Whistleblower Law Blog

Bank of America Whistleblower Awarded $14.5 Million False Claims Act Settlement for Challenging Bank’s Practice of Inflating Home Appraisals to Obtain Federal Loans

June 08, 2012

Kyle Lagow, a former employee of Countrywide Financial Corp., which was acquired by Bank of America in 2008, will receive a $14.5 million whistleblower award as part of the $1 billion False Claims Act settlement Bank of America (BoA) reached with the U.S. Department of Justice. The $1billion settlement that BoA reached with the federal government was part of a $25 billion national mortgage settlement reached between five mortgage lenders in February 2012.

Lagow filed his lawsuit in 2009 alleging that Countrywide terminated his employment because he raised concerns about Countrywide’s appraisal practices.  Law 360 writes that according to Lagow, “Countrywide [inflated] property appraisals for federal loans, [and as a result] FHA ended up insuring home mortgages under false pretexts, and the government ended up repaying lenders at falsely inflated amounts if borrowers defaulted.” Countrywide would pressure home appraisers to inflate home values so they could gain larger federal loans and gain a larger profit. They would pay these appraisers above-market fees and would reward appraisers that produce as many as 400 appraisals and reviews a month, a number that could not be achieved legally.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Federal Court in New York Orders Chicago Resident and Former Floor Broker, Kent R.E. Whitney, to Pay $600,000 for Margin Call Avoidance Scheme

June 06, 2012

On May 22, 2012 the U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York issued a consent order and permanent trading and registration ban on former Chicago, Illinois floor broker Kent R.E. Whitney.  As part of an elaborate scheme to trade stock options without posting the required margin, Whitney was accused of making false and misleading statements to Chicago Mercantile Exchange (CME) representatives, futures commission merchants (FCMs), and others.

The consent order found that between May 2008 and April 2010, Whitney fraudulently avoided substantial margin calls when placing orders for commodity options traded on the New York Mercantile Exchange (NYMEX) and the CME by utilizing a margin avoidance scheme with out-of-the-money options that had no intrinsic value.  He did this by waiting until the day or two before the front month options expired to sell a large volume of front month out-of-the-money options on the NYMEX and CME trading floors.  In order to show that the accounts he sold were open and held sufficient funds, Whitney would provide clearing firms with invalid account numbers for the trading allocations he submitted, however, the accounts he traded were closed and held no funds for margin.

When the clearing firms that received the initial allocations realized that the account numbers Whitney provided were invalid or the accounts were closed, they would return the trades to the clearing firms of the executing floor brokers.  Whitney would then provide valid account numbers in order to clear the trade, which ultimately helped him avoid posting margins by shifting the overnight margin risk to the clearing firms of the executing floor broker.  This practice allowed Whitney to avoid posting over $96 million in margin calls and made it possible for Whitney to collect the premiums for the accounts he traded.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer, including securities fraud and commodities trading fraud.

Air Force Pilots Blow the Whistle on F-22 Fighter Jet Design Flaws that May Cause Pilots to Black Out

May 29, 2012

The Huffington Post reported earlier this month that two elite U.S. Air Force pilots, Major Jeremy Gordon and Captain Josh Wilson, are seeking protection under federal whistleblower law for revealing safety concerns with the F-22 Raptor and for refusing to fly the $400 million jets.  The two pilots risked their careers by appearing in uniform on the CBS news program “60 Minutes” to discuss the F-22 problem without permission from the Air Force. According to Gordon and Wilson, the F-22 jets have a faulty oxygen system which is causing numerous pilots to suffer from oxygen deprivation and black out.

In 2010, Captain Jeffrey Haney died after his F-22 crashed in Alaska. Although the crash was attributed to pilot error, evidence shows that Haney blacked out prior to crashing.  After this incident, more than a dozen other F-22 crashes prompted the Air Force to ground the jets in May 2011. Following an investigation, the Air Force found no “definitive cause” for the black outs and put the jets back in the air this last September.  As an interim corrective measure, the Air Force ordered a change to the charcoal filters in the F-22’s air filtration system.  However, following this update, several pilots, including Gordon, suffered from oxygen deprivation, and some coughed up black sputum.  Gordon and Wilson have stated that they disclosed their concerns to the press because despite knowing about this safety issue, the Air Force has been ordering pilots to continue flying the F-22 jets and is threatening pilots that refuse to fly with disciplinary action.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation, including members of the military and federal employees.

