Tuesday, January 30, 2018

Whistleblowing When You Know You Will Fail

Whistleblowing When You Know You Will Fail

Whistleblower projects tend to go on for years, and you have to wonder why exactly.

First there is the observation of wrongdoing.  You bring it up to management.  They push back and start retaliating against you.  After you are fired, you get an attorney involved.  Maybe there are negotiations; they take a while.  Complaining to a State agency can take a couple of years[1].  A lawsuit is longer still, with discovery, motions, rulings, and so on.  Then there are the appeals. 

My run at HomeFirst, start to finish, lasted 4½ years for nothing.  Others keep going longer: Robert Purcell stayed at it for 18 years.  He also got nothing.

Our projects last so long, and so many people warn that they will end badly.  We must all sense we will lose.  When – how many times – do we realize that we are going to fail?  Why not stop when we see our bleak future?

I began to understand things would not work out well a month after I disclosed the first of HomeFirst’s violations, its overbilling of Santa Clara County by $140,000.  At a meeting of the board’s finance and executive committees the board chair warned, this year will be challenging and we don’t want any more red flags.  Everyone else kept quiet.  I protested, asking if she wanted me to conceal wrongdoing.  No, just let CEO Jenny to decide what to do, she said.  That’s what I told him, Jenny said.  Everyone else’s silence made clear whistleblowing would not be received warmly by the HomeFirst crowd.

I continued to find more problems, and the CEO and board continued to do little while claiming they did as much as they could.  It was clear they would never act, but I persisted.  Why in the world?

Eight months after I began, I admitted that I had made two disclosures externally.  I wanted to protect myself.  The board’s attorney told them I had taken Whistleblower 101.  He advised firing me and negotiating a settlement of around $100,000.  After reading their emails, I was enthused and continued my work.

Time crawled.  The CEO built a case for firing me for cause.  I watched potentially dangerous emails accumulate in her Mike Veuve folder.  I began to look for an attorney.

The guy I found, Stephen Jaffe, assured me I had a case.  Of course.  I was enthused again.  I paid him a $5,000 retainer against a 40% contingency.  After HomeFirst fired me, Jaffe moved slowly.  I doubted he would perform.  I paid another $3,000 for a mediator.  It would save a lot of time, he said.  It would save him expense, I heard.  It became clearer I would fail, but I had no options and proceeded.

Jaffe didn’t work out.  He settled for $45,000 and a nondisclosure so tight I couldn’t even bitch to my wife about HomeFirst without giving back the money, including Jaffe’s 40%.  Jaffe said it was a good deal, a success.  Even if it felt like a failure to me.  I rejected it.

Then I complained to the State.  No additional cost to me, so I did it.  I asked to be reinstated, but I didn’t really expect that.  A clerk told me it would take 6-8 months.  After a year of following up, I decided the State would not help either.  The first draft of its determination letter was in my favor, I was told.  Mild but also disbelieving enthusiasm.  A year later, the final version ruled against me.  My final failure.

For the entire 4½ years, I continued to follow-up on my complaints about HomeFirst even though it was pointless.  One by one I had to abandon them.  At each step HomeFirst won; I lost.  For years now I’ve known I would lose.  It was like I found schadenfreude in my own defeat.

What brings this to mind is Chelsea Manning, whistleblower.  Manning gained fame after she released secret government documents to Wikileaks.  Her leak was soon discovered.  She was arrested, convicted, and sentenced to 35-years in a maximum security prison.  President Obama commuted her sentence after 7 years of confinement.

Now she fashions herself as a politician running for a U.S. senate seat in Maryland.  Manning is 30 years old, has no meaningful experience, and is a felon for betraying U.S. secrets.  She probably should have known how her whistleblowing would end, but she went ahead anyway.  Now she is spending time and money running for office despite knowing how that will end.  In explanation, she says the establishment needs to be challenged.  The animus that helped her to whistleblowing glory still burns in her.

What else brings this to mind is Stephen Jaffe, my former whistleblower attorney.  Like Manning, Jaffe sees himself as a politician.  He is running against Democrat leader Nancy Pelosi for her seat in the House of Representatives.  He has raised $66,000 against Pelosi’s $1.9 million.  Jaffe and everyone else knows he will fail, but there he is campaigning.  Judgment, I am reminded, is not necessarily his strong suit.

