Michael Sullivan, Author at Finch McCranie LLP

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Michael Sullivan

IRS Whistleblower Rules Hearing on May 11 Attracts Global Attention

May 3, 2011
Michael Sullivan

A frequent question I receive is whether non-US citizens can receive rewards under the IRS Whistleblower Program. There is no limitation to US citizens, and persons around the world are eligible to participate in the IRS Whistleblower Program, regardless of citizenship.

Perhaps this is one reason why the May 11 hearing in DC on the IRS Whistleblower rules has attracted attention far and wide, from the India Times, to the American Banking and Market News, to the Northside Neighbor. We will
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Financial Fraud Cases Under False Claims Act Continue, As Deutsche Bank and MortgageIT Face Mortgage Fraud Suit

May 3, 2011
Michael Sullivan

The 2008 financial sector collapse has led to another False Claims Act case against financial institutions. Today, Deutsche Bank and MortgageIT were named in a mortgage fraud case under the False Claims Act, filed by U.S. Attorney Preet Bharara of the Southern District of New York.

The government’s Complaint alleges that Deutsche Bank and MortgageIT “repeatedly lied to be included in a Government program to select mortgages for insurance by the Government. Once in that program, they recklessly selected mortgages that violated program rules
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Tax Whistleblower Rules to “Expand” Whistleblower Program Actually Restrict and Discourage Participation, Say Whistleblower Lawyers

April 21, 2011
Michael Sullivan

Earlier this week we wrote about our urging the IRS to remain true to Congress’s plain intent to attract a greater number and variety of tax whistleblower claims. Our written comments on changes needed to the IRS Whistleblower regulation were published in today’s Tax Notes.

We will be in Washington on May 11 to address the IRS in person. In the meantime, here is some additional discussion of why these changes are so important.

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New IRS Whistleblower Rules Still Need Substantial Changes

April 18, 2011
Michael Sullivan

Since tax returns were due today, it was fitting that today was the deadline for comments on an important proposed new regulation for tax whistleblower claims.

We have submitted formal comments today to the IRS excerpted below, and have asked to speak to the IRS to urge important changes on May 11 in Washington. We thought it important to explain the history of Congress’s 2006 changes to the IRS whistleblower law–and emphasize that its clear intent was to attract a greater number and variety of tax whistleblower claims.

We believe the IRS needs to remain true to that principle, and thus amend its proposed regulation to reward any whistleblower who creates a financial benefit to the Treasury. That principle will dramatically simplify–and enhance–the IRS Whistleblwoer rules. We have also advocated to end needless delays in the program.

Exceprpts of our formal comments to the IRS are reprinted below:
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First Reported IRS Whistleblower Award Is Made–Finally!

April 8, 2011
Michael Sullivan

The floodgates may be opening for the IRS Whistleblower program for tax whistleblowers, which we have written about since its birth in late 2006.Today, a law firm announced that its client received yesterday a $4.5 million award after filing a Form 211 reporting tax violations by a financial services firm.

The IRS Whistleblower Office cannot comment, as whistleblower information is protected by section 6103 of the the Internal Revenue Code. The whistleblower has elected to remain confidential, as the IRS rules allow.

The
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International and Offshore Tax Whistleblower Issues Among Topics for Next IRS Whistleblower Boot Camp

March 29, 2011
Michael Sullivan

We have written about the first two highly successful “IRS Whistleblower Boot Camps” in 2009 and 2010, at which the IRS Whistleblower Office and whistleblower lawyers gathered to discuss the latest developments in pursuing tax whistleblower cases. It is sponsored by Taxpayers Against Fraud.

The Third Annual IRS Whistleblower Boot Camp will be held on April 12 in Washington, D.C.

Because the IRS has increasingingly focused on international and offshore tax issues, I will be moderating the panel discussion on “International and Offshore Tax Whistleblower Issues.”

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IRS Whistleblower Rules For Disclosure of Tax Return Information to Whistleblowers and Their Attorneys

March 14, 2011
Michael Sullivan

The IRS announced today final regulations for sharing of tax return information with IRS whistleblowers and their lawyers, as the IRS pursues tax whistleblower claims.

Under these regulations, officers and employees of the Treasury Department may disclose tax return information to whistleblowers and, if applicable, their legal representatives, in connection with written contracts for services. (See our updated comments on why this rule and IRS practice should change dramatically, as the procedure has never been used.)

