How Do I Report Government Fraud?

Nearly all countries have official channels through which a citizen may report government fraud. To begin the process of reporting, contact the government agency that regulates the specific type of fraud you are reporting and ask how to proceed. Some agencies may only take reports by mail or fax; others may allow reports to be submitted via telephone, email, or Web form. Ask if the agency pays rewards for information and what the eligibility requirements are to qualify for a reward. Should you prefer to remain anonymous, you may forfeit your right to collect a reward.

If you provide contact information, the investigating agency will usually contact you within 30 days and ask you to send additional evidence or documents proving the allegation. The investigator will give you further instructions at that time on how to submit your documentation. While it is not always necessary to have an attorney represent you, it is generally recommended that you get some case-specific legal advice before reporting government fraud, especially if the case is complex or involves large sums of money.

When individuals, corporations, or government employees defraud the government, they are in essence stealing the people's money. Hard-working taxpayers ultimately wind up paying the price for these deceptive schemes. Because government fraud is a serious crime, such cases are often prosecuted vigorously. The defendants may go to jail in addition to paying large civil judgments. People who report government fraud are known as whistleblowers, or qui tam relators, in legal terminology.

There are many types of government fraud. Income tax fraud, procurement fraud, false claims, health care fraud, and securities fraud are some of the most costly to taxpayers. Procurement and contractor fraud may involve bribes or kickbacks to get government contracts, billing the government for work that was never performed, or over-inflation of actual costs incurred. Under the Federal False Claims Act, it is a crime to present a false claim, or to participate in a conspiracy to defraud the government. If convicted of presenting false claims in the United States, the defendant is liable for treble damages — three times the amount stolen — in addition to a civil fine of up to $10,000 US Dollars (USD).

Health care fraud lawsuits can recover sums in the millions or even billions of dollars. Common Medicare and Medicaid fraud schemes involve health care providers overbilling for lab tests or procedures that were never performed, or deliberately overestimating costs. Income tax fraud also costs the government large sums each year when taxpayers don't pay their fair share. In the United States, any individual can report tax evasion to the Internal Revenue Service anonymously; however, to receive a reward from the IRS, the reporter must provide his or her name and contact information, and meet some very strict reporting requirements.

Reporting securities fraud can also result in large financial rewards from the Securities and Exchange Commission or the Commodity Futures Trading Commission. Rewards are paid for detailed information on insider trading, money laundering, violations of the Foreign Corrupt Practices Act, or any securities law. Blowing the whistle on securities fraud also provides qui tam relators protection against retaliation from their employers. In cases where the whistleblower desires anonymity, he or she must be represented by an attorney to collect a reward.

Those who are the first to report specific instances of fraud and provide evidence leading to conviction can sometimes earn reward money from U.S. government agencies, generally 10 to 30 percent of the amount recovered. The U.S. Department of Justice administers a whistleblower reward program that has recovered more than $20 billion USD in government money and paid out nearly $3 billion USD in rewards. While the average reward to a citizen whistleblower is around $1.5 million USD, some rewards are as large as $100 million USD. The use of rewards to encourage persons with direct knowledge or evidence of government fraud has been so successful on the federal level that many states have now instituted similar reward programs for citizens who report fraud involving state funds.

It is not always possible to collect financial rewards for reporting government fraud, and some concerned citizens do not wish to receive money for the information they provide. At the federal level, the Government Accountability Office (GAO) investigates allegations of fraud and waste by and against the government. The GAO never pays reward money for tips. Reporting fraud to the GAO may be done anonymously.