Why people undertake doomed projects is always something of a mystery.  We like to come up with explanations eventually, though.  About whistleblowers, we say they are moral heroes, the law or their professional standards demanded they do it, they wanted a reward, they tried to hide the fact that they couldn’t do their jobs, they wanted to destroy the organization, or something else. 

Professor C. Frederick Alford and some whistleblowers contend they had no choice but to blow the whistle.  It was a choiceless choice.  They could not have lived with themselves if they had remained silent.

Most of the time it’s pretty clear that our whistleblowing will not be useful.  No moral standard demands our profitless self-sacrifice.  We just waste our time and money on the project. 

I suggest whistleblowers will be free only if we accept that our motives were, maybe in large part, base and we knew we would fail. 

We were not compelled by anything.  We intentionally chose to blow the whistle (or whistles) despite the probable outcome.  We did not deserve victory any more than someone else deserves wealth or good health.  We lived, and we acted.



[1] 2.1 years on average pass from termination to determination, based on decisions by the California Department of Industrial Relations in 2014 and 2015 (using copies provided by State).  My unfavorable determination letter came nearly 3½ years after HomeFirst fired me.

Tuesday, January 23, 2018

Silence Breakers, #MeToo, and Whistleblowing

Silence Breakers, #MeToo, and Whistleblowing

Time’s Person of the Year 2017 is the Silence Breakers, women who have raised their voices against sexual misbehavior.  They may be whistleblowers, but not all in the traditional sense.  Unlike the rest of us, they have started a firestorm.

Whistleblowing has been defined in various ways.  One early (1985) version put it:

the disclosure by organization members (former or current) of illegal, immoral, or illegitimate practices under the control of their employers, to persons or organizations that may be able to effect action[1]

In some ways this reading covers a broad range of actors.  It includes, for example, those who, like me, reveal relatively minor misdeeds.  Some ethicists think only disclosures of big crimes are worthy.  Also, it does not limit the behavior we disclose to violations of law, which is demanded by most whistleblower protection laws. 

It is, though, restrictive in other respects.  It expects the whistleblower to be part of the offending organization, making loyalty a potent issue.  It demands that the wrong be actual rather than merely suspected, as most laws now allow.  Further, it requires the disclosure be made to someone who can fix the problem.  Just telling journalists doesn’t count.

The Silence Breakers – and #MeToo, Time’s Up, and other movement participants – call out possible wrongs, but not always those committed by organizations where they are members.  As a result, formal channels often don’t exist for registering their complaints, and those they approach may be unable to fix anything.

Every whistleblower’s charge is denied by her accused, but Silence Breakers are subject to especially wide-ranging denials and critiques.  Among the bad guys, Harvey Weinstein said his relations were consensual.  Donald Trump called his accusers liars.  Bill O’Reilly said there was nothing to the claims made against him even as Fox was paying $32 million in his newest settlement

Similar denials arise in corporate fraud cases, of course.  For example, Wells Fargo refused to admit government claims when it agreed to pay $50 million to the Consumer Financial Protection Bureau and $35 million to the U.S. Comptroller for fraudulently opening customer accounts.  And when it settled for $108 million claims it improperly charged fees on veterans’ mortgages.  Again when it agreed to pay $766 million for improperly foreclosing mortgages.  And when it agreed to change its practices and to pay $4 million for improperly repossessing the service members’ cars

We expect accused wrongdoers to deny our claims.  But kibitzers like to weigh in on what Silence Breakers report.  A hundred French female public figures believe that the matters demand a more nuanced understanding of sexual relations.  Matt Damon cautioned not to conflate casual sexual offense with sexual assault.  Then under pressure he walked his comment back.  A woman’s report of abuse by Aziz Ansari was followed by impassioned criticism and support.

Deciding if a behavior was really wrong is difficult in any whistleblower case.  For some the rankness of the act makes it more clearly wrong.  For others any offense is worth proclaiming.

Even more basic than the question whether behavior is right or wrong is: who cares[2]?  Whose interests are harmed may decisive.  I accused HomeFirst of several violations, but no one really cared.  The financial stakes could have been too small.  Or maybe the injured were just homeless folks and none was seriously hurt.

