Over the last week since our Nightline show aired on the Ephren Taylor/City Capital Ponzi Scheme Class Action Suit we have received a lot of helpful information on our class action lawsuits as well as other potential cases. But what I want to address today is something I have discussed privately with some of the Nightline viewers who contacted me and wanted to discuss their situation namely, the knowledge that their employer was conducting a fraudulent scheme or Ponzi scheme and they were afraid to come forward and disclose it. I fully appreciate that apprehension and applaud the whistleblowers who have come forward publicly to stop fraud. Because of my concern about the proliferation of Ponzi schemes being perpetrated in this country and the apparent inability of regulators and law enforcement to stem the tide of these crimes (for the most part through no fault of their own), it is time for the average citizen to step up and facilitate reporting of these crimes so the perpetrator can be stopped. I understand there are significant concerns about doing so and therefore wanted to provide the same advice I have provided to to other potential whistleblowers who were unsure of what to do in order to do the right thing but also protect themselves.
If you know your employer is committing a fraud and you do nothing about it then in my opinion you become part of the criminal enterprise. Let's turn the tables. If you were the victim instead of the whistleblower and you lost your money in a Ponzi scheme, wouldn't you want the people who were getting paid to keep the scheme going held responsible if they knew they were aiding a fraud but continued to do it anyway without telling anyone? I certainly would. So what should you do if you are a potential whistleblower?
I will tell you:
1. The truth will set you free. If you know your employer is committing a fraud on its customers/clients or third parties such as governmental agencies you walk around with a lot of guilt. That is because you know you should do something. I get that. Doing something to report a Ponzi scheme or fraudulent activities will eliminate that guilt and also establish that you did not intend to perpetuate the fraud. It will also permit you to sleep at night.
2. Reporting Options. Depending on the type of fraud, there are a multitude of options for reporting fraud to regulatory agencies both state and federal. For example, in the case of Ponzi Schemes you can report such activity to the FBI, SEC or your state securities regulatory agency. If you are aware of governmental contractor fraud and wish to file a Qui Tam action which is a special kind of whistleblower law suit, you can contact an attorney who specializes in that area or your state attorney general. In most cases these agencies have hotlines or other methods of anonymous reporting that permit you to provide information without disclosing your identity. Just Google the agency you are looking for and their website will provide you with all the information you need to provide an anonymous disclosure.
In addition, you could report fraudulent activity to an attorney that you know and trust and ask for their advice on how to proceed. If you don't know an attorney, then contact the state bar association in the state where you reside and they can direct you to an attorney who practices in the appropriate area of law.
There are several options for a whistleblower to report fraudulent activities without having to reveal their identity. I urge you, if you are reading this blog and know your employer is committing a fraud, to take action to disclose it so that it can be stopped. It is only through this method of "private policing" that we can stem the tide of fraudulent schemes that are stealing the money of innocent victims daily.
No one knows how many Ponzi schemes are actually initiated each year in the United States. But I can assure you the number is staggering. There are several reasons for that. First, regulators are understaffed to deal with the magnitude of this problem in this difficult economic climate. There is simply not enough money to fund the manpower needed. Secondly, these crimes for the most part go unnoticed unless reported by the victims and then it is generally too late because by the time the victims become aware that they are the victims of a fraudulent enterprise the scheme has run out of money and the fraudulent enterprise has crumbled. Third, not enough insiders with knowledge of the crimes report the fraudulent schemes to the appropriate authorities so that they can be investigated and stopped.
I cannot do anything about the first and second roadblocks to stopping fraudulent schemes. But number three is certainly easy to address. People just have to be willing to come forward and disclose a fraud being committed in front of them. It is that simple. Those of you that I have spoken to and those of you reading this Blog-you know who you are-please do something to stop these crimes and help turn the tide on this escalating crime spree. And remember- The Truth Shall Set You Free.....