The Federal False Claims Act
People who are engaged in fraud often target the United States government because it can be a lucrative proposition. It is easy for something to get overlooked in a system that conducts thousands of transactions each day. During the American Civil War, dishonest contractors sold sick horses, faulty ammunition and spoiled provisions to the Union Army. In response to the prevalent fraud, the United States Congress passed the Federal False Claims Act in March of 1963. Often called the Lincoln Law, this new legislation offered citizens a reward for suing on behalf of the government. The person filing the lawsuit is called “relator” in a qui tam action, which is a Latin phrase referring to someone who sues on behalf of the king. Relators were eligible to receive up to 50 percent of the total amount recovered in the suit. This percentage was later cut when Congress amended the act in 1943. In 1985, the Department of Defense (DOD) began investigating complaints of widespread fraud by some of the largest defense contractors. In an effort to encourage more whistleblowers to come forward, Congress revised the False Claims Act allowing litigants to obtain 15 to 30 percent of the amount recovered by the government.

Trailblazing Whistleblowers
In 1989, Congress enacted the Whistleblower Protection Act in an effort to shield government employees from retaliation by their employers. In 1989, Congress enacted the Whistleblower Protection Act in an effort to shield government employees from retaliation by their employers. Whistleblowers can file complaints against the government or government agency if they are punished for reporting fraud.

Long before the federal government had protections for whistleblowers in place, there were some notable people who blazed the trail in reporting government fraud. Some memorable examples of insurance fraud include the following:

• Some memorable examples of insurance fraud include the following:
  Former British Government minister John Stonehouse went missing in 1974 from a beach in Miami. He was discovered living under an assumed name in Australia, extradited to Britain and jailed for seven years for fraud, theft and forgery.
• John Magno allegedly hired accomplices to set fire to his Toronto, Canada hardware store in order to collect insurance money.

Defense Department Defrauded Out of $20 Million
A company by the name of C & D Distributors successfully bilked the Defense Department of more than $20 million dollars. Twin sisters, Charlene Corley and Diane Wooten discovered a loophole in the government’s automated payment system. When paying defense contractors, shipping charges are automatically paid on supplies the government considers a top priority, no matter how high the cost is. Over a nine-year period, C & D Distributors exploited the system and charged the government over $900,000 to ship two 19-cent plumbing washers. The company submitted 112 fraudulent invoices, totaling $20.5 million in bogus shipping charges.

After being questioned by federal investigators, Darlene Wooten committed suicide in October 2006. Her sister, Charlene Corley pled guilty to wire fraud and money laundering. In March 2009, Corley was sentenced to six and half years in federal prison and ordered to pay $15.5 million to the government in restitution.