Rules for Whistleblowers: a Handbook for Doing What’s Right

When Whistleblower Francis Haugen came forward and testified before Congress about what she thought was going wrong inside Facebook, she changed big tech forever. But how? I recently talked about this with Stephen Kohn, author of the book, Rules for Whistleblowers, A Handbook for Doing What’s Right, and many, many other books and publications on whistle-blowing. He’s also one of the nation’s leading whistleblower attorneys. It’s been about 18 months since Francis Haugen appeared before Congress. I began by asking Stephen about the impact of her testimony.

You can listen to our conversation on the Debugger podcast by clicking play below, or by following this link. Below that you’ll find a full transcript.

Stephen Kohn: Well, the impact should be long term. Under the new whistleblower laws, whistleblowers can file anonymous and confidential claims to a variety of agencies concerning wrongdoing, of which is the SEC, which Francis filed. Now she did it publicly, but the overwhelming majority of whistleblowers … in fact, all my clients … go anonymous and confidential, so in this way they can keep their jobs, keep their reputation and become essentially a confidential informant to the US government.

So that’s what Facebook is facing, and all tech is facing  – the realization that their employees can be anonymous and confidential, qualify for extremely large financial awards, 10-30% of a sanction, and really keep their jobs.

Bob: Can we talk just a little bit more about how that works? Because I feel like there’s a generic definition of whistle-blowing – you know, anyone who says something at my organization is going wrong – but then there’s a specific legal definition and legal process. So walk me through that.

Stephen Kohn: Sure. So the new whistle-blowing… and when I say new, these are laws that are all about 10 or 12 years old and they’re now used more than any other whistleblower laws… for example, 65,000 people have gone into the anonymous and confidential SEC program. You know, just a radical increase.

And essentially these laws are the opposite of this stereotype of whistle-blowing, and this is the real change in the concept of whistle-blowing. Ellsberg. Snowden. Deep Throat. These were sensational media exposes, and the concept was a loud public report of a wrongdoing. That’s still permitted under the new laws, but the new laws with their anonymity and confidentiality features make it safe or much safer for someone to become a whistleblower. Also, the financial incentives are amazing. The SEC alone has paid whistleblowers about $1.5 billion in rewards, and in almost every one of those cases, no one even knows who the whistleblower is. They don’t receive big press reports. It’s almost all under the radar.

So, That’s what the book Rules for Whistleblowers is all about. It’s all about explaining this total shift. Now, you asked how this will impact Facebook. It usually takes the government between three to five years to resolve a major case. So what you’re looking at today would be informants and whistleblowers providing information, but you may not really understand the impact of that for a couple of years.

Bob: I also wonder…maybe I’m an employee at a big tech company and I feel like, okay, they’re doing this thing and I believe it hurts children. You might feel strongly about that, but that wouldn’t necessarily qualify for a whistleblower lawsuit and this kind of process. Right?

Stephen Kohn: That’s again a misconception. All of the major new laws have something known as a related action, which means if … say you go to the SEC for online work that’s in violation of child pornography laws. Now another federal agency — say the Department of Justice — may sanction the company, but because you went to the SEC, if they give a sanction of more than $1 million, which is fairly small in SEC-land, you collect rewards from every other federal agency that sanctions the company. So if Justice did a criminal prosecution against the company for $1 billion dollars, and SEC did a securities action for $1 million, your minimum award would be $100 million.

Bob: That’s, that’s rather dramatic. And I suppose if we’re talking about violation of child porn laws, maybe that would be a little bit more clear. But let’s say it’s… “I think that the algorithm that we’re using is biased against Black folks,” for example. How could you use whistleblower laws to come forward about that?

Stephen Kohn: Well, again, sometimes it’s completely counterintuitive. I would doubt an algorithm would only be biased against African Americans, but let’s assume it was. You have two pots here. One is what does the SEC do about it? And that can be something known as a 10-K violation where they’re supposed to inform investors about material risks or risks where they might get criminally or civilly prosecuted. So let’s assume they knew of the risk. They knew of the violation but didn’t publicly report it to their shareholders, so now you have a potential SEC violation.