The interests harmed are not always those of the general public.  Many whistleblowers disclose misdeeds that affect them personally.  Their paychecks bounce.  They are denied paid breaks or overtime pay.  Or they are exposed to danger in the workplace.  Silence Breakers have disclosed actions that reach new levels of personal insult.  Rape and forced witness to someone masturbating are hugely more damaging than the typical crimes most people disclose.

Organizations regularly ignore our honest complaints and claim we were fired for good reason.  It was our faulty teamwork or performance.  Those accused by Silence Breakers likewise claim their victims were at fault.  The way they dressed or behaved was the problem.  They work in an industry where such things are common.  They should be ashamed of themselves.

Most whistleblowers disclose white-collar crime – there’s a lot of that occurring all the time.  How much sexual misconduct goes on can be a matter of definition.  The U.S. Department of Justice reported 432,000 cases of rape/sexual assault in 2015.  But broadening the definition, one poll found 54% of all women have experienced unwanted sexual advances in their pasts.  #MeToo’s power is less surprising than the fact that it took so long to emerge.

Organizational whistleblowing has been awash in public attention for more than four decades.  In 2002 it was three female whistleblowers who were Time Persons of the Year.  Disclosures have increased.  Laws have been passed to protect and even reward well-placed whistleblowers.  But just a few of us have risen to hero status.  And we have started no revolution.

Silence Breakers, #MeToo, and others uniting their voices against sexual harassment could truly rock relations in the workplace and in social life.  If they do, it will be a change that has been in process for decades.  Their success will follow years of personal pain experienced by millions.

Most regular whistleblowers lose in our projects.  I did.  It’s hard to make sense of what we did when so little changes[3].  We’d like some of the revolution the #MeToo crowd sparks.  We’d like some of that righteous fury again.





[2] Asked by critics from the beginning.  For example Nader, Ralph, Peter J. Petkas, and Kate Blackwell (eds.)  Whistle Blowing: The Report of the Conference on Professional Responsibility. New York: Grossman Publishers. 1972; Bok, Sisella. “Whistleblowing and Professional Responsibility.” New York University Education Quarterly 11.4 (1980): 2-10; Bouville, Mathieu.  “Whistle-blowing and morality.”  Journal of Business Ethics.  81.3 (September 2008): 579-585; https://link.springer.com/article/10.1007/s10551-007-9529-7

Wednesday, January 10, 2018

A New Whistleblowing – Kohn’s New Handbook

A New Whistleblowing – Kohn’s New Handbook

Stephen M. Kohn’s The New Whistleblower’s Handbook prescribes an ethics-free approach to whistleblowing.  He responds to a world much different from 35 years ago.  Ethics and morality, which were core to the older whistleblowing, are not inconsistent with his new approach.  They are just not that important.

Since whistleblowing became a phenomenon, the number of laws protecting whistleblowers has increased, and more are added each year.  There are now 55 federal laws, and most states have at least a couple.  Federal and local governments have ramped up payments to vendors, especially for health-related services[1], expanding opportunities for fraud. 

Kohn points to two other important factors that have changed the whistleblowing landscape.  First, anonymous reporting has become more common.  Anonymity is helpful because it can protect the whistleblower, at least for a while, from retaliation.  Second and Kohn’s favorite, reward laws allow disclosers a chance to share in fines and other recoveries from wrongdoers.

Early writers on whistleblowing focused on the ethical questions we should consider before making our disclosures.  That was proper, Sisella Bok[2] wrote, because we break our duty of loyalty to our employer and colleagues when we blow the whistle on them.  Despite our disloyalty, whistleblowing is morally permissible, Richard De George[3] wrote, if

1.       The firm will do serious harm to the public
2.       We first report to our immediate supervisor and
3.       If the supervisor fails to take effective action, we exhaust the internal reporting methods

Furthermore, whistleblowing is morally required if

4.       We have hard evidence that would convince a reasonable, impartial observer that our view of situation is correct
5.       We have good reason to believe that by going public the necessary changes will be made.  The chance of being successful is worth the risk taken by exposing the problem.

