Why are TAF and the
TAF Education Fund Needed?

Taxpayers Against Fraud and the Taxpayers Against Fraud Education Fund (TAFEF), are organizations dedicated to assisting whistleblowers and their attorneys, to protecting the False Claims Act against attack by big business and to educating the American people about the benefits of the False Claims Act's qui tam provisions.

Our work is necessary because the False Claims Act works so well that unscrupulous special interests are always plotting new ways to weaken the law. Since the 1986 amendments to the False Claims Act were passed, numerous attempts have been made to weaken and undermine the law or obtain an outright exemption from it.

"Future attacks on the False Claims Act are undoubtedly around the corner despite the fact that the law's success is in many ways unparalleled in the enforcement community. Consequently, the False Claims Act is, and will remain, a target of those industries that accept billions and billions of taxpayer dollars annually and balk at strict accountability." - Sen. Charles Grassley (R-IA)

The Age-old Battle Against Fraud

Qui tam actions were first used in 13th Century England as a way to enforce the King's laws. In America they existed in colonial times, and were embraced by the first U.S. Congress as a way of enforcing the laws of the new federal government when it had virtually no law enforcement officers.

The term “qui tam” derives from the Latin phrase “qui tam pro domino rege quam pro sic ipso in hoc parte sequitur,” which means that “he who sues for the king in this matter sues for himself as well.”

The False Claims Act, the federal qui tam law focused specifically on fraud by government contractors, was enacted during the Civil War when the Union Army was routinely sold guns that could not fire, shoddy uniforms that dissolved in the rain, broken-down horses that could barely walk, and bags of sawdust masquerading as gunpowder.

In 1863, in response to frauds that were costing the U.S. Treasury millions of dollars and many lives, Abraham Lincoln urged Congress to pass the False Claims Act as a way of recruiting "citizen soldiers" -- including the private bar -- to combat scams against the federal government. This law was very successful, and was nicknamed the "Lincoln Law."

Corruption Fights Back

During World War II, the U.S. government rushed to sign massive military procurement contracts, and it frequently did so with little oversight or due diligence -- a situation ripe for fraud. In 1943, in the throes of the war, the False Claims Act was amended by Congress to narrow its scope by defining the "unknown to the government" clause in such a way that most of the fraud that was was excluded from FCA prosecution. In addition, opponents of anti-fraud measures managed to cut the whistleblower's share of the recovery so low that there was little incentive for someone to risk damaging their career and entering a prolonged legal battle in order to bring a False Claims Act case against a government contractor.

"There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government." - Benjamin Franklin

The New and Improved "Lincoln Law"

After World War II, many years went by with very few qui tam cases filed. In the early 1980s, however, Congress once again began to ramp up for military expansion. At the same time, regular press accounts began to feature easy-to-understand stories of exorbitant defense contractor fraud:  $640 toilet seats, $7,600 coffee makers, and $1,075 bolts, to name just a few examples.

In 1986, in response to this overt price-gouging of the American people, Senator Charles Grassley (R-IA) and Howard Berman (D-CA) persuaded Congress to amend the "Lincoln Law" with the express intention of giving whistleblowers increased incentives to come forward, and greater job protection when they did.

Under the 1986 amendments to the False Claims Act, the role of the whistleblower was expanded, and the financial remuneration to the whistleblower was increased. In addition, the newly strengthened law allowed whistleblowers to play an active role in the litigation and to challenge the fairness and adequacy of a government-negotiated settlement. Finally, in cases where the whistleblower prevailed, the law mandated that reasonable attorney's fees be collected.

The 1986 amendments to the False Claims Act have been an unqualified success, and have already resulted in awards and settlements against fraud feasors of over $12 billion. More importantly, the False Claims Act is now working to discourage fraud against the federal government in many arenas, from prescription drug purchases, to nursing homes, from weapons and defense purchases, to natural resource contracts and low-income housing.

Industry Tries to Gut the New Law

Many of the first cases filed after passage of the 1986 amendments to the False Claims Act were targeted at defense contractors. In 1985, 45 of the largest defense contractors, including 9 out of the top 10, were reported to be under investigation for multiple fraud offenses.

In 1990, the defense industry fired back and attempted to get itself exempted from the False Claims Act.

This plan of attack failed, however, in large part because the credibility of the defense industry had already been shattered by the many procurement scandals already broken. Newspaper headlines of the day routinely trumpeted stories of defense contractor kickbacks, convictions, and guilty pleas. Thus, when Derek J. Vander Schaaf, the Defense Department's Deputy Inspector General told the House Armed Services Committee that 39 out of the 46 defense contractors that had agreed to police their firms had already come under investigation for fraud, the room erupted in laughter (The Washington Post, July 7, 1988)

Needless to say, this first attacks on the False Claims Act largely fell on deaf ears in Congress.

The Defense Industry next tried to get the courts to hold the False Claims Act unconstitutional. Most courts rejected this argument, however, and in May of 2000 the Supreme Court ruled that the Act was constitutional.

In 1998 an attack was launched on the False Claims Act from another source. This attack was led by the American Hospital Association, an organization whose considerable political muscle derives from the fact that its members are major employers in many congressional districts.

Despite their political muscle, however, the Hospital Association's attack floundered thanks to "truth squad" work done by Taxpayers Against Fraud working in conjunction with consumer and senior citizen organizations.

TAF pointed out, that in 1997 alone, prosecutors indicted 282 defendants for health fraud crimes, and opened more than 4,000 civil cases while regaining more than $1 billion for the U.S. treasury. That same year, the FBI and several other federal agencies served 35 warrants on the largest hospital chain in the world, Columbia/HCA. That investigation eventually recovered over $2 billion from HCA and its former affiliates.

Armed with facts and figures, TAF joined with consumer and senior citizen groups to run full-page ads in the Capitol Hill newspaper Roll Call asking "Remember when Congress used to be against fraud?"

Senator Pete Stark (D-CA) described the amendments endorsed by the American Hospital Association as "written by felons, paid by felons to let felons off the hook" (quoted in The Charleston, WV Gazette, June 10, 1998).

In the end, the Hospital Association's credibility failed in the face of overwhelming evidence that systematic fraud against Medicare and Medicaid had been going on for years. The False Claims Act -- and Taxpayers Against Fraud -- prevailed.

How is TAF Different?

Taxpayers Against Fraud and the TAF Education Fund are not law firms, nor are they affiliated with a law firm.

Instead, TAF and the TAF Education Fund serve as a clearing house for information about the False Claims Act and its qui tam provisions, and as a resource for whistleblowers, their lawyers, the press, and other seeking information about the FCA.

Taxpayers Against Fraud is the only organization in the U.S. whose sole mission is to protect and popularize the most effective tool citizens have to combat fraud against federal and state governments -- fraud which now consumes billions of taxpayer dollars every year.

Taxpayers Against Fraud and the TAF Education Fund serve to:

• Highlight the importance of the False Claims Act and its qui tam and whistle-blower protection provisions;
  
• Disseminate information about the False Claims Act to attorneys, elected officials, whistleblowers, and the media;
  
• Highlight the need for adoption of state False Claims Acts in order to discourage fraud at the state level;
  
• Highlight any and all attempts to weaken the False Claims Act;
  
• Educate Congress about the various legislative remedies that might curb certain kinds of fraud;
  
• Work in partnership with qui tam plaintiffs, private attorneys, and the Government to effectively prosecute qui tam suits;
  
• Assist potential qui tam plaintiffs in determining whether they have a meritorious quit tam suit, and help them find competent quit tam attorneys in their area;
  
• Provide limited financial assistance, in the form of low-interest loans, to a very limited number of qui tam plaintiffs, secured by prospective recoveries in their qui tam cases.

Help Fight Fraud

Taxpayers Against Fraud and the TAF Education Fund are supported by donations. We receive no government financing or grants.

All donations to the TAF Education Fund are tax-deductible, as the TAFEF is a 501(c)(3) nonprofit organization.

Donations to Taxpayers Against Fraud can be deducted as a business expense by most law firms, but are not tax-exempt because TAF engages in direct lobbying to protect and strengthen the False Claims Act.

Click here to donate to Taxpayers Against Fraud or the TAF Education Fund.