Cory Kirchert: Whistleblowers have an integrity that goes to the core of their being

Cory C. Kirchert, a member of SECIL Law and Of Counsel in the Washington, D.C., office of Arnall Golden Gregory LLP, recently talked about some of the most important things someone thinking about being a whistleblower should know, including what mistakes to avoid, how to protect yourself, and potential rewards.

Q: In your own words, what is a whistleblower?

A: A whistleblower is someone who discovers what he or she perceives to be unlawful or wrongful conduct who decides to report that to a third person, and who does report that to a third person.

Q: What words would you use to describe a whistleblower?

A: They are courageous, they're strong. And people who are whistleblowers, at some point they can't tolerate fraud, or deception, and particularly unfairness. They have an integrity that sort of goes to the core of their being, if you will.

Q: What is the single biggest mistake a whistleblower can make?

A: I think whistleblowers can blow the whistle too soon. Without a proper decision-making process, rushing to one's employer, or running to talk about what they've seen or whatnot, can cause very bad results. So I've seen situations where the whistleblower has brought the right information to the wrong people, and the wrong information to the right people. And if they do that precipitously, they can lose their employment, lose promotion possibilities. And of course, depending on the information and its financial value it can be even worse.

Q: What is the risk to a whistleblower who does not have legal protection?

A: Well, I think first, I would define legal protection for whistleblowers. It's a term that the government uses, statutes use, and legal protection is misleading, because protection means when one's protected, they're guarded or defended against loss or harm. Under the statutes, state and federal, typically, legal protection is a right of recourse, conditional recourse for harm already perhaps suffered. So for instance, retaliation. When you bring a retaliation case, that's because you've already been harmed, perhaps have lost your job. So the things that people can do to protect themselves, in a more realistic sense, include anonymity, working through an agent such as a lawyer, and divulging the information in a special way that protects the whistleblower. So for instance, if you're using a whistleblower statute that remunerates a whistleblower, you would want to suggest ways in which the government can investigate so that it doesn't disclose the position and the insights of that whistleblower.

I think the most important thing is the decision whether to become a whistleblower. Because once you put that information out there, then you have no control over the events that follow. So I have seen situations where whistleblowers have lost their jobs. And in some circumstances, they had the right motivation, but the information was based on cocktail talk, you know, at a party, which was false. The talk was self-aggrandizing and it was false. We concluded that after an investigation. So it's very important that a potential whistleblower talk to someone about what it is they think they would like to blow the whistle on.

Q: At what point, does a whistleblower have protection?

A: Again, that goes to the legal protection versus a real protection. A whistleblower needs to be protected throughout the process. So, in terms of legal protection, oftentimes it's when the whistleblower is out there, has exposed the information, and some retaliation of some kind is going to take place or has occurred.

Q: Can whistleblowers remain anonymous?

A: It really depends. There are so many whistleblower statutes. You have the federal statutes, and you have your state statutes. And the federal statutes sort of break down into two groupings: One is where you have “legal protections”, and the others, a few, also enable you to recover significant payouts if there are fines collected and so on.

So in terms of anonymity, it depends on the statute. For instance, right now, a lot of cases in the False Claims Act area, the “relators” are kept anonymous through essentially one-time organizations through which they act through their attorneys. A “relator” is essentially one who, in a qui tam action, is the whistleblower. But unlike other whistleblowing cases or matters, in a qui tam action the whistleblower is actually the plaintiff. So brings a case as essentially an agent of, let's say, the United States government.

Q: Can you explain qui tam laws?

A: A qui tam lawsuit is essentially a whistleblower’s lawsuit brought on behalf of the government under the False Claims Act. The “relator” is essentially a whistleblower who is a plaintiff. A lot of whistleblowers don't need to bring their own lawsuits. With False Claims, the qui tam action is an action in which the whistleblower is the plaintiff acting on behalf of the government. And then of course, the government can take over the lawsuit, or may not take over, or could oppose the lawsuit.

Q: Can you highlight some of the monetary rewards?