In contrast, Kohn’s thirty rules for good whistleblowing do not sound moral concerns.  They include

#3  Follow the Money (Use laws that pay rewards)
#4  Find the Best Federal Law (It will offer protection and rewards)
#6-12  Get Reward!
#15  Make Sure Disclosures Are Protected
#17  Beware of “Hotlines”
#18  Don’t Talk to Company Lawyers
#22  Delay Is Deadly
#23  Conduct Discovery
#26  Get Every Penny Deserved
#27  Make the Boss Pay Attorney Fees

Rule 30 states whistleblowing works.  As proof: from 1988 to 2016 the Department of Justice civil fraud division recovered $15.3 billion without the help of relators.  With their help, the DoJ recovered $37.7 billion.  The whistleblowers received $6.4 billion for their efforts.

But Kohn’s handbook describes a narrow patch of the whistleblower landscape.  During the past five years, the DoJ recovered an annual average of $3.3 billion on whistleblower complaints.  It also received just 693 new whistleblower suits a year.   That’s a miniscule portion of the million or more whistleblower complaints a year.

Kohn’s new world does not concern most whistleblowers.  It didn’t apply to me.  HomeFirst had no anonymous complaint reporting system.  Even if it had, my identity would have been discovered quickly enough.  Although the State did not reveal I had complained about its licensing violation, the CEO and Board chair figured that it was me. 

Most of the violations we disclose do not lend themselves to a calculation of rewards.  My whistleblower complaint listed eight HomeFirst violations.  None of them involved outright fraud.  The misdeeds were simply violations of laws and government agreements that did not provide rewards.  When government agencies waive the violation or fail to reclaim the ill-gotten funds, as Santa Clara County and HUD did with HomeFirst, there’s no hope for compensation.  But retaliation still occurs.

Even some famous whistleblowing falls outside Kohn’s territory.  No qui tam suit was available to Edward Snowden or Chelsea Manning.  And few of Politico’s top 10 whistleblowers could hope for rewards even under new laws. 

Kohn doesn’t discourage disclosures made for intrinsic or ethical reasons.  He just directs us to a more practical and self-aware way of whistleblowing.  When C. Frederick Alford[4] reported his interviews of whistleblowers, he warned us that we will probably not improve anything by our efforts.  Our suffering will probably be meaningless.  Rather than acting heroically, we are more often driven by moral narcissism[5].  Kohn offers an attorney’s counsel out of that despair.

But Kohn’s result may not inspire the general public.  Popular imagination is not excited by whistleblowers who are in it only for their own payoff.  Folks are fascinated by someone like Edward Snowden who acts to protect rights for all of us.  We are intrigued, if puzzled, by a person like Eric Ben-Artzi who won then turned down an $8.5 million award because he thought the wrong people were punished.  Kohn speaks to the potentially winning whistleblower, not to those who stand on principle or who chose to remain silent.

Early writers tested whistleblowing against a moral standard because they thought the act was inherently immoral.  A stain on our loyalty.  Employment-at-will laws and short tenures have reduced the expectation of loyalty, but still external measures of whistleblower sincerity seem necessary.  The idea of the public good is one test in laws.  Or, as Kohn recommends, a successful lawsuit based on solid evidence and an adroitly selected law.

Alternatively, we could admit that the violation we disclose is simply one wave on top of a choppy sea of misbehavior.  Like most, I blew the whistle because I was dissatisfied.  It’s perfectly reasonable to be unhappy with an employer that does lots of bad things.  It’s altogether appropriate to strike at that employer.

Employers like to dismiss whistleblowers as disgruntled employees.  The State determination letter in my case accepted that.  My relations with HomeFirst’s CEO and Board deteriorated, and they deserved to fire me, the State said.  But we are disgruntled.  That’s why we blow the whistle.

We can retrospectively justify our action in terms of external moral standards.  We can evaluate the action in terms of how effective it changed another’s behavior or secured a reward from some authority.  Still our action comes from within us.  It is ours, successful or not.