Federal Appeals Court Reverses Lower Court Decision Allowing Whistleblower Lawsuit Against Two Boston Hospitals and Two Alzheimer’s Disease Researchers to Proceed

May 25, 2012

Judge Kermit V. Lipez of the U.S. Court of Appeals for the First Circuit last week reversed a summary judgment decision granted by the U.S. District Court for the District of Massachusetts to two Boston hospitals, Brigham and Women’s Hospital and Massachusetts General Hospital (“MGH”), and two Alzheimer’s disease researchers, Marilyn Albert, M.D. and Ron Killiany, Ph.D.

In 2006, Kenneth Jones, Ph.D., a chief statistician for a $15 million National Institutes of Health (NIH) grant for Alzheimer’s research, filed a qui tam lawsuit under the False Claims Act.  Jones alleged that statements in the grant issued to the National Institute on Ageing and NIH were falsified, and that despite knowing this, the defendants failed to take corrective action.

This research is part of an ongoing study trying to determine whether changes in brain volume seen on structural magnetic resonance imaging (MRI) can ultimately help predict who will develop Alzheimer’s. As part of the research, Dr. Killiany and one other rater manually outlined brain structures, including the entorhinal cortex (EC) on 103 participants’ MRI scans. Based on Dr. Killany’s brain structure outlines, computer software would calculate the volume of EC, after which other team members would conduct statistical analyses to try to determine if volume changes of the EC would help predict who might develop Alzheimer’s in the future. Jones, however, alleged that Dr. Killiany falsified information submitted to NIH by manipulating his brain structure outlines to support his hypothesis.

According to Medscape: “Dr. Jones later expressed concern to his colleagues regarding quantitative differences between the data sets, stating that the alterations were substantial and that, according to his analysis, the alterations were responsible for the apparent statistical significance.”  When Jones requested that the scans be re-measured, Dr. Albert refused because she believed that the additional set of measurements would cause more confusion.

Judge Lipez, stated:

“Distribution of revisions presents a genuine issue of material fact as to whether, as [one expert] put it, [Dr.] Killiany cherry-picked measurements to revise in a non-random fashion in order to produce data that would support his hypothesis on the role of EC volume and the prediction of prodromal Alzheimer’s.”

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

Law360 Interviews R. Scott Oswald, Managing Principal of The Employment Law Group®, on the Significance of OSHA’s Recent Call to Establish a Whistleblower Protection Advisory Committee

May 21, 2012

R. Scott Oswald, managing principal of The Employment Law Group® law firm was recently interviewed by Law360 regarding the Department of Labor’s Occupational Safety and Health Administration’s (OSHA) announcement last week that it plans to establish an a Whistleblower Protection Advisory Committee dedicated to improving OSHA’s whistleblower protection efforts.

The proposed committee would fulfill and advisory role and make recommendations to the Secretary of Labor on ways to improve the effectiveness and transparency of OSHA’s administration of whistleblower protection laws.  The committee would advise on the development and implementation of “improved customer service models” for both whistleblowers and employers, as well as recommend changes to investigator training, and regulations governing OSHA investigations.  The move, according to commentators, highlights the government’s reinvigorated focus on protecting employees who report unsafe working conditions, violations of financial and securities law, or other violations.

The proposed committee would likely be comprised of a cross-section of stakeholders representing both employee and management perspectives and would function as a public forum to discuss the whistleblower program.

According to Mr. Oswald, “a committee that includes a broad range of perspectives would also serve to continue the discussions that OSHA had with stakeholders in its efforts to develop the changes it has made so far to improve the process for whistleblowers and corporations.”

Last year OSHA, which enforces the whistleblower provisions of 21 statutes that protect employees who blow the whistle on violations, completed an exhaustive internal review of its whistleblower program and subsequently announced a restructuring of the program, as well as new updates to OSHA’s investigator manuals.

Furthermore, Oswald commented that OSHA’s establishment of an advisory committee “is a continuation of that process meant to ensure that the pragmatic changes that OSHA has established do not in any way erode over time because there will be a group of individuals that have a vested interest in whistleblower programs’ success.”

