The authors of this blog are former prosecutors who now represent whistleblowers / Renée Brooker (former Assistant Director for Civil Frauds) email@example.com (202) 288-1295 / Eva Gunasekera (former Senior Counsel for Health Care Fraud) firstname.lastname@example.org
The Department of Justice needs whistleblowers to report fraud involving any federal or state government programs or contracts, including Medicare and Medicaid, as well as government spend on non-health care dollars.
How to blow the whistle on your employer
Published: Apr 10, 2019 10:43 a.m. ET
Legal experts and whistleblowers share advice on how to say something when you see something
Theranos founder Elizabeth Holmes is the subject of a new podcast and documentary.
On Aug. 22, 2001, Enron vice president Sherron Watkins presented CEO Ken Lay with documents and a summary of facts regarding the Houston-anchored energy company’s accounting problems. The scandal would eventually bring down Enron.
Watkins thought Lay would consult with accounting and legal experts and realize Enron had manipulated its financial statements and likely committed fraud. She also expected her boss would form a crisis management team, figure out the salvageable business lines and brace for a financial tsunami.
‘We like to destroy the myth that in order to help fight corruption or wrongdoing, you have to sacrifice your livelihood and put yourself and your family at risk.’
—John Kostyack, the executive director of the National Whistleblower Center
Of course, Lay took no such actions. Enron soon imploded, declaring bankruptcy on Dec. 2, 2001, and cemented itself in the annals of corporate America as a classic case of greed and hubris.
Watkins would later learn that Enron’s outside law firm, Vinson and Elkins, had advised the company’s lawyers on the potential consequences of discharging employees who raised accounting concerns.
Their letter was dated just two days after Watkins’ meeting with Lay.
“I was naive as to why the messenger gets shot,” Watkins, 59, told MarketWatch in an email. “No one wants to hear bad news, and they tend to ignore and [shoot] the messenger.” Watkins, who lives in Georgetown, Texas, now speaks publicly about leadership and ethics.
Former Enron vice president Sherron Watkins watches as former Enron president Jeffrey Skilling testifies in 2002.
Blowing the whistle today
Whistleblowers have dominated headlines in recent weeks. A memo released in early April revealed that Tricia Newbold, a career official in the White House’s personnel security office, told a congressional committee that dozens of security-clearance application rejections administered by her office were later overturned despite “disqualifying issues.”
Meanwhile, Theranos whistleblowers Erika Cheung and Tyler Shultz have attracted renewed attention with the debut of a new ABC News DIS, -0.08% podcast and HBO documentary T, +0.36% about the so-called Silicon Valley “unicorn.”
They alerted health regulators to their concerns about the now-defunct blood-testing startup and spoke with The Wall Street Journal investigative reporter John Carreyrou. Last month, the pair launched an Ethics in Entrepreneurship nonprofit.
Some frame the still-evolving #MeToo movement, through which many employees have spoken out about workplace abuses of power, as a form of mass whistleblowing.
Some also frame the still-evolving #MeToo movement, through which many employees have spoken out about workplace abuses of power, as a form of mass whistleblowing.
John Kostyack, the executive director of the National Whistleblower Center advocacy nonprofit, says he believes “there’s never been a better time to be a whistleblower in this country.”
“We like to destroy the myth that in order to help fight corruption or wrongdoing, you have to sacrifice your livelihood and put yourself and your family at risk,” he said. “You can do this confidentially [and] anonymously, and you can benefit financially.”
American politics and business are strewn with famous and sometimes infamous whistleblowers — among them Watergate informant Deep Throat (later revealed to be FBI official W. Mark Felt), former Pentagon staffer Linda Tripp and former National Security Agency contractor Edward Snowden — who have shone a light on legal and ethical misdeeds, often at great professional and personal risk.
Some live with complicated legacies: Snowden, alternately deemed a hero and a traitor for his role in uncovering the United States’ domestic surveillance practices, lives in exile in Moscow. Tripp, whose secretly taped phone calls with then-White House intern Monica Lewinsky eventually led to Bill Clinton’s impeachment, now says she endured “a real high-tech lynching” for the role she played — but only regrets “not having the guts to do it sooner.”
A professional and personal toll
Blowing the whistle can be a thankless job. More than one-third of respondents who reported wrongdoing and were identified as the source were either threatened with or received a reprisal as a result, according to a 2010 survey by the U.S. Merit Systems Protection Board, an independent “quasi-judicial” agency that hears federal employees’ appeals of removals, demotions and suspensions.
