Unclaimed Property Whistleblowers- Well Paid for Speaking their Minds:by Tracey Reid on 10/17/12
Recently, a potential client asked me why they should be in any kind of hurry to get into Unclaimed Property compliance if they weren’t under audit. They seemed willing to continue their non-compliance since the laws are so obscure and they are SURE that no one is going to come looking for them…..My answer was, “Noone has to come looking for you…..You just downsized and let your entire AP department go to India. Do you think that one of your former employees is not going to JUMP at the chance to rat you out to Unclaimed Property Offices all over the country and get a little payback?” They seemed stunned! I figured, from their reaction, they had no idea that states had whistleblower laws to incentivize folks to turn in companies for audit. One glaring example is from everyone’s favorite incorporation state: Delaware. Delaware's False Claims and Reporting Act (DFCRA) permits any private citizen to bring civil law suits on behalf of the government to allege that a business owned an amount of money to the government (i.e., unclaimed property) and that the business knowingly made use or used a false record or statement (LIKE FILING A “ZERO” UNCLAIMED PROPERTY REPORT OR NO REPORT AT ALL) to avoid or conceal their obligation to the state. The law then allows the government to intervene and join the suit. A recent case played the scene out in glorious detail: Higgins v. SourceGas LLC et al. In the SourceGas case, the defendant company was incorporated in Delaware. The plaintiff, Mr. Higgins was a SourceGas employee that discovered a large number of unclaimed or uncashed utility deposits and customer credits that should have been reported as unclaimed funds. The Court found that SourceGas renamed its Unclaimed Property Account , calling it “Converted Balance from December 2004” in an attempt to conceal their obligation to the state. Mr. Higgins got a tidy sum for Whistling (to the tune of 12% of the funds recovered by the State of Delaware) and SourceGas got a hefty fine, court costs, interest on the amounts past due and all of the bad publicity that comes from being publicly found guilty of bilking the public.
In conclusion: The government doesn’t have to find the non-compliant companies—the laws incentivize regular citizens to do the dirty work for them! If your company is unsure about whether or not they are truly in compliance with their Unclaimed Property Reporting obligations, PLEASE give me a call! I will be happy to discuss the matter with you for up to one hour at no cost. I have helped many, many companies gain peace of mind about their unclaimed property obligations and minimize their costs, including public damage to their reputations. My direct dial number is (614) 804-8486.