts of money spent by the government, the possibility of fraud will exist. Fortunately, there are individuals with honor and integrity who will blow the whistle on wrongdoers, whether they are bilking Medicare or stealing oil and gas royalties.

Tagged as: fraud, government, whistleblower No Comments

24Dec/090

2009: A Big Year for Fraud Fighters

Ethisphere Institute, a business ethics think-tank "dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability" has named the 100 Most Influential People in Business Ethics for 2009. This year, a pharmaceutical whistleblower tops the list, and a U.S. Senator committed to fighting fraud is in the top 20. The list also includes a whistleblower who filed a qui tam suit against Quest Diagnostics and the Nichols Institute.

John Kopchinksi is the whistleblower named as this year's most influential person in business ethics. Kopchinski was a Pfizer sales rep who, in 2003, filed a qui tam suit against the pharmaceutical behemoth. Kopchinski is a Gulf War vet who is honorable to the core. When Pfizer kept driving him to increase profits, no matter how many lives were put at risk, Kopchinksi stood his ground and refused to go along with the company's avaricious ways.

Pfizer eventually settled the qui tam suit with the Department of Justice for an eye-popping, record-obliterating $2.3 billion. The settlement was the largest in the history of the Department of Justice. Part of the suit was brought against Pfizer for off-label use marketing of its pain-killer Bextra. The FDA had approved Bextra for treatment of arthritis and menstrual pain in limited doses, but Pfizer pushed the drug for use at high doses which would put patients at risk of heart attacks, strokes, and blood clots. The lawsuit also alleged that Pfizer paid kickbacks to docs who prescribed Bextra for off-label uses.

For his role as a whistleblower, Kopchinski received $51.5 million. Ethisphere Institute gives him the praise he deserves, noting that Kopchinski "[o]fficially turned whistleblowing into big business."

Coming in at number 16 on the list of the 100 most influential people in business ethics is Iowa's very own Senator Chuck Grassley. An important component in Senator Grassley's mission to save taxpayer dollars is his support for whistleblowers. Despite our political differences, everyone should be able to agree that wasted tax dollars, whether through fraud or inefficiency, end up hurting all of us. As Senator Grassley sums it up on his website, "Every tax dollar lost to waste, fraud or abuse cheats the taxpaying public and prevents the federal government from serving the public good." (Read some of the numerous news articles concerning Senator Grassley's efforts to combat fraud here).

2009 turned out to be a big year for whistleblowers, but there is more work to be done. As the government continues to spend trillions on military campaigns, healthcare, bailouts, and other programs, there will be a steady supply of unscrupulous individuals and entities out there trying to commit fraud. It's up to whistleblowers to stand up and fight.

Filed under: Current Cases, Litigation, News, Qui Tam Fraud, Types of Fraud No Comments

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