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PRESIDENTIAL IMPEACHMENT PART II OF II: WHAT’S PAST IS PROLOGUE

By Zachary Kitts on February 7, 2020 in ,

Virginia Qui Tam and False Claims Act Lawyers

 

 

 

 

 

 

BOOK REVIEW:  AN AFFAIR OF STATE:  THE INVESTIGATION, IMPEACHMENT, AND TRIAL OF PRESIDENT CLINTON by Judge Posner

(Part Two of Two)

 

In Part One of this book review, we covered the distinction Judge Posner draws between private morality and public morality, and the importance of that distinction for Presidential Impeachment and legal ethics.  There is a bit more to cover on this topic, especially as it factors into the decision to impeach Clinton.

To sum up the final section of Part One of this review, I left off by describing Posner’s distinction between private morality and public morality.  Private morality is what we expect from our friends, neighbors, family, coworkers, employees, business associates, etc.  We expect them to abide faithfully by the agreements they make, and we consider it a serious breach of private morality if they knowingly and intentionally lie to us.  Also if someone has a known history of failing to abide by their agreements, we think carefully and perhaps think again before we allow this person into our private lives.

On the other hand, we expect our elected officials to lie if it serves the aims of their office and the aims of the country as a whole.  The example I used is international diplomacy – few if any Americans have a problem with the fact that international treaties are frequently ignored or even broken outright as soon as they no longer serve the interests of the United States, and it is safe to assume that we not alone in this regard.

Posner goes on to point out that breaches of private morality by an elected official can, however, rise to the level of a breach of public morality, but even this alone would not suffice to measure the importance of a President of the United States.  Posner allows that in some (perhaps many) situations a President’s moral flaws could well be balanced out by extraordinary executive talent such that any moral failings should be ignored.  Indeed, seen in this light, the mere fact that a President is a liar (or possibly even a criminal) is not, in and of itself, grounds for impeachment.

Posner spends considerable time compiling an impressive list of Clinton’s undeniable talents and then weighs those talents against his moral failings; I will not describe this balancing test here, but this part of the book is especially well-worth the read.

The Undercurrent of Emotionality, the Mystery of Why Conservatives Hated Clinton So Much, and the Failure of the Public Intellectuals

This all feeds directly into an important theme of the book – namely, why conservatives hated Clinton so much.  On the facts of his presidency, there is no reason why conservatives should have hated him.  He governed from a position that was decidedly right-of-center, and he did so in a way that would be impossible for a Democratic president today.

In my own personal recollection of the Clinton presidency, I seem to recall him being “taken out to the woodshed” by Congressional Republicans (and the electorate, who gave the GOP major gains in the 1994 Congressional mid-term elections) over his failed national healthcare law; but, after that, he seemed to have learned his lesson and chose to work with the Republican majority rather than spend the remaining years of his presidency resigned to irrelevance, as Presidents of both parties (and their voters) seem to prefer today.

The list of conservative objectives that Clinton endorsed and pursued following his failed try at healthcare reform is long.  He may well have been even more to the right than a second-term George Bush would have.

In addition to asking why Republicans hated Clinton so, we have to ask: Why did liberals love him?  Prior to the Lewinsky scandal, true leftists in the Democratic party had been at best lukewarm to Clinton, for understandable reasons.  Clinton compromised on everything important to the true leftist — and sometimes he eschewed them completely.

Just as true leftists were not excited about Clinton prior to the Lewinsky scandal, neither were true conservatives enraged.   True enough, there were a small number of true “Clinton haters” kicking around in conservative intellectual circles almost right from the start of his Presidential candidacy.

So how did society go from that to the frenzied and irrational “debate” that followed?  Posner’s answer to this question is compelling and fascinating — and it holds a great deal of relevance to our current political situation; more than that, it is a helpful introduction to human (and political) conflict generally.  The chapter mainly devoted to this analysis is entitled The Kulturekampf.

Given Posner’s analysis of the complex moral and legal issues at work in the Clinton Presidential impeachment, he is not surprised that the Clinton impeachment led to passionate debate among Americans and especially among the intellectual element of our society.  What does surprise him is the emotional nature of the disagreement, and

…the tone in which the issue has been debated, and the recklessness with which many intelligent people, including many academics, took sides passionately and dogmatically before it was possible to know what the facts were, their refusal to face the facts when they became known, their unwillingness to concede any merit to any points made by opponents, their proneness to exaggeration, distortion, and oversimplification, and the sheer unreason demonstrated by so many of the people who became caught up in the public debate…

 

At some point as the Independent Counsel’s investigation moved forward and uncovered more and more evidence of wrongdoing, the left united behind Clinton completely and the right united against him.  This Posner attributes to the “pluralistic sexual morality found in the United States,” and the fact that Clinton’s behavior “forced these attitudes into articulate competition.”  He continues:  “if the Right had been content to criticize Clinton’s conduct, even his sexual conduct, the Left would not have reacted so fiercely.  The Right wished instead to label and condemn him as a representative of a style of life that is common to many liberal academics, urban sophisticates, and unregenerate members of the generation of the 1960’s.”

