We have met with many potential new clients who know about a crime or fraud and are interested in blowing the whistle. Sometimes the client is motivated by a genuine desire to right a perceived wrong, sometimes the client is motivated by the desire to collect an award, and sometimes the client is motivated by the desire to get ahead of the problem.
A common misconception these clients have is that if they blow the whistle they will be protected from criminal prosecution. The purpose of this article is to briefly explain how some common whistleblower statutes work, what protections they afford, and a suggested framework for protecting those clients who decide to blow the whistle from criminal prosecution.
Please note that this article is written from the perspective of a criminal defense attorney, not a plaintiff’s attorney. Our interest is in making sure our clients don’t receive their monetary award while sitting in a prison cell.
At the federal level, Congress has enacted various whistleblower laws. The main programs for whistleblowers are the False Claims Act (FCA), the SEC Whistleblower Program, IRS Whistleblower Program, and the Whistleblower Protection Act. The FCA, SEC Whistleblower Program, and IRS Whistleblower Program reward individuals who expose fraud and abuse and protect them from retaliation by their employers. The Whistleblower Protection Act protects federal employees who report crimes, fraud, or abuse in their agencies.
In Texas, the main whistleblower laws are the Texas Whistleblower Act and the Texas Medicaid Fraud Prevention Act. The Texas Whistleblower Act protects public employees from retaliation if they blow the whistle on the government agency that employs them. The Texas Medicaid Fraud Prevention Act targets Medicaid fraud and has provisions that allow whistleblowers to expose Medicaid fraud by filing qui tam lawsuits. That law protects whistleblowers and rewards them if Medicaid funds are recovered as a result of their information and assistance.
Whistleblowers often face employer retaliation for reporting their concerns. This retaliation can take many forms demotion, being fired or sidelined, being blackballed, etc. Most whistleblower laws, both state and federal, contain some sort of anti-retaliation provision. Both Congress and our state legislature recognized that whistleblowers need job protection from the subject of their whistleblower complaint as some may lose their jobs, be demoted, or be blackballed from working in their industry.
Sadly, whistleblowers receive no similar protection from prosecution. Our jails are filled with individuals waiting to be released so they can collect their whistleblower awards. Often these same individuals believed that they would be protected, and that if they got ahead of the problem they could avoid prosecution.
The only way to protect your clients from getting themselves indicted is to carefully negotiate an immunity agreement with the Government. Immunity agreements both formal and informal can be of two varieties.
First, a prosecutor can promise use immunity. Use and derivative use immunity protects the witness from the government’s use of the witness testimony and any leads or fruits that may be derived from it.
Second, a prosecutor can promise transactional immunity. Transactional immunity is broader than use immunity. It gives full immunity from prosecution for the offense to which the testimony relates.
Statutory immunity, also known as formal immunity, should be distinguished from informal immunity. The latter term, often referred to as pocket immunity or letter immunity, is immunity conferred by agreement with the witness. For example, the government and a cooperating witness might enter into a non-prosecution agreement if the defendant or witness agrees to cooperate. Testimony given under informal immunity is not compelled testimony, but is testimony pursuant to an agreement and thus voluntary. The principles of contract law apply in determining the scope of informal immunity. United States v. Plummer, 941 F.2d 799, 802 (9th Cir. 1991); United States v. Britt, 917 F.2d 353 (8th Cir. 1990), cert. denied, 498 U.S. 1090; United States v. Camp, 72 F.3d 759 (9th Cir. 1996) [replacing 58 F.3d 491 (9th Cir. 1996)].
Grants of informal immunity that do not expressly prohibit the government’s derivative use of the witness testimony will be construed to prohibit such derivative use Plummer, supra. But a grant of informal immunity that expressly provides for derivative use of the testimony by the government will be upheld. United States v. Lyons, 670 F.2d 77, 80 (7th Cir. 1982), cert. denied, 457 U.S. 1136.
An important difference between statutory/formal immunity and informal immunity is that the latter is not binding upon non-signatories. This follows from the fact that the local prosecutor representing the state is normally not a party to the agreement between the witness and the Federal prosecutor, and thus cannot be contractually bound by the Federal prosecutors’ agreements and vice versa.
One method we have found to be effective in representing individuals who have knowledge of criminal activity is the attorney proffer. An attorney proffer is nothing more than an off-the-record discussion between the lawyer and the government in which the attorney tells the government what he believes his client would be able to testify to. The point of the discussion is for the government to get some sense of the information being offered and the role played by the client so that it may make an informed choice to grant or withhold immunity. The advantage of the attorney proffer is that the information given to the government by the attorney cannot be used directly against the client as it is the defense attorney’s opinion as to what his client may know. Obviously some level of trust must exist between the criminal defense attorney and the prosecutor for this to work, and this is where the attorney’s previous relationship with the prosecutor becomes very important. But notwithstanding this trust, the defense attorney should consider not identifying his client or speaking in more than hypothetical terms until an agreement is reached.
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