Katz, Marshall & Banks client Michael Lindley, a former Gallup employee who was terminated after he blew the whistle on the company for allegedly fraudulently pursuing government contracts, received some more good news last week. According to Bloomberg News, Timothy Cannon, the former director of the human capital division of the Federal Emergency Management Agency (“FEMA”), pled guilty on Tuesday, January 15, 2013, to felony conflict of interest. As we reported three weeks ago, the government’s conflict of interest charge alleged that the FEMA employee was that Cannon had helped Gallup secure a FEMA contract in exchange for an offer of a position with Gallup.
Lindley filed a qui tam lawsuit against Gallup under the federal False Claims Act (“FCA”), which allows employees to receive a percentage of any government recovery when they inform the government of fraud against the government on the part of their employer. Lindley also filed a retaliation claim under the FCA, alleging that Gallup terminated him in response to his decision to report the company to the government – according to Lindley, shortly before terminating him, one senior Gallup lawyer told him that “when you start talking about going to the Department of Justice, I don’t trust you anymore.” Section 3730(h) of the FCA makes it illegal for a company to retaliate against an employee because the employee investigated, reported, or sought to stop an employer from engaging in practices which defraud the United States government.
That Gallup was illegally offering inducements to government officials in exchange for securing government contracts was one of the central claims that Lindley made when he blew the whistle against the company. In publicly responding to the lawsuit, Gallup stated that Lindley’s claims were meritless, and that Lindley, the company’s former client services director, was just a “disgruntled former employee.” The fact that a FEMA employee has now pled guilty to the very fraud alleged in Lindley’s claim clearly undermines that attack against Lindley, and significantly bolsters both the credibility of Lindley’s allegations and the likelihood of success of Lindley’s lawsuit. The fact that one of Lindley’s claims of fraud by Gallup against the government has essentially been proven truthful makes it more likely that a) the government can view his other claims as reliable and trustworthy; and b) the culture of Gallup was one that allowed fraud against the government to take place.