Wednesday, December 22, 2021

District Court for ED VA Dismisses Reverse False Claims Act Proceeding Against Credit Suisse (12/22/21)

In United States Ex Rel. John Doe v. Credit Suisse AG, (E.D. VA. No. 21-CV-00224) Order dated 12/17/21), here, the court dismissed this claim under the False Claims Act’s reverse false claims provision, 31 U.S.C. § 3729(a)(1)(G).  The claim was that the relator, identified anonymously as John Doe, a former employee of Credit Suisse, AG, had information that Credit Suisse had failed to comply with its plea agreement regarding aiding and assisting U.S. taxpayers evade U.S. tax.  See Credit Suisse Pleads to One Count of Conspiracy to Aiding and Assisting (Federal Tax Crimes Blog 5/19/14; 5/20/14), here.  The key basis for the dismissal is that the reverse FCA claim must involve an obligation to the U.S. and here there was no obligation.  At most there was a potential obligation if the Government identified with the information additional claims it could make against Credit Suisse with the information and assess amounts due based on the information.

John Doe, a Birkenfeld-type whistleblower wannabe, claimed to have proof that Credit Suisse had withheld information in violation of the plea agreement that, if disclosed, would have resulted in larger amounts of penalties or other required payments to the U.S. 

 Furthermore, as a basis for dismissal, the court said that

             The Relator's case threatens to interfere with ongoing discussions with Credit Suisse regarding the identification and remediation of remaining Swiss accounts held by U.S. citizens. Civil litigation by the Relator, ostensibly on behalf of the United States and in parallel with the ongoing implementation of the plea agreement, would threaten the Department of Justice's ability to continue working with Credit Suisse in pursuit of uniquely governmental and federal interests. This is sufficient reason to dismiss. See Toomer, 2018 WL 4934070, at *5 (dismissing qui tam where the Government alleged that litigation would consume agency resources and impair its ability to work with the defendant).

            Further, the prosecution of the Relator's qui tam action would place a significant burden on Government resources. Courts have routinely held that preservation of Government resources is a valid purpose for dismissing a qui tam action. See, e.g., Sequoia Orange, 151 F.3d at 1146 (holding that the district court "properly noted that the government can legitimately consider the burden imposed by taxpayers by its litigation, and that, even if the relators were to litigate the FCA claims, the government would continue to incur enormous internal staff costs"); United States ex rel. Stovall v. Webster Univ., No. 3:15-V-03530-DCC, 2018 WL 3756888, at *3 (D.S.C. Aug. 8, 2018) (holding that the Government's "interest in preserving scarce resources by avoiding the time and expense necessary to monitor t[he] action" was a valid Government purpose for dismissal).

 As with Birkenfeld’s case, some of the amounts involved could possibly have been a subject of IRS whistleblower claims if "John Doe" identified U.S. taxpayers who underpaid tax obligations.  The opinion does not say whether an IRS whistleblower claim was made.

 For access to some of the filings in the case, see the CourtListener docket entries here.

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