In theory, that sharing of information should
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Offshore Alert Conference: Protecting Whistleblowers from Criminal and Civil Liability

March 8, 2011
Michael Sullivan

Of interest to whistleblowers reporting fraud under the False Claims Act, the IRS Whistleblower Program, or the brand new SEC Whistleblower and CFTC Whistleblower Programs is an upcoming presentation, “Avoiding the Mistakes of the UBS/Birkenfeld Case: Protecting Whistleblowers from Criminal and Civil Liability.”

This discussion is part of a fascinating gathering this April in South Beach–the OffshoreAlert Conference. As the brochure promises:

Where else could tax collectors mingle with tax minimizers, asset tracers with asset protectors, regulators with the regulated, whistleblowers with their former employers and crooks with prosecutors?

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SEC Whistleblower Office Has First Director–Sean McKessy

February 18, 2011
Michael Sullivan

Just as we have followed closely the development of the IRS Whistleblower program since Congress authorized it in December 2006, we are watching the birth of the new SEC Whistleblower program. In 2010’s Dodd-Frank Financial Reform law, Congress mandated the creation of what could be the first meaningful SEC and CFTC Whistleblower programs.

Today, the SEC took a major step in announcing the first head of the nascent SEC Whistleblower Office: Sean McKessy, a former Senior Counsel in the SEC’s Division
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SEC Resolves FCPA Case With Maxwell Technologies, Inc. Alleging Millions in Bribes to Chinese Officials

January 31, 2011
Michael Sullivan

As we have discussed previously, bribery of foreign government officials is the subject of many cases filed by the SEC under the Foreign Corrupt Practices Act. Those cases, which often bring significant recoveries, will increase in number as a result of rewards to whistleblowers under the new SEC Whistleblower program that we have followed.

The SEC today announced the successful conclusion of an FCPA investigation of Maxwell Technologies, Inc. The SEC announced it had filed a “settled” case through which Maxwell agreed to
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First Large SEC Whistleblower Award Is Encouraging, As SEC’s “Loss” in Mark Cuban Case May Be

October 21, 2013
Michael Sullivan

“Government shutdown” month (October 2013) has brought encouraging news from the SEC–including some good news you might not realize.

On October 1, the SEC announced its first SEC whistleblower award of more than $1 million. The Commission’s Office of the Whistleblowerer led by Sean McKessy awarded more than $14 million to a whistleblower who remains confidential. According to the SEC, the whistleblower’s information “led to an SEC enforcement action that recovered substantial investor funds.”

Two weeks later, a Texas jury found against the SEC
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The False Claims Act and the New Georgia “Taxpayer Protection False Claims Act’

August 7, 2013
Michael Sullivan

After I helped draft Georgia’s new False Claims Act enacted last year, the “Taxpayer Protection False Claims Act,” I have been asked many questions about this new whistleblower law. Like the federal False Claims Act, its “qui tam” provisions allow private citizens to report fraud against public funds and receive a share of the recovery.

What many people may not know is that Georgia’s two False Claims Acts now apply to all spending by the state, and all spending by local governments.

The 2012 Act can be used by a wide array of “local government” bodies, and by citizens who know about fraud against those entities. The Act defines “local government” broadly to include “any Georgia county, municipal corporation, consolidated government, authority, board of education or other local public board, body, or commission, town, school district, board of cooperative educational services, local public benefit corporation, hospital authority, taxing authority, or other political subdivision of the state or of such local government, including MARTA.”

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Liechtenstein Bank Secrecy Gives Way in $23.8 Million IRS Settlement That Exposes US Tax Evaders

July 30, 2013
Michael Sullivan

Another shoe dropped for offshore tax evaders today, in an encouraging sign for the IRS Whistleblower Office.

A Liechtenstein bank avoided prosecution by agreeing to turn over files on 200 U.S. customers and to pay $23.8 million for assisting U.S. taxpayers in opening and maintaining undeclared bank accounts from 2001 through 2011.

Liechtensteinische Landesbank AG (LLB-Vaduz) helped a significant number of U.S. taxpayers hide these offshore accounts, evade U.S. taxes, and file false tax returns with the IRS, according to today’s announcement.

The Justice Department
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CFTC Whistleblower Program Taps SEC Enforcement Lawyer As New Director

July 17, 2013
Michael Sullivan

In January, the Commodity Futures Trading Commission (CFTC) lost to the SEC the first director of the new CFTC Whistleblower Office, Vincente Martinez. CFTC Chairman Gary Gensler has announced that he has recruited from the SEC Enforcement Division Christopher Ehrman to lead the CFTC Whistleblower Office’s efforts to attract whistleblowers in the swaps and futures markets.

