Business Law

Business Law News 2017, Issue 3

The False Claims Act*

Matthew Zandi

Matthew Zandi is a senior managing director in the Los Angeles office of Guidepost Solutions. A former Orange County deputy district attorney, senior trial lawyer at the U.S. Department of Justice, assistant U.S attorney, and counsel at Nixon Peabody, he has extensive experience in both the public and private sectors with more than 40 trials in state, federal and international courts. Mr. Zandi is nationally recognized as one of the leading experts in Qui Tam, fraud and various state and federal whistleblower statutes.

Show me a government contract, and I will show you fraud!" This was a statement I made frequently (and only half-jokingly) during my tenure as an assistant U.S. attorney in charge of the Affirmative Civil Enforcement taskforce at the U.S. Department of Justice, where we prosecuted the federal False Claims Act, passed by President Abraham Lincoln and reinforced in 1986 by President Ronald Reagan. Originally enacted during the Civil War to fight profiteering by suppliers to the Union Army, the FCA has evolved into a sweeping statute covering nearly every company doing business with the federal government. The law imposes liability on persons who knowingly submit false claims seeking government funds or who knowingly seek to avoid paying amounts owed to the government. Today, the FCA is the government’s most important tool to uncover and punish fraud against the United States. The FCA is intended not only to recover funds, but also to deter fraud and encourage ethical corporate behavior.

In the last year, the DOJ took major steps in the enforcement and additional strengthening of the FCA; however, looking at the history of the FCA since 1986, it has proven to be ineffective at preventing fraud and encouraging ethical corporate behavior.

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