So let’s just assume they find the violation. They sanction Google $2 million. Now you have to think of other federal or state criminal agencies that may have an interest in that type of violation. If there are none, well, that’s what you get. You get 10-30% of the $2 million. But let’s assume the US Department of Justice Civil Rights Division decides to file a civil enforcement action against the company for violation of civil rights based on the same information, and they, say, sanction them $50 million.

Now at that point, you’d be entitled to an award. Based on that additional $50 million. The related action provisions are very misunderstood because there is a slew of modernized laws, but then there are other laws that don’t have any protections. So for example, the Federal Trade Commission doesn’t have a whistleblower law, but if the SEC takes action against the company, and the Federal Trade Commission uses the same information to sanction the company…Voila. You have a related action award.

But the thing to keep in mind is as follows: Anonymous means you don’t have to set your hair on fire. You don’t have to burn your bridges. And the government wants you to stay working in the company so you can provide additional information about violations. Once you have filed, sometimes the government agencies will share your information or you’re aware of other agencies that might be interested, and  … say, tell the SEC to share your information. So it begins a process. The bottom line is these laws make it easier to do the right thing to report misconduct and not necessarily lose your job and career.

Bob: Okay. Let’s say someone listening right now is inspired by what you’re saying. They work at a tech company, they feel like something’s going wrong. Something, …in my brain….  let’s say it’s akin to suppressing seatbelt safety research at a car company in the 1960s. What should that employee do?

Stephen Kohn: That employee should seek an attorney with expertise in whistleblower law. They absolutely should get my book, because that’s what it’s all about. And then they need to follow the procedures to the “T.” Each new whistleblower law has very precise procedures on how to qualify. So, on the one hand, the government will pay an award and they do. But on the other hand, it’s still the government and they will look for ways to deny an award, sometimes, in my view, unjustly. Now, you can challenge a denial in court, but the best move is to get expert counsel, learn what your rights are, and then file your whistleblower claim to the proper agency in the proper methodology.

Now if you go anonymous and confidential, the risks are small and the benefits are large, but of course, you have to take steps to protect yourself, such as don’t use government or company computers. You have to take steps to protect your identity.

Bob: That was going to be my next question. Can people trust that the government will keep them anonymous?

Stephen Kohn: Yes. So as I mentioned, 65,000 cases to the SEC alone, I don’t know of any breach. We have filed well over a hundred cases. They have been fantastic … the investigators have gone out of their way to make sure that identities and confidential information is protected.

So I’ll just give a quick example. We represent someone from a company and they’re the chief financial officer. This is all true by the way. They turned over the books of the company…  meaning on hard drive, on disks… so the fraud is proven on day one. The government did their job. They back-sourced everything. They hid where the information came from. It took about three more years to get an enforcement action, but our whistleblower remained the CFO during the entire investigation. Nobody knew that he or she had any involvement. So yes, they will do a good job.

Bob: Okay. We can’t answer or ask all of these questions, but here’s just a couple to bang through that I saw in the teaser for your book. Is it legal to tape your employer?

Stephen Kohn: Depends on the state you are in. Under federal law, you can do it. What’s known as one-party taping. You can’t plant a bug. But if you are a party to the conversation, you can tape. Now, some states have made this illegal, like Maryland … the famous case of Linda Tripp, where she was criminally prosecuted for doing one-party taping in a state where it was illegal. So our position is quite simple. Taping should always be discussed with the council beforehand. Sometimes it is done with the cooperation of the US government. That’s the best. But if you’re gonna do it on your own, make sure you’re doing it in a state where it’s not illegal.

Bob: And does it matter where you are or where the taped person is?

Stephen Kohn: It’s where you are. And so like if you go travel to another state and do it in the state … I know that for Maryland, since we were involved in the trip case, she did the taping in Maryland. Had she simply driven over to the District of Columbia where it’s legal and did the same taping, she would not have been charged.

Bob: Can you take confidential documents from your office?

Stephen Kohn: This is another great question. So the answer is, again, a qualified yes. First: You can’t steal documents, so you can’t .. like hack in, you can’t break into your boss’s office. But if you have lawful access to the information at work, and you believe it’s evidence of a crime, there’s ways that you can give that information to law enforcement and protect yourself.

