• Whistleblowers present the government a way to recapture funds stolen in cases of fraud.businessman image by Jarek Miarka from Fotolia.com
  
  The U.S. Government first established whistleblower laws in 1863 when it prosecuted Civil War manufacturers who used sawdust instead of gunpowder in army supplies. In recent years, the whistleblower laws allow the government to punish corporations involved in fraud without the time and effort of prosecutions. Under whistleblower laws, an informant sues the company on the government's behalf and receives compensation for his risk and efforts.
  
  

False Claims Act

• The False Claims Act permits a U.S. taxpayer to become a whistleblower and sue any corporation if she has evidence that the corporation defrauded the government. The whistleblower receives between 15 and 25 percent of any funds recovered in the lawsuit. The Act does not include tax fraud, which falls under IRS jurisdiction. It is also limited to large claims due to the personal risk to the civilian filing the suit. The corporations must be large because smaller companies can file bankruptcy to avoid payment.
  
  

Definition of False Claims

• The 1986 Reform Act defines what charges may be prosecuted under the False Claims Act. When a corporation knowingly presents an employee or officer of the U.S. Government or military forces with a false claim, they are guilty of fraud. The Act also prohibits possessing, delivering or authorizing the delivery of property or money used to defraud the government. Penalties for these violations can be up to $10,000 for each false claim plus attorney's fees and costs.
  
  

Sarbanes-Oxley Act (SOX)

• The Sarbanes-Oxley Act protects a whistleblower from retaliation by his employer. The whistleblower must prove four things before the act protects the individual: that he was involved in a protected activity, the employer knew he was involved, the individual suffered unfavorable actions and the actions were as result of the protected activity. In defense, the employer has to prove the actions taken against the employee would have been the same if the person had not completed the protected action. The courts can find the corporation liable for compensatory damages, punitive damages, and attorney's fees. The court can also order reinstatement of the whistleblower.