Fraud in the federal bailout program (TARP and CPP)

Whistleblowers and qui tam lawsuits brought under the False Claims Act can play an important role in ensuring that taxpayers' money is spent properly and legitimately in the $700 billion federal bailout programs known as the "Troubled Asset Recovery Program" (TARP) and the "Capital Purchase Program" (CPP).

Given the amount of money involved and the delay in setting up government oversight, Congress is concerned that the TARP and CPP programs may lose funds through fraud. U.S. Sen. Chuck Grassley (R-Iowa), an ardent champion of whistleblowers, has pointed out to Treasury Secretary Henry Paulson and Attorney General Michael Mukasey that whistleblowers and qui tam lawsuits are a "proven and effective method of overseeing taxpayer funds."

The basis for a whistleblower to file a qui tam lawsuit could be if the whistleblower had evidence that a company provided false or misleading information to obtain bailout money; has failed to acquire or use TARP funds as required by law; submitted false certification that a company has complied with a law, contract or regulation for receiving bailout funds; or took other fraudulent actions.

In a letter to Paulson and Mukasey about the TARP and CPP programs, Grassley asked they "ensure that whistleblowers are treated seriously, their concerns are reviewed in an expeditious manner, and that any legitimate claims of fraud, waste, or abuse are aggressively investigated and prosecuted to the fullest extent of the law, including seeking recovery of all funds lost via the [False Claims Act]."

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