The article, entitled “OSHA Steps Up Efforts To Revamp Whistleblower Program”, appeared in the May 21, 2012 edition of the web-based legal news service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

Law360 Interviews R. Scott Oswald, Managing Principal of The Employment Law Group®, on the Potential Impact of the Senate-Approved Whistleblower Protection Enhancement Act (WPEA)

May 16, 2012

R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 regarding the Whistleblower Protection Enhancement Act (WPEA), which the U.S. Senate unanimously passed last week.

If also passed by the U.S. House of Representatives, the WPEA would expand whistleblower protections against retaliation by making it easier for whistleblowers to claim protected status, by eliminating the Federal Circuit’s exclusive appellate jurisdiction over certain whistleblower cases for a period of five years, and by allowing jury trials under certain circumstances for employees who sue agencies that retaliate against whistleblowers.  Additionally, if enacted, the WPEA would extend whistleblower rights to approximately 40,000 airport baggage screeners.

Since 1994, whistleblowers have only prevailed in 3 out of 220 retaliation lawsuits heard by the Federal Circuit.  According to Mr. Oswald, “The Whistleblower Protection Enhancement Act takes direct aim at the Federal Circuit precedents by [extending] protection to several new classes of employees, including employees of the Transportation Security Administration and intelligence agencies”.

“This is a critical reform,” Oswald stated, “Whistleblowers will know their disclosures won’t be held against them if they come forward with that information in good faith.”

Oswald also emphasized that the WPEA would “restore protections intended by the original Whistleblower Protection Act by protecting communications related to an employee’s official duties and communication with supervisors.”  This, according to Oswald, “[could] help agencies deal with fraud or other problems internally”.

“We want individuals to make disclosures at the lowest possible level and not feel like they have to file a complaint with the inspector general in every instance,” Oswald said.

Finally, Oswald noted, the law would also “expressly prohibit relocation or revoking an employee’s security clearance as retaliation for blowing the whistle, which can amount to retaliatory firing by other means for some employees.”

The article, entitled “Senate Bill Would Boost Whistleblowers’ Chances In Court”, appeared in the May 15, 2012 edition of the web-based legal news service, Law360.

OSHA Orders Tennessee Trucking Company to Reinstate Whistleblower and Pay Over $180,000 for Terminating Him for Refusing to Drive While Fatigued and Ill

May 10, 2012

On May 3, 2012, the U.S. Department of Labor Occupational Safety and Health Administration (OSHA) announced that it ordered Mark Alvis, Inc., a Tennessee-based commercial motor carrier, to reinstate a former employee and pay him $180,000 in back pay, interest, and damages. OSHA found that the company violated the Surface Transportation Assistance Act by terminating the employee for refusing to drive while he was fatigued and ill, and for refusing to exceed the hours-of-service limitations of the Federal Motor Carrier Safety Regulations.

On May 4, 2010, while inspecting a milk tanker truck for readiness before making a delivery, the driver slipped and hit his chest and stomach against a ladder. After he completed the delivery, the employee’s supervisor instructed him to perform another delivery.  The employee informed his supervisor that could not make the delivery, both because he was hurt and because he did not have enough remaining service hours to complete the task in accordance with federal regulations., Under U.S. Department of Transportation Federal Motor Carrier regulations,  commercial truck drivers are limited in the number of consecutive hours they may spend on the road without adequate breaks.  Upon refusing to make the delivery, the employee was told to remove his belongings from his truck was terminated.

After he was terminated, the employee filed a formal whistleblower complaint with OSHA.  After investigating the matter, OSHAdetermined that there was sufficient evidence to conclude that the company terminated the employeebecause he refused to complete the last delivery.

“America’s truck drivers have the right to refuse to drive when they are fatigued and/or ill and when they may be in violation of hours-of-service requirements, as permitted by current federal trucking regulations,” said Cindy A. Coe, OSHA’s regional administrator in Atlanta. “OSHA will ensure that these basic worker rights are protected and will prosecute any employer found violating them.”

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity and safety hazards by their employer.

The Employment Law Group® Principals, Adam Augustine Carter and Nicholas Woodfield, Selected as 2012 Washington, D.C. Super Lawyers

May 09, 2012

The Employment Law Group® law firm is proud to announce that two of its principal attorneys – Adam Augustine Carter and Nicholas Woodfield – have been selected as 2012 Washington, D.C. Super Lawyers.