 

When we add to the mix what Posner describes as the “radical feminists, Hollywood bohemians,” and  “libertines” that quickly joined the Clinton ranks, we begin to understand how the Clinton coalition appeared to many average Americans as an ungodly “Axis of Evil” that more or less replaced the Kremlin as the new American enemy.  As the “mess” (and that is indeed what Posner repeatedly calls it) got bigger, both sides quickly became “frenzied and irrational.”

THE FINAL TWO CHAPTERS

In a book full of important insights into human nature, some of the most important are in the final two chapters.

Posner points out that, psychologically, people have a hard time liking and disliking the same person (or group, or movement) at the same time.  We want people to be all one thing or all the other; as any observer of individual people will tell you in any given circumstance, that is not realistic.  (I myself learned this during my clerkship in the Circuit Court for St. Mary’s County Maryland during numerous criminal sentencings, when convicted criminals are allowed to introduce testimony and evidence of their redeeming qualities.  As an inexperienced young lawyer, I found it amazing that every single criminal had done at least something that was undeniably good and selfless in their lives).

But human beings want to see everyone as all one thing or all the other – and since we couldn’t agree with each other on which one of these Clinton was, we found ourselves in mutually uncomprehending, warring camps.

The remainder of the book is also fascinating for its parallels between war and intense political disagreement — but I will forgo that here.  (Just as in Part One, I had to forgot much of the fascinating discussion of the legal standards for Presidential Impeachment).

On top of all this, the book is a compelling read — you will find it hard to put this book down.

 

Virginia False Claims Act Lawyers

 

 

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PRESIDENTIAL IMPEACHMENT AND LEGAL ETHICS: WHAT’S PAST IS PROLOGUE

By Zachary Kitts on February 6, 2020 in ,

Virginia Qui Tam and False Claims Act Lawyers

 

 

 

 

 

 

BOOK REVIEW:  AN AFFAIR OF STATE:  THE INVESTIGATION, IMPEACHMENT, AND TRIAL OF PRESIDENT CLINTON by Judge Posner

Today we take a break from our regularly scheduled programming about qui tam claims under the federal False Claims Act.   We will look at some more general stuff about lawyers, litigation, legal ethics, courts, and government as we sometimes do.  This I will do in the form of a book review — only the second I have done in the more than 12 years of this blog.  While the book does not pertain directly to false claims litigation, it is something that should be of interest to lawyers and laypersons alike; the book is AN AFFAIR OF STATE:  THE INVESTIGATION, IMPEACHMENT, AND TRIAL OF PRESIDENT CLINTON by Judge Posner.

The relevance of this book to current events should be apparent and, indeed, that is one of the reasons why I decided to read it in the first place.  But I was not prepared for how relevant a book about the last Presidential impeachment imbroglio would be to the current impeachment imbroglio, especially in terms of the legal ethics involved.  In retrospect this should not have been surprising.  For one thing Presidential impeachments have been very infrequent events; there are only three examples in the history of the United States – at the time Posner wrote this book there were only two – which means each Presidential impeachment will be relevant to every other Presidential impeachment.

Perhaps if we had had a dozen or so Presidential impeachments, they could be organized into various subcategories. (By now I assume, by the way, that most Americans understand that Nixon doesn’t count as a Presidential impeachment because he resigned before he could be convicted in the Senate.)

Second, I consider Judge Posner one of the most astute observers of  society.  His interests extend far beyond law and legal ethics and reach more or less every area of human endeavor.  I would wager, therefore, that he had a hunch that Presidential impeachments (and perhaps political messes) were going to be more frequent in the future.   (Indeed, he discusses the idea of “post-electoral politics” in the book).

Finally, I shouldn’t have been surprised because, as King Solomon states in Ecclesiastes 1:9: The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.

Any review of a book by Judge Posner should begin with a quick discussion of his career.

BACKGROUND ABOUT RICHARD A. POSNER

I provide this background about Judge Posner for my non-lawyer readers, because I am confident that all lawyers are at least familiar with his name and the fact that he was (is) one of the most respected Judges in the history of the English system of laws.  It turns out, however, that defining Judge Posner is not as simple as that.  From one point of view, of course, he was a federal appellate Judge who sat on the Seventh Circuit Court of Appeals from 1981 to 2017.  During that time he authored around 3,400 (!) opinions, and he did so with verve and a style all his own.

But to describe him as a very influential Judge and stop there does the man an injustice.  By his own admission (found in William Domnarski’s fine biography) judging was never more than a “day job in the Hollywood sense.”  In addition to his demanding day job, he maintained a lecturer position at the University of Chicago School of Law and authored hundreds of law review articles during that 36-year period.  He is in fact the most frequently cited legal scholar of the 20th century.

