When a Whistleblower Gets Prosecuted

Originally published by Dan C. Guthrie, Jr..

Whistleblowing comes with several inherent risks: harassment, demotion, even getting fired. But it can be even riskier for a whistleblower who has also engaged in illegal activity.

A recent case out of federal court in Dallas highlights the tightrope whistleblowers walk.

Dr. Walter Neil Simmons, an Arizona physician, filed a federal whistleblower lawsuit that exposed a kickback scheme involving expensive pain creams. But, as it turned out, Dr. Simmons was one of those who profited from the kickbacks, according to federal prosecutors in Dallas. Despite his efforts to report the scheme to authorities, he was charged with conspiracy to commit healthcare fraud. He ultimately pleaded guilty to wrongful use of a unique health identifier and was ordered to pay $528,000 in restitution.

There’s no way to know how many whistleblowers this has happened to, but it’s definitely not the first such case. In fact, a well-known white collar criminal case involving food giant Archer Daniels Midland’s global price-fixing scheme resulted in the imprisonment of the man who brought the crimes to light.

Unfortunately, the people who are in a position to blow the whistle on a significant criminal conspiracy may only know about the crime because they participated in it — and either decided the risk was greater than the reward, or they saw the writing on the wall and decided they were better off by tipping off law enforcement.

But when whistleblowers find themselves on the wrong end of an indictment, it discourages other whistleblowers from stepping forward.

If you are considering blowing the whistle on unlawful activity, here are some things to consider: 

• Speaking with an experienced white-collar attorney can help you weigh the risks and benefits before moving forward. 
• If you have engaged in illegal activity yourself, you should tell your attorney up-front. 
• You may be able to blow the whistle anonymously. 
• Whistleblowing is not the forum to air grievances or make false reports. 

Mark Whitacre and the Archer Daniels Midland Price-Fixing Scheme

If you have not read Kurt Eichenwald’s book or seen the subsequent movie, The Informant!, you may not be familiar with Mark Whitacre. Whitacre was a vice president at Archer Daniels Midland (ADM), when he informed the FBI of the company’s global price fixing scheme. For three years, he worked undercover for the FBI, wearing a wire to help expose corporate wrongdoing. 

Whitacre might have been considered a hero if not for one major bombshell: he had embezzled roughly $9 million dollars from ADM while he was working as a government informant. Although his information led to the discovery of one of the largest international price fixing schemes in history, Whitacre was sentenced to 9 years in federal prison for his own illegal activity. In comparison, those involved in the ADM price-fixing served a maximum of 30 months in prison.

Should You Become a Whistleblower if You Have Also Broken the Law?

If there is anything to learn from Whitacre’s story, it’s that the government does not take kindly to whistleblowers who have also broken the law. While some argue that Whitacre’s sentence was unfair, others think he turned informant purely to save himself. Either way, Whitacre paid quite the price. 

However, things may have turned out differently if Whitacre had been up-front about his embezzlement before contacting the FBI. It may have been his long-lasting efforts at hiding and covering up his wrongdoing that led to his lengthy prison sentence. 

As a white-collar defense attorney, I have seen countless government investigations. Blowing the whistle on unlawful activity can be a valiant endeavor, but there are many things to consider before you contact authorities. 

First and foremost, you should consult with an experienced attorney before you report any unlawful activity. An attorney can help you determine if you have a valid claim and mitigate the risks associated with whistleblowing. They can ensure you are reporting the right kind of claims to the correct authorities. 

Also, if you have broken the law in any way — either as a co-conspirator in the scheme you are trying to report, or you engaged in additional illegal activity on your own (like Whitacre) — you need to tell your lawyer right away. This way, your attorney can help you address the risks head-on, hopefully reducing any chance of serving jail time for your actions (depending on the specifics of your case). 

Implications of Blowing the Whistle

Most whistleblower laws vary state to state, and the protections for whistleblowers are not always uniform. Most whistleblowers are afforded some protection from retaliation, but the level of protection differs if you work for a public company vs. a private corporation and the type of activity being reported.

The Texas Whistleblower Act, for instance, protects public employees from retaliation (such as termination or demotion) as long as the employee files a complaint within 90 days of the unlawful activity. 

Moreover, some individuals may be hesitant to come forward given the outcome of cases like Whitacre and Dr. Simmons, the Arizona physician. One can only imagine the amount of people who would blow the whistle if they had some level of assurance they would not face legal repercussions for reporting unlawful activity in which they participated. 

In addition to potential legal issues, whistleblowers face risks to their career as well. One case study found that 74% of whistleblowers were fired, another 11% were suspended or transferred, and 15% were demoted or harassed. 

In a nutshell, whistleblowing is a risky endeavor with far-reaching repercussions. Nevertheless, our society has a moral and financial interest in uncovering corporate wrongdoing. Whistleblowers play an important role in reforming institutions for the better and holding corporate leaders accountable for their actions. Whistleblowers can also make the workplace, and our country as a whole, safer for others. 

If You Are Thinking of Whistleblowing, Contact an Experienced Attorney

If you know of wrongdoing at your company and are thinking of contacting authorities, it is wise to speak with an attorney first. An experienced white-collar defense attorney can advise you of your rights, help strengthen your case, and mitigate risks to you of being prosecuted. 

Attorney Dan C. Guthrie, Jr. has been representing white-collar clients in Dallas and throughout the nation for over 30 years. He has been recognized as an AV Preeminent lawyer by Martindale Hubbell, a Top 100 Trial Lawyer by The National Trial Lawyers, and by Super Lawyers, published by Thomson Reuters. To schedule a consultation, fill out our online contact form. We look forward to assisting you.

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