Mr. Ehrman most recently had been Assistant Director of the SEC’s Office of Market Intelligence. His experience there should serve him well since he “oversaw the processing, review and
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Court Allows N.Y. Tax Whistleblower Case To Proceed Against Sprint-Nextel Corporation

July 10, 2013
Michael Sullivan

When New York amended its state False Claims Act in 2010, it broke new ground by including tax whistleblower cases. New York’s decision to attract tax whistleblowers bore fruit when the NY Supreme Court recently ruled that New York’s $100 million tax whistleblower case against Sprint-Nextel Corp. may proceed.

If successful, this case may net New York three times the more than $100 million in unpaid taxes that the state alleges Sprint has failed to pay its state and local governments. It may also bring the whistleblower 15%-25% of what the state recovers.

The N.Y. Supreme Court first rejected Sprint’s arguments that the N.Y. Tax Law did not require payment of the sales tax in question. The Court allowed the case to proceed.

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Amid Attacks on the IRS, Recognition of the Best of the IRS Whistleblower Office

June 10, 2013
Michael Sullivan

Now is the time to tell the story of Bob Gardner. Bob retires this week after 37 years of service with the IRS, most recently with the IRS Whistleblower Office.

Bob understands that public service is a noble calling for so many in our government. He epitomizes all that is good in fairly administering our internal revenue laws.

When IRS Whistleblower Office Director Steve Whitlock began hiring for the first “tax whistleblower” office that Congress had authorized in late 2006, Bob Gardner was
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Reforming the IRS–and Why We Need a Functioning IRS That Follows the Law

June 5, 2013
Michael Sullivan

Could the IRS and Treasury Department have done a worse job in how they have handled the alleged “targeting” of conservative groups that applied for tax-exempt status before the 2012 elections?

My criticism starts–but does not end–with any IRS personnel who singled out “Tea Party” and similar groups for extra scrutiny based on their political affiliations. Any such acts cannot be tolerated..

But less noticed is what was being done–or not done–since at least mid-2012 by the Treasury Inspector General for Tax Administration (“TIGTA”).

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IRS & SEC Whistleblower Directors Join False Claims Act Officials for Conference on Whistleblower Issues

March 23, 2013
Michael Sullivan

This week in a rare occurrence, the heads of the IRS and SEC Whistleblower programs and federal and state False Clams Act officials participated in one conference to discuss prosecuting and defending whistleblower cases.

Our firm has organized this “Whistleblower Law Symposium” since 2007 to explore developments in the growing number of federal and state whistleblower laws that seek to stop fraud against taxpayer funds.

“Sequestration” threatened to keep some major speakers from participating because of travel restrictions. The solution was “beaming in” Sean McKessey, Director of the SEC’s Office of the Whistleblower, and Steve Whitlock, Director of the IRS Whistleblower Office, to join our panelists by videoconference.

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Health Care Fraud Institute Discusses False Claims Act Developments

December 18, 2012
Michael Sullivan

Each December, some of the nation’s top health care lawyers gather to discuss developments in prosecuting and defending health care fraud cases at the Health Care Fraud Institute in Atlanta. Because the qui tam law–the False Claims Act– is the government’s primary civil tool to combat fraud and false claims, the False Claims Act developments are a highlight of the discussion.

This year, I was honored again to be invited to participate as part of the False Claims Act panel with Rick Shackelford, an
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SEC and Justice Department Issue “Resource Guide to the U.S. Foreign Corrupt Practices Act”

November 14, 2012
Michael Sullivan

The SEC Whistleblower Program authorized in 2010’s Dodd-Frank law has greater significance because the SEC and the Justice Department share jurisdiction over Foreign Corrupt Practices Act cases.

Today, SEC Director of Enforcement Robert Khuzami and Assistant Attorney General Lanny Breuer released the “Resource Guide to the U.S. Foreign Corrupt Practices Act.” They describe the Guide as “a unprecedented undertaking by DOJ and SEC to provide the public with detailed information about our FCPA enforcement approach and priorities.”

FCPA investigations have increased significantly in the past few years, and the dollar amount of these cases is often quite large. FCPA cases brought by SEC whistleblowers will only add to amount of FCPA violations uncovered.

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