Fairfax, Virginia, November 5, 2008—Navy Federal Credit Union will pay $640,000 dollars to settle allegations that it failed to deliver unclaimed property to the Commonwealth of Virginia as part of a settlement under the Virginia Fraud Against Taxpayers Act.  The Order, entered by the Circuit Court for the County of Fairfax, can be viewed here. 

The settlement marks the largest non-healthcare settlement to date under the Act, and it is the first non-healthcare case to be prosecuted without the intervention of the Attorney General’s office.  Northern Virginia lawyer Zachary A. Kitts, of the firm of Cook & Kitts, PLLC, represented relator Nisar Siddiqui, a former employee of Navy Federal.  

The Virginia Fraud Against Taxpayers Act—commonly known as “the Virginia False Claims Act”—is modeled on the Federal False Claims Act and, like its counterpart, allows private citizens with first-hand knowledge of fraud on the Government by any person to sue on behalf of the Commonwealth.  The statute provides for an award of treble damages, civil penalties and attorney’s fees to a prevailing party.  As an incentive, relators who “blow the whistle” receive a share of any money recovered by the Commonwealth. 

Despite the statutes’ incredible incentives, it has seen very little use by the private bar since becoming law in 2003.  Under Attorney General Bob McDonnell, the Medicaid Fraud Control Unit of the Attorney General’s office has received national awards for its use of the statute, but there have been only two non-healthcare prosecutions under the statute.

“I was surprised to learn that we were going to be the first non-intervened case under the statute, but at least it added a nice angle to what is usually an unhappy moment in the life of a qui tam case” Kitts said this week, referring to the moment when he learned that the Attorney General’s office would not intervene in the case.    

As part of the settlement, Navy Federal denied liability.  Of the total $640,000 recovery, $535,000 will be paid to the Commonwealth as payment of $155,000 in unclaimed property, plus treble damages and civil penalties.  Of the $535,000 paid to the Treasury, Siddiqui will receive a little over 28%, or $149,896 as his reward.  Siddiqui will also receive another $5,000 for his alleged constructive discharge from Navy Federal, and $100,000 to help cover his attorney’s fees and costs.