 |
|
|
CFC # 10222 |
|
||
|
|
||
|
|
|
||
|
|
|
|
|
 |
|
|||||||||
|
|
|
|
|||||||||||||||
|
Back to Past Press Main Major Civil Rights Tax Case Filed With Supreme Court December 13, 2007, Washington, D.C. – Today, The U.S. Supreme Court was asked to hear a key civil rights tax appeal which could affect thousands of past and future victims of civil rights offenses and whistleblower retaliation. In Murphy v. IRS, the U.S. Court of Appeals for the District of Columbia Circuit reversed its own original ruling in deciding that court awards for damages such as emotional distress and loss of reputation are taxable as income. The case was brought by Marrita Murphy, an environmental whistleblower who won her case before Department of Labor, and was awarded compensatory damages to vindicate her rights under six federal environmental whistleblower statutes. Murphy filed suit when the IRS demanded that she pay taxes on the “make-whole” award as if it were income. After having her case dismissed, Murphy filed an appeal. After full briefing and oral argument, the Appeals court initially held that Murphy’s award was not income and the tax on her damages violated the U.S. Constitution. Then, under pressure from the Bush Administration, the judges decided to rehear the case. In this ruling, Murphy II, the D.C. Circuit reversed its own previous decision, declaring that non-physical compensatory damages are taxable as gross income. For the first time the issue of whether compensatory damages for non-physical injuries are taxable income is squarely before the Supreme Court. This is a major issue impacting all cases in which any person obtains compensatory damages for a mental distress or illness, or for physical problems resulting from or associated with emotional distress. David K. Colapinto, General Counsel for the National Whistleblower Center and attorney for Marrita Murphy said he is requesting that the Supreme Court review the issue because "The D.C. Circuit’s reversal stands reality on its head." Colapinto went on to say that, "The D.C. Circuit’s decision in the Murphy case is the first time that any court has construed the tax code to imply an 'excise' tax on the 'privilege' of utilizing the 'legal system' to vindicate a federal statutory right." “However, Congress did not pass a special tax demanding payment from people who use the legal system to prevent retaliation against whistleblowers or to vindicate civil rights. It was error for the D.C. Circuit to imply such a tax," he added.
Whistleblowers Still the Best at Detecting Fraud According to the survey, while professional auditors were only able to detect 19% of the frauds on private corporations, whistleblowers exposed 43%. Moreover, the executives surveyed estimated that the whistleblowers saved their shareholders billions of dollars. “This survey is proof that corporate shareholders directly benefit from whistleblower disclosures. Instead of firing the whistleblower, this survey demonstrates that corporate culture should change,” Stephen M. Kohn, President of the National Whistleblower Center. “Congress must do its job and enact comprehensive whistleblower protections. Corporations must change their own operating culture and stop retaliating against honest employee whistleblowers. Who loses when a whistleblower is fired? The taxpayers and the shareholders,” added Kohn. The Price Waterhouse Survey is consistent with statistics released by the U.S. Department of Justice, demonstrating that employee whistleblowers are responsible for detecting the majority of civil frauds collected by the United States from unscrupulous and dishonest government contractors. The Price Waterhouse Corporate Crime survey can be found at www.pwc.com/crimesurvey/index.html Whistleblowers Responsible for Washington, DC. – October 1, 2007. Several whistleblowers provided confidential information to the United States Department of Justice which resulted in a $515 million taxpayer recovery against the drug company Bristol Myers to settle health care fraud allegations. The settlement was announced by the Department of Justice and Acting Attorney General Peter Keisler on Friday, September 28, 2007. The drug company paid the federal government over $328 million in civil fraud damages and penalties, and paid various state governments over $187 million, plus interest, to settle seven whistleblower lawsuits. The settlement arose from allegations concerning the illegal marketing of more than 45 drugs made or marketed by Bristol Myers, including Tequin, Pravachol, Glucovance, Avapro, Plavix