Examples of State Fraud
The state reward statute is a perfect supplement to the DOJ reward program because there are many instances where the loss to the government is solely state funds. The state reward programs work largely the same as the federal DOJ reward program, with one logical difference. They apply when there is fraud against the state, as opposed to the federal government. Therefore, the same technical requirements discussed for the federal program are applicable. In fact, courts often look to the federal DOJ reward program for guidance in deciding how to interpret the state programs.
The following state cases paid significant rewards:
- a large bank chain improperly kept proceeds from unclaimed $187 million in municipal bonds
(These are funds that rightfully belonged to the state of California. However, the bank hid this information from the state in order to keep the funds. The whistleblower received a large reward for reporting this fraud.)
- a local electric company cheated Los Angeles schools by overcharging them $160 million for electricity
- a company overcharged a state government by $40 million relating to installment and monitoring of heating and cooling systems in state buildings
- a company sold $30 million in defective computers to the state
- a company cheated by $30 million during the construction of the Los Angeles Subway system
- a company sold to nursing homes $40 million in "repackaged" drugs that had been returned by not used
(This violated certain rules and regulations.)
- a hospital falsely reported the amount of its charity work and engaged in kickbacks totaling $14 million
In short, be on the lookout for the same types of fraud schemes being committed against states as against the federal government.