On top of all that he has written more than 40 books on a range of topics only tangentially related to law, including books about sex, plagiarism, asteroids, English literature, and … the impeachment of President William Jefferson Clinton, which is the subject of this book review.

THE BOOK ITSELF

Judge Posner’s book was published in 1999, only months after Clinton was acquitted in the Senate.  In the introduction, he notes that he began writing the book in October of 1998 and finished in February 16, 1999, a mere four days after Clinton was acquitted in the Senate.  As he further notes in his introduction – and I agree with him – this proximity to the actual events avoids some of the usual problems associated with historiography, such as hindsight bias.

This brings me to the topic of Judge Posner’s writing style.  In his written opinions, as well as in his books, he takes a unique approach to writing.  His approach to judging and writing is, I believe, calculated to force lawyers and judges to rethink how they approach (and write about) the law.  He was famous for refusing to use the much-maligned Blue Book of Legal Citation; instead, he prepared his own citation manual, which was two-pages long.  The Posner citation manual was itself attached to a law review article that was about 10 pages long.  We will return to his writing style again and again throughout this review, by the way, because there is no way to separate the man (or his work) from his style.

ORGANIZATION OF THE BOOK

Posner (kind-of) eschews the usual detailed organization of a book of this length.  (It is just under 300 pages).  His book is instead organized into only eight chapters, each of which has its own subparts that are unlisted in the table of contents.  The eight chapters are: (1) The President’s Conduct; (2) Prosecution and Defense; (3) The History, Scope, and Form of Impeachment; (4) Morality, Private and Public; (5) Should President Clinton Have Been Impeached and If Impeached Convicted? (6) The Kulturkampf; (7) Lessons for the Future; and finally (8) The Balance Sheet.

The book is much more than a mere narrative of the ordeal; although some form of narrative is necessary, the narrative is largely limited to Chapter 1, which primarily covers the public record (i.e., the 8,000 pages of Ken Starr’s investigation).  The book also covers, in various sections, the actual crimes (there are some serious ones) committed by Clinton (and whether those crimes would be prosecuted if Clinton had been anyone other than the President); the legal and procedural standards for Presidential impeachment; the range of punishments possible for a President who is impeached; the performance of the lawyers involved in the case … and the golden stripes on the shoulders of Chief Justice Rehnquist’s black robe.

You read that right: Chief Justice Rehnquist’s robes – famously adorned with four yellow stripes on each sleeve – get a penetrating analysis in one of Posner’s intellectual wanderings.  These wanderings, by the way, are one of the most fascinating and engaging elements of Posner’s style – he writes in a manner that is at the same time highly organized and stream-of-consciousness; it must be seen to be believed.

Judge Posner writes: “Judges, including the Justices of the Supreme Court have, for as long as anyone can remember, worn plain black robes.”  (It feels a bit tawdry to say this, but he may in fact be wrong about judicial robes being only black.  The Judges of the Maryland Court of Appeals wear red robes — actually, they are scarlet and not red — and have been so adorned since 1976.

The adoption of red robes in 1976 was in recognition of the bicentennial of the United States and — perhaps paradoxically — of the prior use of red scarlet robes by Judges in Colonial America.

According to a history of these robes, then-Chief Justice Taney recollected that when he had been sworn into the bar around 1796:

             “The first session of the General Court, after I went to Annapolis, made a strong impression upon me. The three judges, wearing scarlet cloaks, sat in chairs placed on an elevated platform; and all the distinguished lawyers of Maryland were assembled at the bar.”  

For the sake of completeness, a history of Judicial Robes compiled by the Maryland Court of Appeals contains some evidence that Judges in Massachusetts and Maine also wore scarlet robes in the 1760’s.

At any rate, Posner shares his opinion about Rehnquist’s robe in plain language that is a little surprising at first.  After all, at the time this was written Posner was (I think) the Chief Judge of the Seventh Circuit Court of Appeals and Justice Rehnquist was the Chief Justice of the United States Supreme Court.

It therefore took guts, I think, to write:  “The most solemn form of American trial was thus presided over by the highest judge in the land dressed in a funny costume.”  And in the conclusion he returns to Justice Rehnquist’s costume when describing the “high drama” of the “Clinton mess” as “Wagnerian in intensity and protraction.”

But then, why would he not share his opinion about Rehnquist’s robe?  What could Rehnquist or anyone else really do to Judge Posner at that point?  I suppose they could give him the cold shoulder at Judicial Conferences and so forth…but that’s about it.

THE MAIN POINTS OF THE BOOK

Because many of the chapters overlap, I have organized the remainder of this book review around what I see as the central themes of the book and its most important contributions to …. To what?  To our system of laws?  To our system of government?  No, this book is a contribution to American society.