[1]Medicare/Medicaid fraud is a favorite target for False Claims Act suits.  Medicare/Medicaid costs increased from $61 billion in 1980 to $1.2 trillion in 2016.
[2] Bok, Sisella. “Whistleblowing and Professional Responsibility.” New York University Education Quarterly 11.4 (1980): 2-10
[3] De George, Richard T.  Business Ethics.  6th edition.  Upper Saddle River, NJ: Pearson Education.  2006De George first published his text in 1982.
[5] Ibid 79

Tuesday, January 2, 2018

When We Lose (Part 4) – Being Alone

When We Lose (Part 4) – Being Alone

Whistleblowers are individuals who confront wrongdoers.  They stand up against the system.  That’s the myth.  It is true that most of us act singly when we disclose misdeeds.  But I did not feel exactly alone on my project.  Not until the end anyway.

Citigroup promoted Richard Bowen to senior vice president in 2006.  He soon discovered that 60% of the $90 billion of the mortgages his area bought and sold to Fannie Mae and Freddie Mac failed the bank’s credit tests.  He alerted Citigroup management to the problem because it was part of his job.  He didn’t oppose the organization.  He acted as a vital member of the institution.  When management didn’t respond, he approached the Citigroup board of directors.  They, too, didn’t act, and he went to the Securities and Exchange Commission.  Then he testified before Congress.

At each step Bowen believed that he was doing his job.  Each time he expected to be welcomed in the deepening circles of authority.  As it turned out, he did not belong.  Officials at each level failed him.  In 2009 he was fired.  His severance was less than $1 million – a small amount compared to his salary and his lawyer’s take – and Citigroup later received a $45 billion bailout plus $300 billion in asset guarantees from the government.

Whistleblowers’ stories are not always about ethical norms.  They don’t necessarily reflect the defense of good against evil although they may later be cast that way.  Lots of times they are about being part of a work unit, a management group, or some other community.  Until you find your friends have no use for you.  First comes the ostracism.  Then the reprimands.  Then justification for retaliation makes it perfectly clear: you were not on the team after all.

When I revealed HomeFirst’s overbilling of Santa Clara County, I was just doing my job.  When I objected to the board chair’s admonition not to disclose any more violations, I assumed the other board members present would help because they valued me.  Privately afterward, the board audit chair encouraged me, and I thought I was embraced and safe. 

But the board continued to support the CEO despite more identified violations.  Its willingness to believe that I was the unfit one, not she, made evident that I had no entry into their circle.  But I still believed that government monitors would respect and welcome me.  One by one, they too let me know that HomeFirst was their partner and I was not.  The Department of Justice attorney stated it most plainly: they did not like going after organizations they thought did good.  The other agencies spoke through inaction.

A 2013 survey by the Ethics & Compliance Initiative found that 92% of those who report wrongdoing do so first internally.  Bowen did that; I did, too.  We believed that others in our company needed to know.  We were not loners standing up courageously.  We were not speaking truth to a foreign power.  We communicated with our colleagues, we thought.

Most of us successfully spend years in organizations like the one that rejects us.  Bowen rose to senior vice president at Citigroup because he served his employers well.  I was CFO of five companies and did some good work, even at HomeFirst.  Whistleblowing is hard because we need the organizations that eventually toss us out.

The expulsions can leave us isolated.  James Holzrichter called out overbillings by defense contractor Northrup Grumman.  The company fired him.  It blackballed him, blocking him from another auditing job.  He and his family were homeless for a time.

Attorney Jesselyn Radack thought she was doing her job when she advised the Department of Justice that accused terrorist John Walker Lindh needed to have his attorney present during interrogations.  She was pressed to resign.  After the DoJ publicly denied receiving her counsel, she leaked information to Newsweek.  The agency responded by getting her new employer to fire her and state bars to investigate her.  That made getting another legal job nearly impossible.

Through a combination of factors, including their personal skills and the significance of their claims, some whistleblowers become well known for what they did.  Bowen is one of many inspirational speakers on whistleblowing.  Holztrichter also speaks, consults, and encourages whistleblowers.  Radack works for the Government Accountability Project in defense of big league whistleblowers.


Like many in the little leagues, I believed the whistleblower myth.  I expected the protection promised by long-term loyalty and the law.  But the state determined that I was not a whistleblower at all.  I did not belong in that circle either.  I was alone.