Government Contracts Monitor

If You Want to Become a Whistleblower, You Probably Shouldn’t Plead Guilty to Defrauding the Government

July 10, 2013

In a recent federal court decision, United States ex rel. Schroeder v. CH2M Hill, No. CV-09-5038, (E.D. Wash, May 13, 2013), the Court granted the government’s motion to dismiss a qui tam relator, Carl Schroeder, because Schroeder pled guilty to conspiracy to defraud the government with respect to the exact same overbilling scheme on which his False Claims Act qui tam action was based.

The Court looked to section 3730 of the False Claims which states: “If the person bringing the action is convicted of criminal conduct arising from his or her role in the violation of section 3729, that person shall be dismissed from the civil action and shall not receive any share of the proceeds of the action.” The Court found that this provision “means precisely what is says.” Therefore, the Court held that a criminal conviction arising from his role in the conduct constitutes an absolute bar. The Court also noted that Schroeder did not approach federal investigators on his own initiative, rather he was approached by the Department of Energy Office of Inspector General (OIG) after the OIG received an anonymous complaint from someone other than Schroeder. Schroeder admitted his conduct to the OIG, and after such admission, filed the qui tam action before the Court. He subsequently pled guilty in November 2011.

Finally, the Court noted that “Mr. Schroeder did not have to plead guilty,” and “[h]e knew or should have known of the implications this would have for his ability to recover a share of the proceeds in his qui tam action.” While this decision was certainly not surprising, it serves as an important reminder that an employee who is convicted of criminal conduct as a result of his role in defrauding the Government cannot turn around and benefit from filing a False Claims Act qui tam action based on the same conduct. He simply can’t have his cake and eat it too.

Brian Stolarz is the attorney responsible for the content of this article.