Recently, we discussed how the SEC was investigating Wells Fargo regarding the bank’s fraudulent practice of opening up bank accounts without customers’ knowledge. (If you’d like to read that article, please click here). Other than the scandal itself, one of the more shocking aspects of the entire situation was that it appears that no whistleblowers reported this Securities Fraud to the SEC. By not reporting this to the SEC, a possible whistleblower lost out on a potential reward of 30% of what the SEC recovers and the ability to stay anonymous as long as the fraud is reported through an attorney. With an estimated workforce of more than 250,000 employees, there was abundant opportunity for someone to report this fraud and be rewarded. So where was the whistleblower? Turns out, that question is harder to answer than we thought.
On December 9, 2016, the New York Times reported that three employees of Prudential Financial had filed a wrongful termination case against the insurance giant for internally investigating a connection between Wells Fargo and Prudential. When the news first broke about Wells Fargo, Prudential began reviewing their own customers’ information because Wells Fargo sold Prudential life insurance as part of a partnership between the two companies. During the investigation, three Prudential employees discovered that Wells Fargo was not only opening up bank accounts without customers’ knowledge, but were also signing up customers for Prudential life insurance without customers’ knowledge. Not only that, but it appeared that Wells Fargo was using the same fraudulent schemes it used in opening up bank accounts, fake email accounts, when signing up customers for life insurance policies. The target of life insurance policies? Individuals with Hispanic-sounding last names, many of which spoke little to no English. When they tried to report this scheme to their executives, the three employees were terminated.
While many whistleblowers are employees or former employees of the companies they are blowing the whistle on, that is not a requirement to be a whistleblower. Despite the long standing belief that only employees or former employees of companies can report fraud and be rewarded by the Government, the truth is that anyone can be a whistleblower under the False Claims Act, SEC, CFTC, and IRS whistleblower programs as long as the whistleblower meets the requirements. (See here on our home page to learn more about a good whistleblower case.). If you know of a company that is committing Fraud on the Government, Securities Fraud, Commodities Fraud, or Tax Fraud but you don’t work for them, you may still be eligible to receive a reward. To review your eligibility, contact the whistleblower attorneys at Levy Konigsberg, LLP for a free confidential consultation at 1-212-605-6200 or toll free at 1-800-988-8005.