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Qui Tam

: Virginia Qui Tam Law

Everyone seems to focus on the treble damages, civil penalties, and attorney's fees...

By Zachary A. Kitts

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For understandable reasons, people tend to focus on the treble damages, civil penalties, and attorney's fees provided for in the federal False Claims Act and in the 26 states with false claims acts. Today, I want to talk about one of the least emphasized--but most important--benefits that accrues to the public fisc as a result of increased false claims prosecutions.

I am talking about the increase in compliance with the law that follows well-publicized and effective false claims prosecutions, and I will demonstrate with a concrete example from my home state of Virginia.

In 2007 and 2008, I prosecuted the first non-intervened state qui tam action under the Virginia Fraud Against Taxpayers Act. The case involved a federal credit union's (alleged) failure to deliver unclaimed property to the Virginia Treasury. After the case's successful resolution in late 2008, there was a fair amount of publicity in Virginia's legal and banking communities.

While the Commonwealth recovered money as part of my FCA case, take a look at the chart below,which shows an increase of some $45 million in Virginia's unclaimed property collections in 2009--and this chart just covers the first three quarters of the fiscal year!

The chart clearly shows Virginia's unclaimed property recoveries holding pretty steady from 2003 through 2008; on average, between $65 and $80 million dollars in unclaimed property escheats to the Virginia Treasury each year during that time span.

Now look at the first three quarters of FY 2009--unclaimed property recoveries jumped to more than $120,000,000 in the wake of the publicity surrounding the Siddiqui case. To be fair, a sizable chunk of this arose from the Siddiqui case itself--as part of the settlement of the qui tam case, the Virginia Treasury obtained the right to conduct an audit and declare any property as unclaimed that it desired.

Still, there can be no doubt that increased compliance with the law is one of the most important goals of increased FCA enforcement. While increased compliance with the law does benefit the treasury, that is not the most important benefit--indeed, we could even live without that.

I firmly believe that the more important result of increased compliance is that indicates an increased respect for the law in general and for government institutions in particular--and that, ladies and gentlemen, is something we could not live without.

Full post as published by Virginia Qui Tam Law on October 08, 2009 (boomark / email).