A: FinCEN [the U.S. Treasury Department’s Financial Crimes Enforcement Network] has a program for anti money laundering tips. But the SEC [Securities and Exchange Commission] so far has been a big payer. In 2020, they paid out a record $564 million to, I don't know, maybe 100 people or so. They put it out in their annual report. The CFTC [Commodity Futures Trading Commission] is catching up. I believe in 2021, they had one payout that was $200 million by itself. So if you have information, what the agencies call tips, complaints, or referrals, “TCRs”, you file those with the agency. And if they choose to investigate that matter, and if it's the case that they find liability and recover significant funds, you are entitled to 10 to 30% of that. Now, there's discretion in the process. But those can be significant numbers obviously.

In part, it depends on how you sell the tip. I think a lot of folks just go directly to the websites and put in their tips. But having worked for the SEC, in my opinion, you need to basically sell it. You're competing with thousands of tips. And the more recoveries there are and the larger the recoveries, the tips increase. So you need to sell the tip. And by selling the tip, you need to put together essentially a theory of liability under the relevant statute. And you need to put together the information you have, organize it as best you can, and then suggest without being disrespectful, but totally courteously, you suggest an investigative strategy. That does two things, in my opinion. One is it enhances the desirability of your tip over others. And secondly, it can accelerate the investigation.

Q: In your experience, do whistleblowers come forward because it’s the thing to do or because of the monetary awards, or both?

A: Well, I think in the past, it was the right thing to do only because there really were no rewards. And because they took great risks and still do, and the whole idea of representing whistleblowers is to reduce those risks. However, incentives have changed to some extent. And so it's like any kind of reward: people are willing to come forward because there's more of an offset to the potential cost. There's an actual benefit other than just one's integrity. There's also a monetary benefit. So I think it's a little bit of both now. But in the past it certainly wasn't the monetary reward.

Q: What are the risks involved in becoming a whistleblower?

A: Well, the risks depend on whom you're blowing the whistle. It could be if it's your employer, well, one risk is that you can lose your job, depending on who's whose conduct is being looked at, or whose conduct is relevant. It could be a vendor, but it could be an important vendor, in which case your employment could still be at risk. It could be a customer. There are a lot of different scenarios. So one of the most important things to do is to assess right up front, the quality and significance of the information to determine whom, if anyone, it's going to impact and reduce those risks as much as possible. We mentioned anonymity as being certainly one way, but also anonymity and not only in the sense that you're not giving up your name. But you're hiding how it is that you would come across this information. Because sometimes whistleblowers are uniquely situated to have that information. So once it comes out, it’s pretty obvious who it is.

Q: What do you think about the Ethic Alliance and its mission?

A: The Ethic Alliance is so important, so needed, because it creates an opportunity for people who need information, who perhaps need contacts, to get the information, to establish contacts, and to make intelligent and helpful decisions in perhaps disclosing conduct that's wrongful or unlawful.

It allows you to make not only intelligent and helpful decisions concerning the decision to whistleblow, but also whom to represent you in making that decision and then following through if necessary.

Q: What do you want whistleblowers to know about taking the first step in a difficult decision?

A: The first step is to talk to someone who can evaluate the quality, importance and the impact the information will have. Because as I said earlier, once you disclose, it's out there, then you no longer have control of the follow through, the events that follow. And some of those can be harmful to a whistleblower, obviously. Also, in some statutes, once you disclose, you give up potential rights to recovery. Once it becomes public information, then you have lost perhaps certain monetary benefits that you could enjoy.

Q: Anything else you would like to add that I’m missing?

A: I can emphasize again, the importance of having assistance in putting together your story. A lot of folks, they may have great information. And sometimes information is conflated with evidence, because evidence is information that essentially supports a theory. So information can lead to a theory of what is going on or what occurred. And then the evidence is something that, of course, you would collect. So one thing people can do that creates problems for them is to start stealing the company's papers or documents. I don't recommend that. Because the information that leads to the theory can be by itself sufficient. You know, what you see is the best evidence there is, perhaps. But that doesn't mean you need to bring the documents with you.