So my recommendation once again on that is …it’s a sensitive area. Get with counsel … but again, you can just think of it in this way: You heard there’s a murder. You go to a friend’s house and there you see a knife with blood on it. Can you quietly pick up that knife and bring it to the police? That’s the question. If you see actual evidence of wrongdoing and you have access to it… in other words, you’re not breaking in to get it… most cases permit that. On the other hand, there’s a flip side, which is the government can use evidence that would not be lawful if the government had taken the evidence, but if a citizen gives the government the evidence, then the government can use it.

So run this scenario out. You’re a confidential and anonymous whistleblower. You provide documents. And the documents are admissible in the case, meaning … maybe there was no search warrant, but they weren’t the result of an illegal hack. The company hopefully will never know that you were the source of those documents, and in that way you can avoid being sued for theft or, violation of trade secrets. The ability to go confidential and anonymous increases the ability of employees to give evidence to the government and decreases the risk of a counter-lawsuit.

Bob: And that leads to my next question. What about non-disclosure agreements or non-compete agreements, those kinds of things.

Stephen Kohn: Well non-disclosure agreements, we laugh at. The regulatory agencies not only find them unenforceable, but they are unto themselves a regulatory violation. This goes to giving information to the government, not to the press. So for example, under the SEC rules, if someone has a broad non-disclosure agreement that’s illegal.

Because they have a right to give information to the SEC and anything that interferes with that via contract is unto itself a regulatory violation. So we did the first case on that against KBR. They had a NDA that simply said, before you release the information from this confidential investigation, talk to company council. That’s what it said. We challenged the legality. The SEC agreed. They sanctioned KBR $130,000 for violating the Securities and Exchange Act for interfering with the right of employees to report violations.

Bob: So I alluded to seatbelt safety and car safety a little earlier, and I want to close this interview by asking that grand question of you about big tech? I feel like big tech might be on the verge of its 1960s car safety moment, or is it? Am I overstating the impact that Francis Haugen and people like her might have on big tech?

Stephen Kohn: If the whistleblowers come forward with the information, things will change. So if the regulatory agencies do their job …  and remember big tech has tremendous lobbying power, things will change.

But as the scandals break, pressure will build. And all of our whistleblower laws, by the way, were triggered by major scandals. It wasn’t that Congress was sitting back and saying, how do we help whistleblowers? Never happened. Congress sat back and said, ‘Oh my God, there’s been these tremendous policy violations, tremendous issues of safety and health or protection of investors. How can we prevent the next disaster?’ And that’s when the whistleblower laws come in.

So from my view, having represented whistleblowers 35 years, whistleblowers can’t lose. The ultimate question of getting change, of protecting investors, protecting the public … some of them will pay a high price and others will benefit from new laws.

Bob: Your answer does suggest that there is a role, however, for the big public scandal where a whistleblower does go to the press. How do you balance whether you take something public or do it anonymously?

Stephen Kohn: Well, whistleblowers, many of them, will always alert the public. Nothing will stop that. What we’ve seen is for every one whistleblower who’s willing to go public and really risk a lot, there’s a thousand who would go non-public and provide supporting information. Those who go public deserve our support. And really historic recognition for the value they have added to society. But they’re often … they often just get crushed because they’re vulnerable. When an individual goes against a major corporation, a major powerhouse that has the best lawyers, lobbyists, and unlimited resources to crush an individual whistleblower, it can be tough. That’s why Congress in 2010 with the Dodd-Frank Act created these… what I call super anonymity laws. When I discussed those with the Senate banking committee, when the law was being debated …  I’ll never forget it, the Senate staffer said to me, ‘Steve, if Wall Street knows who you are, you will be crushed no matter what, and your career will be destroyed. You know, we have to create procedures to prevent that.’ And I said, ‘Hallelujah!’

Bob: That sounds like a great moment to encourage people out there to come forward whenever they see something is going wrong. Steve Kohn, thank you so much for your time here, and the name of the book is Rules for Whistleblowers, A Handbook for Doing What’s Right and it’s available when?

Stephen Kohn: It’s available pre-order now at the National Whistleblower Center or on Amazon, and its official release date is June 1.

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About Bob Sullivan 1637 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

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