Coronavirus Whistleblower Reward Post
There are two adages I remember about investment fraud. When times are good, we hear the phrase oft used by President John F. Kennedy, “A rising tide lifts all boats.” But when the economy sours, we hear Warren Buffet’s famous quote, “You only find out who is swimming naked when the tide goes out.”
Taken together, those two sayings mean that when the economy is growing, Ponzi scheme artists and swindlers can easily hide their crimes. When the market crashes and everyone wants their money, however, criminals are quickly exposed.
Look at Bernie Madoff. As America entered the Great Recession in 2008, Bernie’s days were numbered. As long as more people were depositing money with Madoff than withdrawing money, his Ponzi scheme stayed afloat. Once the market softened, however, everyone wanted their cash. On December 11, 2008, Madoff was arrested. Prosecutors say his defrauded clients of approximately $64.8 billion.
Since then, America has enjoined the biggest bull market in history. As America entered lockdown in March of 2020, the great bull run came to a screeching halt. We suspect that in the coming months, many new Ponzi schemes, accounting frauds and scandals will be uncovered. All of those represent prime whistleblower opportunities.
Harry Markopolis was the whistleblower in the Madoff case. For 10 years he told the SEC that Madoff was running a Ponzi scheme. No one listened.
Since then, the SEC and other regulatory bodies are determined not to be caught sleeping on the job.
If the fraud involves a publicly traded company, the SEC has the ability to pay cash rewards of between 10% and 30% percent of whatever the Commission recovers from the wrongdoer. Big accounting firms that audit these companies can also be fined.
Luckin Coffee Stock Crashes 80% on Fraud Rumors
One of the first casualties of the COVID-19 market correction is Chinese based Luckin Coffee. Earlier this month its stock (symbol LK) crashed 82% in one day after reports surfaced that the company cooked its books and inflated sales by $300 million.
The longer the coronavirus pandemic lasts, the more stock prices are likely to be battered. While we believe the market will recover, it wont do so before many other frauds and questionable accounting scandals are first uncovered.
Things We Look for in SEC Whistleblower Cases
We are looking for insiders with information about Ponzi schemes and public companies who are misleading investors. Specifically, we are looking for inside information related to:
(1) False financial performance metrics and inflated sales figures,
(2) Materially false financial statements that overstate a company’s financial health or are otherwise unreliable,
(3) Insider trading, and
(4) Ponzi schemes and other frauds
The SEC can also issue rewards for information about companies engaged in the bribery of foreign government officials.
What’s a Couple Trillion Dollars Amongst Friends?
It’s not just some public companies that are about to be outed because of the falling market. Because our economy is teetering on disaster, the government has passed a stimulus bill with a whopping price tag of between $1.76 trillion and $2+ trillion. You know with that much money on the table there will be scams galore.
Because millions of Americans have already lost their jobs, Congress is pushing through these stimulus payments at a record pace. A small business borrower can get up to $10 million with virtually no processing or review requirements. Although these loans are limited to how the money can be used, we know that many will be abused. Ditto for all the other stimulus programs.
There is also billions being spent on ventilators, personal protective equipment and testing. Even Medicare is in on the act. Once again there will be massive amounts of fraud.
Federal prosecutors in Pittsburgh saved Kaiser Permanente from spending $7 million on N95 respirators that didn’t even exist. Prosecutors say it was a phony sale. U.S. Attorney Scott Brady said a Pittsburgh businessman “secured” a deal to deliver 39 million masks. The entire transaction was a fraud. “We believe we disrupted fraud. We are seeing fraud in every variation, but mostly in respect to N95 masks. We have an anxious public, and resources are strained.”
A Georgia man was arrested for trying to trick the VA out of $750 million in exchange for 125 million N95 masks. Prosecutors say he planned to run off with the money. Christopher Parris, age 39, faces 20 years behind bars. If guilty, we hope he serves every day of it.
The scheme was so large that it prompted a statement from Attorney General William Barr, “We will vigorously pursue fraudsters who exploit the COVID-19 pandemic to make money. As this case demonstrates, even beyond the typical costs associated with unlawful behavior, COVID-19 scams divert government time and resources and risk preventing front-line responders and consumers from obtaining the equipment they need to combat this pandemic. The Department of Justice will not tolerate this conduct, especially when it involves this kind of egregious attempt to target and defraud our nation’s treasures – our veterans.”
Lest you think these are victimless crimes, taxpayers are directly or indirectly picking up the tab on all these scams.
False Claims Act and Coronavirus Whistleblower Rewards
In addition to the SEC Whistleblower Program discussed earlier, the Federal False Claims Act also pays cash rewards. The Act allows private citizens with inside information about fraud involving a federal program or federal funds to file a complaint on behalf of the United States. Successful whistleblowers can earn a reward of between 15% and 30% of whatever the government collects from the wrongdoers.
Because the Act permits triple damages and huge penalties, the corresponding rewards can also be quite large.
With passage of the CARES Act and other stimulus programs, the government has adopted a “pay now, chase later” model that is ripe for fraud and abuse. We understand why the government needs to get funds into the economy quickly. Unfortunately that allows fraudsters to sneak under the wire. Hopefully many concerned citizens will become whistleblowers.
Mahany Law – America’s COVID 19 Whistleblower Lawyers
Long before the pandemic began, the whistleblower lawyers at Mahany Law have been actively pursuing fraudsters all over the world. In the process, we helped our whistleblower clients recover over $100,000,000.00 in reward monies. Real money for real heroes.
From former prosecutors to former police officers and former senior government officials, our dedicated team of whistleblower lawyers knows how to prosecute fraud cases.
For more information, visit our SEC Whistleblower Program and Government Contract False Claims Act information pages. Ready to see if you qualify for a reward? Contact us online, by email brian@mahanylaw.com or by phone 202-800-9791. We handle whistleblower cases anywhere in the United States and the world.
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