Whistleblowing can take a substantial emotional toll, too. One 2018 analysis in the Netherlands found that “whistleblowers were significantly more at risk for severe mental-health problems, poor global health, and worsening health” than other population-based groups.
American politics and business are strewn with whistleblowers from Deep Throat and Linda Tripp to Erika Cheung and Tyler Shultz.
Many also indicated that whistleblowing had a “severe and negative effect” on work; income; and relationships with ex-colleagues, partners, and children, according to the research, which was published in the peer-reviewed journal Psychological Reports.
“Those risks are higher when you’re in a place with a bad culture that does not support whistleblowing,” Jennifer Pacella, an assistant professor of law at Baruch College, told MarketWatch. “I’m confident that with future generations, that will start to shift.”
The whistleblower who inspired ‘The Informant’ says he wouldn’t do it again
Mark Whitacre, a high-ranked executive turned FBI informant in the mid-1990s lysine price-fixing scandal at food-processing company Archer Daniels Midland ADM, +0.81% says many whistleblowers struggle to find work after coming forward.
Three former executives were eventually sentenced for their roles in a global scheme to fix prices, including Whitacre. Whitacre lost his immunity from prosecution as a witness when it was discovered that he was taking millions of dollars from the company, while working as an informant. He eventually pleaded guilty to fraud.
“Most of them say they would have left the company and not [gotten] involved,” Whitacre, 61, told MarketWatch. “I rarely hear one that says they’re glad they did what they did.”
Whitacre, whom Matt Damon portrayed in the 2009 Steven Soderbergh film “The Informant,” says he had grown consumed with greed, power and corporate ladder-climbing at ADM. He credits his wife of nearly 40 years, Ginger Whitacre, with demanding he turn himself in to the FBI.
Timothy A. Clary/AFP/Getty Images
Mark Whitacre was the subject of the 2009 film ‘The Informant!,’ starring Matt Damon.
So Whitacre wore a wire at work for almost three years, and in 1995, the FBI raided ADM. The company later fired Whitacre and alleged he had embezzled millions from ADM; his subsequent conviction landed him in federal prison for nine years.
Ginger and their children relocated to each of Whitacre’s prison locations during his incarceration, he said, visiting every weekend and holiday. The couple calls their saga “a messy story with a good ending,” he said, adding they wouldn’t do it again.
‘The legal system offers what protection it offers, but it’s rarely tilted in favor of the little guy and gal.’
—Paula Brantner, a senior adviser to the nonprofit Workplace Fairness
“Knowing what we know today, we would have left,” said Whitacre, a Cornell University Ph.D who now works as the chief operating officer of a biotech company. “I just don’t think it was our responsibility to have to do that.”
Nearly three decades later, Whitacre admits “there’s a little more respect for whistleblowers” in society today. “I still don’t think it’s easy for them — but I think it would be easier, for what we did 25 years ago, to do it today,” he said. “There’s a little bit more protection for them.”
Whistleblowers have more protections than ever
Here are some of the most salient whistleblower and anti-retaliation protections available now:
- The SEC whistleblower program, created under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, entitles eligible whistleblowers to an award of 10% to 30% of the amount recovered, provided sanctions exceed $1 million. The program allows whistleblowers to submit information anonymously.
- The 2002 Sarbanes-Oxley Act offers whistleblowers at publicly traded companies protection against retaliation in fraud cases.
- The 1863 False Claims Act, amended in 1986 and multiple times thereafter to strengthen whistleblower incentives, allows people to sue federal contractors for fraud on behalf of the government and receive a bounty of between 15% and 30%. (Whistleblowers in an FCA case, AKA “relators,” aren’t guaranteed anonymity.)
- Many states have their own false claims acts that cover state funds.
- The Internal Revenue Service offers a payout of up to 30% to whistleblowers with information on people who fail to pay their taxes.
- The 1989 Whistleblower Protection Act and 2012 Whistleblower Protection Enhancement Act protect federal employees.
- The Affordable Care Act offers whistleblower protections to employees who receive an IRS credit under the ACA and those who report violations of the ACA.
- There are also legal protections for environmental whistleblowers, food-safety whistleblowers, airline-employee whistleblowers and several other groups.