The Crimes Committed by Clinton and whether those crimes would be prosecuted if Clinton had been anyone other than the President

 Judge Posner points out early on how Clinton, his legal team and their “fellow-travelers” among public intellectuals were able to successfully muddy the waters about the true nature of the impeachment.  Posner also spares no one in his critical analysis of the various arguments offered.     

Chief among his targets are the public intellectuals.  He notes that the public intellectuals involved failed to contribute anything constructive to the debate; he describes wild public statements made by both left-leaning and right-leaning commentators and then picks those statements apart to show their complete irrationality.

And the answer is yes, normal people do get prosecuted for what Bill Clinton did, all the time.

The Distinction (and Similarities) Between Private Morality and Public Morality: Politicians are Expected to Lie

This books is fascinating for its discussion of the distinctions (and similarities) between private morality and public morality.  Posner points out (and I assume that no thinking person would argue with this) that political leaders generally – and the President of the United States specifically – must lie when necessary and must therefore commit serious breaches of private morality in order to fulfill their duties.  An example that comes to mind is one of international diplomacy.  No thinking person believes that any nation-state enters into a treaty with another nation-state for any reason other than its own selfish interests.  Human history is replete with evidence for this proposition, as well as another important proposition:  once a treaty is in effect, the nation-state parties generally continue to abide by it only as long as the results continue to be in the interests of the nation-state.  Treaties are ignored and even broken outright, and not only when it is necessary, but whenever it is convenient for one of the parties.

Individual citizens of the various nation-states expect (in fact demand) that their leaders will break the rules of international treaties, even though breaking ones’ promises is considered a serious violation of private morality.  So the fact that a President lies (and commits a breach of private morality) should not be surprising; it is rather a part of the job description.

The above example is a clear-cut one, but Posner goes on to explain that violations of private morality by a President can in some instances violate public morality.  In fact, he concludes that is exactly what Clinton did.

Not all Breaches of Private Morality by a Politician are Equal

Clinton’s lie about Monica Lewinsky was not the sort of lie people expect politicians to tell, and not only because it served no greater purpose than Clinton’s own selfish interests.  Rather, it serves as a clear-cut indicator that Clinton had a highly-flawed personality.

Another example Posner gives of Clinton’s poor morality is his (Clinton’s) unabashed involvement of other people – most of whom were drawing a government salary – in his violations of private morality.  Betty Currie, for example, who served as the President’s loyal personal secretary for many years before he became President, was mercilessly roped into the conspiracy by Clinton.

Any leader worth his salt should have refused to rope in such a loyal, low-level employee.  Clinton took advantage of Ms. Currie’s dedication and repaid her for her dedication by exposing her to enormous legal fees and the possibility of prison time.  But he didn’t do this once and he didn’t do it just to Ms. Currie, and the fact that Clinton did this time and again shows a truly ugly side to his personality.

Indeed, there are many ugly facets of Clinton’s personality, as the Clinton impeachment showed.  Another ugly facet was his continued lies even when no one believed him.  As Posner points out, everyone lies at some point in life.  To do so is not necessarily a breach of private or public morality.  Like a politician, every adult recognizes that lies of a certain type are in fact required in some situations.  But to continue to lie to everyone, even after no one believes you, and after your lies have been disproven by incontrovertible physical evidence – here the stain on Monica Lewinsky’s dress – shows a serious character flaw.

Moreover, to date Clinton has never, at any time, admitted any wrongdoing.  Just look at his confession:  he confessed to an “inappropriate relationship” with Lewinsky and to misleading his family, friends, subordinate officials and the American people.

As Posner notes, it is telling indeed that the American people were placed last in his contrition litany.

Stay tuned for Part Two of Two….

 

Virginia False Claims Act Lawyers

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Justice Department Recovers over $3 Billion from False Claims Act Cases in Fiscal Year 2019

By Zachary Kitts on January 17, 2020 in ,

Virginia Qui Tam and False Claims Act Lawyers

 

 

 

 

 

 

False Claims Act Recoveries Top $3 Billion in Fiscal Year 2019

Last week the Department of Justice announced that federal False Claims Act recoveries topped $3 billion in fiscal year 2019.  This announcement of the annual totals has become something of a tradition at the Department of Justice, and many lawyers practicing in this area await it with great anticipation.

History is, I think, a combinaton of two elements: (1) relatively stable long-term trends, and (2) a more or less random series of events.  Many positive long-term trends in this area of law continued last year, as we will see in this post.

Long Term Trends in federal False Claims Act Enforcement Continue, Part I: FCA Cases Brought by Qui Tam Whistleblowers have the Best Results.

It is no surprise that Qui Tam cases continue to result in the lion’s share of FCA recoveries.  (As regular readers know, only cases brought by whistleblowers qualify as qui tam cases).  Of the $3 billion in settlements and judgments reported by the government in fiscal year 2019, over $2.1 billion came from lawsuits filed under the qui tam provisions of the False Claims Act.  That is, by my math, 70% of the government’s total recoveries.

