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Qui Tam Provisions and Civil Investigative Demands under the Virgin Islands False Claims Act
Virgin Islands statutes controlling fraudulent claims upon the government need strengthening. The False Claims Act (“FCA”), promulgated in July 2014, in 14 V.I.C. § 843, is intended to impose liability on those who defraud the Virgin Islands government. 14 V.I.C. § 843.
Criminal penalties under the FCA are fines not exceeding $500, imprisonment not exceeding two years, or both. Id. Civil penalties include treble damages to the government for three times the damages the government sustained. 33 V.I.C. § 3503(a). Civil penalties are to be between $5,000 and $10,000 for each false claim. Id.
Specifically, the FCA provides criminal sanctions for whoever knowingly “makes or presents any claim upon or against the Virgin Islands government.” 14 V.I.C. § 843(1)-(4). It also applies to whoever “knowingly and willfully falsifies, conceals, or covers up by any trick, scheme, or device a material fact,” “makes any false or fraudulent statements or representations,” “or makes or uses any false bill, receipt, voucher, roll, account, claim, certificate, affidavit or deposition knowing the same to contain any fraudulent or fictitious statement or entry.” Id.
According to 33 V.I.C. § 3503, the FCA provides civil penalties for each false claim for which the person:
“(1) Knowingly presents or causes to be presented a false or fraudulent claim for payment or approval;
(2) Knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim;
(3) Conspires to commit a violation of this section;
(4) Has possession, custody, or control of public property or money used or to be used by the Government and knowingly delivers, or causes to be delivered less than all of that property;
(5) Is authorized to make or deliver a document certifying receipt of property used or to be used by Government and knowingly makes or delivers a receipt that falsely represents the property used or to be used;
(6) Knowingly buys, or receives as a pledge of an obligation or debt, public property from any person who lawfully may not sell or pledge the property;
(7) Knowingly makes, uses, or causes to be made or used a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids, or decreases an obligation to pay or transmit money or property to the Government;
(8) Is a beneficiary of an inadvertent submission of a false claim, subsequently discovers the falsity of the claim, and fails to disclose the false claim to the Government within a reasonable time after discovery of the false claim; or
(9) Is the beneficiary of an inadvertent payment or overpayment by the Government of monies not due and knowingly fails to repay the inadvertent payment or overpayment to the Government.”
An attorney general or a qui tam relator can bring this action. A qui tam relator is a person who “may bring a civil action for a violation of [the Virgin Islands False Claim Act] for the person and for the Government in the name of the Government if any Government funds are involved.” 3 V.I.C. § 3504(b)(1). An entity or person filing a qui tam action is known as a qui tam plaintiff or a private attorney general. In the Virgin Islands, if the government intervenes, the qui tam plaintiff receives anywhere between 15-25% of the proceeds of the civil action or settlement, and 33-50% if the Government does not proceed. 33 V.I.C. § 3504(f)(2)-(3). The defendant, however, may be awarded attorney’s fees if the defendant prevails, “and the court finds that the claim was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.” 33 V.I.C. § 3504(g)(9).
Fashioned after the federal False Claims Act, how exactly does the Virgin Islands False Claims Act fare in the face of today’s disasters? Virgin Islands False Claims Act, Bill No. 30-0262, p. 15 (Jan. 30, 2014). See DOJ, False Claims Act: A Primer, FRAUDS FCA Primer (this primer aims to explain the FCA’s most significant elements). Congress enacted the act to stop suppliers of goods to the Union Army from defrauding the Army. Id. “President Abe Lincoln urged the enactment of the federal False Claims Act, which was also known as “Lincoln Law,” as a legal tool to help local governments that were reluctant to prosecute such cases. The law encouraged whistleblowers to assist in the prosecution of fraud and other similar cases via a qui tam action. . . .” Id. Since then, to prevent fraud, Congress made major amendments in 1943 (cutting award for qui tam/whistleblower provisions), 1986 (increasing award for qui tam/whistleblower provisions), 2009 (signing into law the Fraud Enforcement and Recovery Act), and 2010 (signed in the Patient Protection and Affordable Care Act). From 1986 to 2009, the recoveries for federal FCAs were over $24 billion. DOJ, Justice Department Recovers $2.4 Billion in False Claims Cases in Fiscal Year 2009; More Than $24 Billion Since 1986: FY09 Recovery is Second Largest on History (Nov. 19, 2009).
Of particular importance is the 2009 amendment, as it comes after Hurricane Katrina a disaster not unlike Hurricanes Irma and Maria. Within the 2009 amendment lies 31 U.S.C. § 3733, civil investigative demands, which requires a recipient of government funds to produce documents when the Attorney General believes the person has information related to an investigation. 31 U.S.C. § 3733(a)(1) (2009) (the 2009 amendment got rid of the requirement that agencies demonstrate a substantial need in order to share information with qui tam relators). The Attorney General’s authority to request this information can be delegated and this information maybe shared with qui tam plaintiffs. Id. at 15-16.
The 2009 federal FCA amendments that give the Attorney General civil investigative demands are not present in the Virgin Islands FCA. Compare 31 U.S.C. § 3733 with 33 V.I.C. §§ 3501-3509. Currently, the Virgin Islands FCA contains no provision requiring recipients of government funds to produce documents when the attorney general believes that person has information related to an investigation. See 33 V.I.C. §§ 3501-3509. After a natural disaster, there is chaos and less transparency, especially because the public’s access to information is severely limited. The Virgin Islands can greatly benefit from enacting this amendment.
If you believe someone has defrauded the Virgin Island’s government, Please let us know. Come see us at CPLS, P.A. Or contact Attorney Jalicha Persad at 407-647-7887 or email her at jbpersad@cplspa.com
