ATLANTA,GA
DULUTH, GA
ATLANTA,GA
DULUTH, GA
Our whistleblower team includes former senior DOJ and SEC officials and veteran federal prosecutors, with decades of experience in sophisticated financial fraud cases. We know how to work effectively with government agents and prosecutors to get the best results for our clients.
FIRREA was enacted in 1989 in response to the savings and loan crisis. A unique civil money penalty provision went virtually unused in any significant way by the Justice Department until the 2008 financial crisis. 12 U.S.C. § 1833a.
FIRREA authorizes the Department to seek civil money penalties against individuals and entities that violate any one or more of a dozen criminal predicate statutes, including but not limited to, mail and wire fraud and bank fraud—statutes that are used with relative frequency by criminal divisions of the United States Attorneys’ offices.
Certain predicate acts, such as mail and wire fraud, that deal specifically with banks, financial institutions or financial regulatory agencies, even provide for liability where the financial harm is to the financial institution that is itself the subject of the investigation or the wrongdoer.
There are also statutory provisions that allow whistleblowers—called “declarants”—to serve the Attorney General with a complaint and potentially recover a declarant’s award of up to $1.6 million.
FIRREA is a tool the Department of Justice has shown a reinvigorated use of, aimed particularly at the financial services industry in the last five or so years. FIRREA gives the government broad authority to bring civil penalty claims with some significant advantages to the government and in some cases, an alternative benefit not offered by the False Claims Act.
FIRREA allows the United States a civil remedy to pursue fraud that does not involve taxpayer money. Assuming the requirements of FIRREA are met, FIRREA presents an opportunity for the United States to pursue a company for financial remedies when it otherwise would not have redress under the False Claims Act. Also, notably, FIRREA has less stringent requirements to establish liability than under the predicate criminal statutes, which form the basis for the civil penalty action. To prove a civil penalty case, the United States need only show that a criminal violation has occurred by a preponderance of the evidence, rather than being required to meet the higher standard of “beyond a reasonable doubt.
In addition, where the Department of Justice cannot meet the statute of limitations under the False Claims Act, which generally is six years, the FIRREA statute provides a generous ten year statute of limitations.
As a result of these and other advantages of FIRREA, and in light of the powerful results that have been realized, the Justice Department will increase its use of this tool in the upcoming decade. The United States has not kept statistics on its FIRREA recoveries in the same way it has its False Claims Act recoveries, but in the last several years, its most significant recoveries have been under FIRREA.
Whistleblowers who report fraud in commodity futures, options, and “swaps,” and other violations of the Commodity Exchange Act, can now receive substantial financial rewards from the Commodity Futures Trading Commission (CFTC). The CFTC Whistleblower program is similar to the SEC Whistleblower program created by the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 (Dodd-Frank).
The CFTC regulates commodity futures and option markets in the United States. Its authority expanded to include OTC derivatives, or “swaps,” markets through the Dodd-Frank law in 2010. The CFTC’s mission includes protecting “market users and the public from fraud, manipulation, abusive practices and systemic risk related to derivatives that are subject to the Commodity Exchange Act.”
As we have discussed before, Dodd-Frank was enacted in response to the 2008 financial crisis and the Madoff scandal. Inspired by the successes of the False Claims Act in attracting whistleblowers since 1986, Congress has now authorized a meaningful CFTC Whistleblower Program, as well as the new SEC Whistleblower Program.
U.S. Senate committee staff contacted our firm after reading about problems we had found with the House version of Dodd-Frank’s whistleblower provisions. As described in the SEC Whistleblower section, we knew from experience in representing whistleblowers that essential elements of an effective whistleblower were missing from the House bill.
We advocated that significant whistleblowers will come forward only with an enforceable right to a reward—not left to someone’s discretion–and a meaningful percentage of the monetary sanctions imposed. The final Dodd-Frank language incorporated these important changes that we urged.
CFTC and SEC whistleblowers now have a right to 10-30% of the monetary sanctions recovered as a result of a whistleblower’s original information that leads to a recovery of at least $1 million in sanctions. Dodd-Frank also established remedies for retaliation against whistleblowers.
In 2011, both the CFTC and SEC received great pressure from potential defendants to weaken their draft whistleblower rules. We met with senior CFTC and SEC enforcement officials and staff as part of a small committee of whistleblower attorneys to discuss how to make the proposed whistleblower rules most effective. We also met with SEC Chairman Gary Gensler about improving the CFTC rules, just as we had met with each SEC Commissioner.
We advocated that the CFTC and SEC rules include more categories of whistleblowers who are eligible for rewards, in order to attract the most significant information about fraud. We also urged that the CFTC and SEC Commissioners refuse to require “mandatory internal reporting” through companies’ compliance programs, since experience has shown that too many violators will likely take action against employees who report internally first.
The final CFTC and SEC rules did broaden the categories of eligible whistleblowers, and they reward—but do not require–internal reporting within companies by whistleblower employees.
We understand the uncertainty that comes with legal issues. Our attorneys are here to guide you every step of the way — from the first consultation to courtroom resolution (if that becomes necessary). We offer confidential, no-obligation case evaluations.
📞 Call us today at (404) 341-5356 or email finchmccranie@finchmccranie.com to schedule your consultation.