And this is one long-term trend that looks to continue.  Last year, qui tam relators filed 633 cases in the 94 U.S. District Courts.  While this number has increased steadily over time, there was — if memory serves — one year not too long ago where about 1,000 cases were filed.

Long Term Trends in federal False Claims Act Enforcement Continue, Part II:  Healthcare recoveries.

Last year one of the key long-term trends in false claims act enforcement continued, in that health care recoveries were the largest part of the total.  Specifically, of the roughly $3 billion recovered, $2.6 billion of it was the result of health care fraud.  According to the press release, health care recoveries exceeded $2 billion for the tenth consecutive year.

A running total of the recoveries since the 1986 amendments breathed life back into the statute can be found here.

Long Term Trends in federal False Claims Act Enforcement Continue, Part III: Increased Liability for Individual Wrongdoers.

Wrongdoers continued to be individually liable in 2019.  This is a direct result of the continuing influence of the Yates memo (issued in 2015) which announced an increased focus on individual wrongdoers for the first time.

The press release discusses in particular the recovery of millions of healthcare dollars from the individual owners in the Osteo Relief Institutes, Vanguard Healthcare, and Diabetic Care Rx cases.  A little closer to home (and on the non-healthcare front) Luke Hillier (the former CEO of Virginia-based defense contractor ADS, Inc.) paid $20 million to settle allegations that he violated the FCA by fraudulently obtaining federal set-aside contracts reserved for small businesses.

Long Term Trends in federal False Claims Act Enforcement Continue, Part IV:  Non-healthcare Recoveries.

FY 2019 also saw some interesting non-healthcare recoveries.  Among others, the department recovered over $27 million from Northrop Grumman Systems Corporation (NGSC) in a settlement resolving False Claims Act allegations related to two battlefield communications contracts with the United States Air Force.  The settlement resolved allegations that NGSC billed the Air Force for labor hours by individuals stationed in the Middle East who had not worked the hours claimed.

In an interesting case from the Eastern District of Virginia, an Oregon aluminum extrusion manufacturer agreed to pay $46 million to NASA, the Department of Defense, and others to resolve criminal charges and civil claims relating to a 19-year fraud scheme that included falsifying thousands of certifications for aluminum extrusions provided to hundreds of government customers.

Other interesting non-healthcare cases come from the usual suspects, including underpayments of royalties for minerals and natural gas removed from federal lands, false certifications of compliance with environmental laws, and false claims to federal student loan programs.

Long Term Trends in federal False Claims Act Enforcement Continue, Part V: Qui Tam Whistleblower Recoveries in Non-Intervened Cases.

It was also nice to see the government include information on non-intervened cases like the one against Duke University.  That case is particularly note-worthy to fans of this blog because of its size ($112.5 million), its relator share of a 30%, and the fact that it was obtained by our good freind John Thomas at Hafeman Magee & Thomas.  So far as I know, a 30% relator share is unprecedented in a case of that magnitude.

Conclusion

It is indeed good to see all of these positive trends in FCA enforcement continue; stay tuned dear readers, for more updates to come!

 

Virginia False Claims Act Lawyers

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Federal False Claims Act Cases are not just about money

By Zachary Kitts on December 19, 2019 in

Virginia Qui Tam and False Claims Act Lawyers

 

 

 

 

 

 

Federal False Claims Act Cases Are Not Just About Money

First off, I am — as regular readers know — a lawyer focusing on complex civil litigation.  Mostly, my cases concern the federal False Claims Act, the Virginia Fraud Against Taxpayers Act, and the false claims statutes of various states.  In each of those cases, I have a qui tam relator as my client — i.e., an individual with non-public knowledge of fraud on the government.

As part of my efforts to keep my clients focused on what we can do — as opposed to what we can’t do — I try to focus them on the money we can recover if our case succeeds.  This is for sound, practical reasons that have nothing to do with money.  Rather, it is because, as noted above, I am lawyer focusing on civil litigation.  We (that is, me and my clients) can’t raise the dead or heal the sick , and we can’t put anyone in prison on our own.  We also can’t fix large problems in society.

Instead, all that we can do is focus on the one case at hand and develop it as best we can.  In the parlance law practice (and elsewhere) this is called controlling the client’s expectations.  It is always important to what lawyers do, but in qui tam/FCA cases it is especially important.  Many times, qui tam relators will want the bad guy to go to prison or receive some other non-monetary punishment, and that is something we just can’t deliver on our own.

That being said, one of the nice things about this area of practice is that each case we successfully prosecute does do a bit of good.  At a minimum, some money is returned to the U.S. Treasury (or the treasury of a state, or both) and one or more bad actors is brought to task.  Hopefully, those same bad actors won’t go on to submit more false claims in the future.  Perhaps also some other folks who were thinking of trying the same thing will read about the case and think better of thier scheme.

