Courts Freeze Out Late-Filing Whistleblowers

Two recent court wins by False Claims Act defendants shows the perilous position in which late-filing whistleblowers can find themselves if they want to share in any potential fraud recovery.

Pharmacy services company PharMerica and device maker Biotronik both bested FCA lawsuits filed by whistleblowers bringing allegations that at least in part overlapped with other, earlier filed FCA lawsuits. The whistleblowers, both company insiders, were foiled by the governmental action bar, a provision of the FCA that the U.S. District Court for the District of Rhode Island and U.S. Court of Appeals for the Ninth Circuit said blocked the later-filed lawsuits.

The Department of Justice’s intervention and settlement in the earlier FCA suits barred subsequent whistleblower lawsuits involving similar allegations of fraud, the courts said. The Ninth Circuit said the bar applied even to whistleblower allegations concerning which the DOJ didn’t intervene because the government became a “party” to the entire first whistleblower lawsuit upon intervention. 

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Man Who Bilked More Than $100 Million in Ponzi Scheme Escapes Federal Prison

A Washington state man who bilked investors out of more than $100 million in a Ponzi scheme has escaped from a federal prison in central California, according to the U.S. Marshals Service.

Prison officials said Frederick Darren Berg, 55, was discovered missing Wednesday from a minimum-security work camp next to a penitentiary in Atwater, California, The Seattle Times reported.

Berg in 2012 was sentenced in federal court in Seattle to 18 years after pleading guilty to wire fraud, money laundering and bankruptcy fraud. Prosecutors said at the time that it was the largest fraud scheme they had prosecuted in Western Washington. read more »

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