Despite these protections, there is a “fairly complex” set of laws and procedures that can land you in trouble if you fail to navigate them properly, Kostyack said. “There’s a way to address corruption and to not put yourself at personal risk like there was at one point,” he added. “But it requires following procedures, and staying within time lines, and having an intermediary who can represent you and communicate with law enforcement.”
How to blow the whistle without putting yourself at risk
Here are tips from legal experts and whistleblowers on how to say something when you see something — while minimizing your own risk:
First, talk to a lawyer. A lawyer who specializes in whistleblower law should be able to answer questions about possible bounties and anti-retaliation protections, and give a second opinion on whether an issue is whistleblower worthy, said attorney Reuben Guttman of the firm Guttman, Buschner & Brooks, which has represented whistleblowers in False Claims Act cases. Look for an attorney who has tried cases, Guttman added, and review their writings and case histories.
“I don’t think this is something you want to try to do on your own,” Kostyack said. Preserving your confidentiality and having a lawyer help you understand the risks and rewards associated with collecting information is a wise move, he said. Plus, “in many corruption cases, multiple statutes are violated. A qualified attorney will be able to advise a whistleblower which laws apply to her or his situation.”
Weigh the consequences on both sides, Whitacre said. “What will happen if you don’t blow the whistle? How critical is it? Are people’s lives in danger if you don’t blow the whistle?” he said. On the other hand, he added, consider what your next steps might be if you forge ahead. “My wife and I went up against one of the biggest companies in the world, and it was a tough go,” he said.
Fully inform yourself of the potential risks involved, including retaliation, added employment attorney Paula Brantner, a senior adviser to the nonprofit Workplace Fairness. “The laws are complicated, the protections aren’t always straightforward, and there can be consequences,” she told MarketWatch.
“The legal system offers what protection it offers, but it’s rarely tilted in favor of the little guy and gal — so it can be very scary, it can be very intimidating, and relief may be a long time in coming.”
Establish a support network. “Obviously, you’ll want the support of your family and your close friends,” Brantner said. “It’s a very isolating experience.”
Figure out whether it makes sense to blow the whistle internally. “Internal whistleblowing is actually very beneficial to the organization, because it allows an organization to address a problem in a very early stage,” Pacella said.
On the other hand, “if eliminating the wrongdoing is going to eliminate a material part of the company’s profits, then it’s pretty clear that solving the problem internally is not going to work,” Guttman added.
Pacella and Guttman advise considering your workplace culture — is it retaliatory, or does management encourage feedback? — as well as the track record of your company’s ethics department. (A number of companies also provide confidential, anonymous whistleblower hotlines.)
Advice for whistlelowers: Don’t use company-issued computers, phones, electronic devices or WiFi signals to reach out to attorneys or journalists.
Document everything, take notes, and suss out potential witnesses, Brantner said. Gather as much documentation as you can by “legitimate means,” she added. That means no stealing documents, snooping in someone else’s files or compiling information by deceptive means. “Don’t engage in wrongdoing yourself,” she said.
And after you’ve blown the whistle, document any events you think may constitute retaliation, Pacella said. “Keep good records for yourself, so you’re building a body of evidence in the event that you seek to get redress for having experienced retaliation,” she said.
Be mindful of time. “Various so-called statutes of limitations place limits on how much time can pass between the last illegal act and when the whistleblower files her or his claim,” Kostyack said.
Be smart about how you communicate. Don’t use company-issued computers, phones, electronic devices or WiFi signals to reach out to attorneys or journalists, Kostyack said. “Whistleblowers should know that when a company is committing fraud, every internal communication is likely being tracked by their superiors,” he said.
“This includes emails, phone conversations, and website visits using company technology, as we recently found in the Theranos case.” Instead, he recommends in-person meetings or using encrypted email or secure websites — accessed off company property and with non-company-issued technology.
Be careful not to use exact phrases or figures that could be traced back to you with a quick search of your emails by management. That was how management at Theranos first earmarked Tyler Shultz as a whistleblower and, subsequently, threatened him with legal action, a process that cost him six figures in legal defense fees.
If you played a role in the misconduct, “be aware that your own conduct will be scrutinized,” Brantner said. Consult with a lawyer about your potential risks in coming forward based on your own actions.
Join forces. “Talk amongst your peers, find others who agree with your assessment and report together,” Watkins said. “There is strength in numbers. Ken Lay could dismiss my concerns as the opinion of one person.”