But I wouldn’t count on most of those rosy outcomes, at least not in every case.  Nope, federal FCA cases are mostly about money.

Note that I said mostly — the recent case of Dr. Javaid Perwaiz shows that federal false claims act cases are not just about money.  Important goals like patient safety are also accomplished using this law.  Here is a sample of the recent coverage of Dr. Perwaiz’s practice:

 

The indictment reads like a true horror story, and check out the declaration filed in support of the indictment.  This is, of course, just one example and it is a local one in the EDVA…but it is still an example of the good that can be done…

Stay tuned for more on this developing saga…

 

Virginia False Claims Act Lawyers

 

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When is a claim submitted to the United States?

By Zachary Kitts on November 23, 2019 in

Virginia Qui Tam and False Claims Act Lawyers

 

 

 

 

 

 

SECOND CIRCUIT ISSUES IMPORTANT NEW OPINION ON THE TOPIC OF “CLAIMS” TO THE UNITED STATES

As regular readers of this blog know, one of the central issues for lawyers litigating qui tam/false claims act cases is finding the “claims” at issue.  In my humble opinion, the best way to analyze any false claims act case is to find the claim first, and work backwards from there.

Today we will look at an interesting new opinion issued last week on this topic by the United States Court of Appeals for the Second Circuit.  The case is styled United States ex rel. Krause and Bishop v. Wells Fargo, N.A.

But first, a word of caution.  The Federal Reserve System was established in 1913 when the world economy (and even our national economy) was considerably less complex.  As the world-economic system has grown and developed over the last 106 years so too has our understanding of the Fed and what it does.

As Judge Katzman is quick to point out early on in his opinion, the ruling in this case is a narrow one and may well not apply to other issues involving the Fed.  That was likley a wise exercise of judicial restraint, because he recognized that any opinion interpretating critical and fundamental definitions at the Fed could have wide ramifications indeed.

THE FEDERAL RESERVE BANK SYSTEM

“The Fed” is comprised of twelve FRBs, which are separately incorporated banks dispersed geographically throughout the country, and a Board, which is based in Washington, D.C.  The Fed is an independent agency within the executive branch. See 12 U.S.C. §§ 241‐252, 264, 341‐362.

Many people are not aware of this, but when a person “negotiates” a check delivered to them (which is legalese for saying they deposit the check into thier bank account or cash it), they do not actually present a claim to the bank on which the check is drawn.  Rather, they present a claim to the FRB, which then, in turn, presents the claim to the bank on which the check is drawn.  So, in this instance, the FRB serves as a clearinghouse for all checks.

As it turns out, this is most likley the simplest thing the FRB does.  The functions of the Fed are many and varied and, in case anyone has been in a cave recently,  the Fed has a major impact on the world economy.

But alas, the Fed is not financed using tax dollars.  Instead, the Fed is financed by its member institutions — i.e., American banks.  Just as consumers maintain bank accounts at banks like Wachovia and Wells Fargo, banks like Wachovia and Wells Fargo maintain bank accounts at the FRBs.

Also of interest:  by law, the United States Treasury controls the issue of coins, but the Federal Reserve controls the issue of paper money.

THE ALLEGATIONS OF THE QUI TAM COMPLAINT

Relators filed thier case in 2011 in the Southern District of New York.  They alleged that Wells Fargo and Wachovia fraudulently requested loans from the FRBs and that, through the Fed’s emergency lending facilities, “the United States provided significant funding . . . to the Defendants, amounting to at least tens of billions of dollars.”

The relators asserted two theories of liability:  implied false certification and express false certification.

The question is whether a fraudulent loan request made to one of the FRBs is an effort to defraud a private entity or an effort to defraud the United States.  Even more specifically, this question breaks down into three distinct questions:  (1) Are FRB officers and employees officers and employees of the federal government? (2) Are the FRBs “agents of the United States” as defined in the FCA? and (3) Are fraudulent loan requests to the Fed claims to the United States?

The answer to the first question is no, yes and yes, at least in the context of this case…

THE COURT’S NARROW RULING

The opinion makes for an interesting and complex read — in order to do it the justice it deserves, I will cover it some detail in a second post…stay tuned readers.

Virginia False Claims Act Lawyers

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Updated two-volume set on Employment Law in Virginia is on its way

By Zachary Kitts on November 5, 2019 in

 

 

 

 

Updated two-volume set on Employment Law in Virginia is on its way

After some delays, I finally sent off my updated chapter to the two-volume set Employment Law in Virginia. This set was last published in 2016, so it was time for an update.

As in prior years, I contributed Chapter 6 on Qui Tam Whistleblower litigation.  While my chapter on qui tam litigation is not, perhaps, really about employment law, the folks at VaCLE say there is a lot of interest in it and feel like it should be published somewhere.  I think this two-volume set, which is among the best-sellers at VaCLE, is as good as a place as any for it.