Adam Augustine Carter has spent most of his 20 year career as a litigator representing employees and whistleblowers.  Mr. Carter has been praised by clients, counsel, and courts for his effective advocacy and his tremendous problem solving abilities.  Mr. Carter is very experienced representing employees who bring claims against their employers involving wrongful termination, retaliation, contract disputes, employment discrimination, Sarbanes-Oxley (SOX), for violations of USERRA, FMLA, and for violations of other federal and/or state civil rights laws

Nicholas Woodfield is a veteran trial attorney who concentrates his practice on Fair Labor Standards Act wage non-payment and misclassification claims, state law wage non-payment claims, Sarbanes-Oxley whistleblower complaints, False Claims Act (qui tam) claims, and discrimination and retaliation cases. Mr. Woodfield has recovered millions of dollars in unpaid overtime and wages for his clients and currently serves as President of the Virginia Employment Lawyer’s Association

Super Lawyers is a rating service of attorneys who have obtained a high degree of professional achievement and peer recognition.  Super Lawyers selects attorneys using a multiphase, rigorous rating process that includes peer nominations, peer evaluations, as well as independent research.

Law360 Quotes R. Scott Oswald, Managing Principal of The Employment Law Group® on Recent Pro-Whistleblower Decision from the Department of Labor’s Administrative Review Board (ARB)

May 08, 2012

R. Scott Oswald, managing principal of The Employment Law Group® law firm was recently interviewed by Law360 on a recent Department of Labor Administrative Review Board (ARB) decision establishing a lighter burden of proof for whistleblowers under the Sarbanes-Oxley Act (SOX).

The decision, Zinn v. American Commercial Lines Inc., ARB No. 10-029, ALJ No. 2009-SOX-25 (ARB Mar. 28, 2012), involved an in-house attorney, Angela Zinn, who blew the whistle on allegedly unsafe maritime transport practices while employed by the shipping company American Commercial Lines Inc.  The ARB’s decision held that whistleblowers need not establish that their employer’s allegedly legitimate reason for taking action against them was pretextual.

According to Oswald, who represents employees and whistleblowers, “management-side lawyers have fought to graft this tougher burden-shifting standard onto SOX cases, but the decision demonstrates that the DOL is not having it.”

In the decision the ARB “rejected emphatically the notion that an employee has a burden to demonstrate that the employer’s proffered reason is pretextual,” Oswald noted.

Regarding the effect of the ARB’s decision, Oswald stated: “I think this makes it clear that there will be fewer and fewer of these kinds of cases that can and should be adjudicated before an evidentiary hearing.”

According to the rationale underlying the ARB’s recent decision, DOL Administrative Law Judges should now let cases proceed “unless the employer meets its burden to show through clear and convincing evidence that the same adverse action would have been taken regardless of the alleged protected activity at issue, and that,” according to Oswald, “[was] what Congress intended.”

The article, entitled “DOL Ruling Makes SOX Whistleblower Cases Harder To Beat”, appeared in the May 1, 2012 edition of the web-based legal news service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.

 

 

Law360 Interviews The Employment Law Group® Managing Principal, R. Scott Oswald, on Potential Effects of Report Claiming that the SEC Inadvertently Disclosed a Whistleblower’s Identity

May 08, 2012

R. Scott Oswald, managing principal of The Employment Law Group® law firm, was recently interviewed by Law360 and provided commentary on a report that the U.S. Securities and Exchange Commission (SEC) may have inadvertently exposed the identity of a corporate whistleblower.  Last week the Wall Street Journal reported that the SEC had unintentionally revealed the identity of a whistleblower during the course of the agency’s investigation of Pipeline Trading Systems LLC.

Some commentators have predicted that because of the SEC’s purported slipup, whistleblowers may be less likely to come forward, fearing that their anonymity may be compromised.  However, in his interview on the subject with Law360, Oswald, who represents employees and whistleblowers, noted that the reason that many whistleblowers decide to file a complaint with the SEC is because the whistleblowers have already complained to their employers to no avail.

Specifically, according to Oswald, “once [whistleblowers] have made the decision that the company is not going to act responsibly, they’re going to go to the SEC.”

“If anything”, Oswald said “the SEC’s goof would persuade potential whistleblowers to file anonymous complaints through counsel, rather than going directly to the commission”.

The article, entitled “SEC Whistleblower Reveal Won’t Sink Program, Attys Say”, appeared in the April 25, 2012 edition of the online legal news and commentary service, Law360.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer.