Earlier this month, TAF hosted its first annual conference dedicated entirely to financial frauds in Las Vegas.
At a reception the evening before the conference began, TAF Executive Director Jeb White and TAF Board Chair Erika Kelton announced that the Taxpayers Against Fraud Education Fund is changing its name to The Anti-Fraud Coalition, or TAF Coalition.
“We have outgrown our name,” explained Kelton. “It was a suitable name when we were a small, DC-based organization focused solely on the federal False Claims Act. However, our ranks have grown exponentially and internationally, and our fraud-fighting efforts now reach not only fraud on the federal government but also fraud on state governments, tax and securities frauds, money laundering, sanctions violations, and many other types of fraudulent conduct.” A video explaining the name change is available here.
This month’s conference was an opportunity for whistleblower counsel to gather and learn about financial fraud whistleblower programs from colleagues and officials from the SEC, CFTC, DOJ Criminal Division, FBI, and the Department of the Treasury. Those government representatives universally thanked whistleblowers and their counsel for their invaluable contributions to combating financial fraud and encouraged more whistleblower submissions.
The head of the SEC’s Division of Enforcement, Gurbir Grewal, told the audience that enforcing the country’s securities laws “is an enormous responsibility” and that the SEC “rel[ies] on whistleblowers,” who “are absolutely critical to investor protection.” Mr. Grewal noted that his goals are to regain the trust that many investors lost in the wake of the Great Recession, reduce the time between violations and enforcement actions, and increase civil money penalties to deter violations. Specific enforcement priorities include cryptocurrency markets, valuation cases, and insider trading.
The LTTS settlement is not the first time the government has used the False Claims Act to crack down on an outsourcing company that brought foreign nationals into the United States to work using B-1 visas rather H1-B visas. In 2013, for example, Infosys Ltd., another large India-based outsourcing company, agreed to pay $24 million to resolve False Claims Act allegations that it used B-1 visa holders to perform skilled labor and to circumvent the requirements, limitations, and governmental oversight of the H-1B visa program,
Chris Ehrman, the Director of the CFTC Whistleblower Office, expressed that whistleblowers were essential to enforcing the Commodity Exchange Act, noting that around 30–40 percent of the CFTC’s enforcement actions involve a whistleblower. CFTC Director of Enforcement Ian McGinley echoed the broader point: “We need cooperation. We need whistleblowers.” McGinley said that his priorities include cryptocurrency, reporting violations, cybersecurity, misappropriation, and online romance scams.
In a sign of the CFTC’s commitment to combatting cryptocurrency fraud in particular, CFTC’s Digital Asset Task Force co-chair Anthony Biagioli spoke to the audience. He urged whistleblower counsel to file submissions to the CFTC, noting that digital assets are commodities and that the CFTC welcomes submissions that are also referred to SEC.
Cooperation among agencies was an important theme at the conference. JonMarc Buffa, Assistant Chief, CFTC Office of Cooperative Enforcement, told attendees that 90 percent of the CFTC’s enforcement actions involve parallel criminal actions. Avi Perry, Chief, Market Integrity & Major Frauds Unit, Fraud Section, Criminal Division at DOJ requested that whistleblower counsel file tips with the DOJ first or simultaneously with submissions to the SEC and CFTC, pointing out that DOJ has more investigative tools than civil regulators.
Nell Williams, Senior Enforcement Officer, Office of the Whistleblower, Financial Crimes Enforcement Network (“FinCEN”) and Lauren Caserta, Senior Compliance Officer, Office of Foreign Assets Control (“OFAC”) at the Department of the Treasury provided an excellent overview of the new anti-money laundering and sanctions whistleblower program at Treasury. According to Ms. Williams, FinCEN has received around 130 tips to date under the program, FinCEN sends every whistleblower tip to DOJ and OFAC, and parallel investigations are common.
TAF Coalition’s Director of Legal Education, Jacklyn DeMar, explained why the organization held the conference. “As these financial fraud whistleblower programs continue to grow and more practitioners take on these cases, we felt it was vital to our expanding mission to put on a conference focused solely on financial fraud. Educating our members and hearing from our government partners that are in the trenches at the agencies involved are the best ways we can ensure we are bringing quality information to the government that will assist them in their enforcement endeavors and punish and deter fraud.”
John Tremblay is an Attorney at Phillips & Cohen LLP.