This got me thinking about how we, as lawyers and the public, categorize qui tam/false claims/whistleblower practice, so I thought I would write about that today.  One frequent place we see qui tam (or false claims act) litigation categorized is under employment law — so lets start with that.

The Connections Between Employment Law and Qui Tam Litigation

So why are qui tam litigation and employment law so frequently thought of together?  It’s a good question, and here is my attempt at an answer: most qui tam relators continue to be employees who discover wrongdoing (in the form of fraud or false claims to the government) during thier employment and decide to do something about it.  Therefore, many of the first lawyers to file these cases were employment lawyers, for the obvious reasons: they were the ones that had access to wrongfully termination employees.

However, we are beginning to see more qui tam actions filed by individuals other than employees.  I would say that small businesses seeking to correct anti-competitive behavior in the market place are probably the second largest group of qui tam relators after employees.  These folks generally have the kind of information needed to put together a qui tam action.

They also usually have the motivation necessary to organize and execute a qui tam case; this requirement is not to e underestimated.  Indeed, I even wrote a little book called How to be a Successful Qui Tam Whistleblower to assist potential qui tam relators organize thier thoughts (and documents) and find the right lawyer.

As always, feedback and comments are very welcome…stay tuned readers!

Virginia False Claims Act Lawyers

 

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K&G Law Group Partner Zachary Kitts is named “Qui Tam Lawyer of the Year”

By Zachary Kitts on August 20, 2019 in , ,

Zachary Kitts is announced as Qui Tam Lawyer of the year

 

 

 

 

 

 

 

 

 

K&G Law Group Partner Zachary Kitts is named “Qui Tam Lawyer of the Year”

It is always nice to be included in any kind of honors list, but this year I am honored to announce my selection as “Qui Tam Lawyer of the Year” by the publication Best Lawyers in America.  Hopefully the addition of “Qui Tam Law” as a category in these honors listings means practice under the federal False Claims Act and Virginia Fraud Against Taxpayers Act is coming into its own as a practice area, although it is still very much a niche speciality.

This is the first year that a lawyer has been selected from each practice area as lawyer of the year.   According to the Best Lawyers press release, Lawyer of the Year honorees receive this award based on their overall feedback within specific practice areas and metropolitan regions. “Lawyer of the Year” recognitions were awarded in 137 practice areas across 182 metropolitan regions.

For the 2020 Edition of The Best Lawyers in America, 8.3 million votes were analyzed, which resulted in the inclusion of more than 62,000 lawyers, or approximately 5% of lawyers in
private practice in the United States.

ABOUT BEST LAWYERS

For almost 40 years, Best Lawyers has assisted those in need of legal services to identify the lawyers best qualified to represent them in distant jurisdictions or unfamiliar specialties.  Best Lawyers lists are published in leading local, regional, and national publications across the globe.

 

Virginia False Claims Act Lawyers

 

 

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VaQuiTamLaw.com author Zach Kitts is appointed to the Professionalism Committee of the Virginia State Bar

By Zachary Kitts on July 18, 2019 in ,

Virginia Qui Tam and False Claims Act Lawyers

 

 

 

 

 

 

VaQuiTamLaw.com author Zach Kitts is appointed to the the Virginia State Bar’s Professionalism Committee

I am honored to announce my appointment to a three year term on the Virginia State Bar’s Standing Committee on Professionalism.

This is different than my previous appointment to the faculty of the Mandatory Professionalism Course required of every Virginia lawyer.  The Standing Committee on Professionalism does, in part, administer the professionalism course, among other duties.

According to the Virginia State Bar’s website:

The Standing Committee on Professionalism is charged with responsibility for the administration and oversight of the mandatory course on professionalism, which is required of all newly admitted active members of the Virginia State Bar. The purpose of the course is to encourage attorneys to uphold and elevate the standards of honor, integrity, and courtesy in the legal profession. The committee designs and updates the curriculum of the course and selects and trains the faculty of more than eighty distinguished Virginia lawyers and judges.

It is an honor and I look forward to it!

Virginia False Claims Act Lawyers

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Judge Alston is confirmed to the U.S. District Court for the Eastern District of Virginia

By Zachary Kitts on June 11, 2019 in ,

 

Judge Alston is Confirmed to the U.S. District Court for the Eastern District of Virginia

I am pleased to announce that as of yesterday, June 10, 2019, Judge Alston has been confirmed to the U.S. District Court for the Eastern District of Virginia, Alexandria Division.  Like many judges these days, Judge Alston had quite a wait — I think it was close to a year and a half.  Virginia Lawyers Weekly has the full scoop here.

 

 

According to Virginia Lawyers Weekly, Alston, 62, was elected in 2009 to the Court of Appeals after service in both the circuit and juvenile and domestic relations courts of Prince William County. He spent nine years in private practice in Manassas and served as a commissioner in chancery and substitute judge. Before private practice, he worked for five years with the National Right to Work Legal Defense Foundation and for two years as a staff attorney with the National Labor Relations Board. He graduated from Averett University and from the North Carolina Central University law school.

Although I have never appeared before him, I have met him several times — he is a frequent speaker at the Mandatory Professionalism Seminar and I have read a number of his opinions.  What strikes me most about him is his independent streak; I fully trust that Judge Alston will follow the law and his conscience, and this is a critical element for a federal Judge, or indeed any Judge IMHO.

Judge Alston will be a welcome addition to the Alexandria bench.  According to some folks, the Court there has slowed down just a bit as a result of the retirements of several Judges, including, most recently, Judge Cacheris and Judge Lee.  (Rest assured, it is still the Rocket Docket!)   Judge Alston is young (relatively speaking) and I look forward to many years of court appearances before him.

 

 

Virginia False Claims Act Lawyers

 

 

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Deputy Attorney General designate Jeffrey A. Rosen’s Answers to the Senate Judiciary Committee

By Zachary Kitts on April 29, 2019 in , , ,

Virginia Qui Tam and False Claims Act Lawyers

 

 

 

 

 

 

Deputy Attorney General designate Jeffrey A. Rosen’s Answers to the Senate Judiciary Committee

With all of the “stuff” going on in the political and legal world, thank goodness that we here at VaQuiTamLaw.com focus only on the federal False Claims Act and Virginia Fraud Against Taxpayers Act.  Along those lines, Deputy Attorney General designate Jeffrey A. Rosen prepared written answers to the Senate Judiciary Committee’s questions this month in advance of his testimony.  You can read the Deputy AG Rosen answers to all of the questions here.  

Specifically concerning the federal False Claims Act, Rosen responded to questions from Sen. Grassley as follows:

Specific Answers to Sen. Grassley’s Questions:

  1. Whistleblowers are critical to exposing government waste, fraud and abuse. They are our eyes and ears on the ground, and their courage to come forward and expose government malfeasance benefits us all. Will you commit to protecting whistleblowers from retaliation, and to promoting a culture that values their important contributions?

 

RESPONSE:  I strongly support federal laws that protect whistleblowers, and I am committed to upholding the letter and spirit of those laws. Whistleblowers perform an important service for the public and the Department of Justice when they truthfully report evidence of wrongdoing.  Such individuals should not be subjected to reprisal.

 

  1. In 1986, President Reagan signed into law some very important amendments to the False Claims Act. Since those 1986 amendments, the government has recovered more than $59 billion in taxpayer money. Most of that is because of whistleblowers who found the fraud and brought the cases at their own risk.

 

6.If confirmed, will you vigorously support and enforce the False Claims Act?

 

RESPONSE: The False Claims Act is a critically important tool used by the government to detect fraud and recover money.  If confirmed, I will diligently enforce the False Claims Act.

 

7. If confirmed, will you continue current staff and funding levels to properly support and prosecute False Claims Act cases?

 

RESPONSE:  Because I am not currently at the Department, I have not had the opportunity to evaluate the proper level of staff, funding, and support for False Claims Act cases.  If confirmed, I will consult with the relevant Department personnel about these issues to ensure that the False Claims Act is diligently enforced.

 

8. A new guidance document developed by the Justice Department last year, known as the “Granston memo,” provides a long list of reasons that the Department can use to dismiss False Claims Act cases. Some of them are pretty vague, such as “preserving government resources.” Of course the government can dismiss obviously meritless cases. But even when the Justice Department declines to participate in a False Claims Act case, the taxpayer can and in many cases still does recover financially. So it’s important to let whistleblowers pursue cases even when the Justice Department isn’t able to be involved.

 

9.Under what circumstances can, or should, the Justice Department move to dismiss a False Claims Act case?

 

RESPONSE: The False Claims Act is a critically important tool used by the government to detect fraud and recover money.  If confirmed, I will support the Department’s diligent enforcement of the False Claims Act.  In certain cases, it may be appropriate for the Department to move to dismiss a False Claims Act case.  This may true, for example, when the Department determines a case is meritless or when there is no evidence to support the allegations in the case. Any decision to dismiss a case should made only after thorough review of the case file and consultation with the litigating attorneys.

 

  1. In circumstances where the government does not intervene in a False Claims Act case, if confirmed, will you commit to ensuring that the Justice Department does not unnecessarily dismiss False Claims Act cases?

RESPONSE:  Please see my response to Question 6(a) above.

 

Conclusion

Generally speaking, I think the FCA has become so ingrained in our jurisprudence and in our form of government that real damage to the statute (for example, the repeal of the FCA) would be unthinkable; moreover, I think that even drastic changes to enforcement of the FCA would be unthinkable…but we have to stay vigilant!

 

Virginia False Claims Act Lawyers

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