Abilify, Monopril, Metaglip, Taxol and Coumadin. These wide-spread practices by Bristol Myers were alleged to have increased Medicare and Medicaid costs, all of which is paid by the taxpayers. Employee whistleblowers now account for the majority of all civil fraud recoveries obtained by the United States. For example, between 2000-2006, the Department of Justice recovered $12 billion in civil fraud recoveries ($12,093,022,897). Whistleblowers were responsible for $7 billion ($7,972,051,660) worth of these recoveries, or 65.9%. Attorney David K. Colapinto, who represented one of the Bristol Myers whistleblowers, said: "The employee whistleblowers who reported massive health care fraud by Bristol Myers risked everything to help the government uncover the details of the complex web of fraudulent schemes that were allegedly used to rip-off patients and the taxpayers. These acts of courage led to the recovery of more than half a billion dollars of taxpayer money under the settlement.” “This settlement demonstrates the effectiveness of the whistleblower (or qui tam) provisions of the False Claims Act.” “Without the assistance of these whistleblowers it is unlikely that the government would have discovered the entire fraud or obtained as large a recovery for the American people.” National Whistleblower Center President, Stephen M. Kohn, added the following: “Whistleblowers save the taxpayers billions of dollars every year. They are the true heroes in fraud recovery cases. Laws which encourage and reward whistleblowers must be expanded, so every crooked contractor is held to the same standard as Bristol Myers.” Whistleblower Advocates Request Congressional Action Washington, D.C. September 20, 2007. A letter requesting Congressional action to protect all employee whistleblowers was sent to Congressional leaders on Thursday, September 20, 2007. The letter was endorsed by more than twenty whistleblower advocate and civil liberties groups. View the letter by clicking this link. Senate Democrats to Hold Friday Hearing on Iraq Contracting Abuses Former Top U.S. Contracting Official among Witnesses Washington D.C. September 17, 2007. The Senate Democratic Policy Committee heard testimony September 21, 2007 regarding abuses by government contractors during the Iraq War. The hearing, entitled “The Mistreatment of Iraq Contracting Whistleblowers,” focused on the experiences of the employee-whistleblowers who report contractor misconduct, and included significant information about Iraqi contracting abuses. Among those testifying were Bunnatine Greenhouse, who served as the top civilian contracting officer for the Army Corps of Engineers until she was demoted in retaliation for her opposition to “casual and clubby” contracting practices in the run-up to the War. Ms. Greenhouse has described a controversial five year, no-bid, multi-billion dollar contract awarded to Halliburton/KBR in 2003 as “the most blatant and improper contracting abuse I have witnessed during the course of my professional career.” Also testifying was Stephen M. Kohn, President of the National Whistleblower Center and co-counsel for Ms. Greenhouse. Whistleblower Accepts Fallout , June 13, 2007 Testimony of Bunnatine Greenhouse Model Whistleblower Legislation Click here to access a video of this hearing MAJOR WHISTLEBLOWER LEGISLATION I False Claims Act Correction Act of 2007 Introduced by Senators Grassley, Durbin, Leahy, and Specter Washington, D.C. September 12, 2007. Important legislation designed to protect taxpayers from fraudulent government contractors was introduced in the Senate today by Senate Judiciary Chairman Patrick Leahy (D-VT), Ranking member Arlen Specter (R-PA), longtime whistleblower champion Charles Grassley (R-IA), and Judiciary Committee member Dick Durbin (D-IL). The bill is intended to correct loopholes in the False Claims Act, a law which permits private citizens to file suit against contractors who defraud the federal government. The False Claims Act has been the most effective anti–fraud law in American history, having recovered over $20 billion dollars in ill-gained taxpayer dollars over the past 20 years. National Whistleblower Center President Stephen M. Kohn hailed the introduction of the bill: “The majority of all civil fraud recoveries in the US are based on whistleblower disclosures. Because of the effectiveness of the False Claims Act, powerful corporate interests have aggressively attacked the law in court, creating loopholes which have undermined the law and cost the taxpayers billions of dollars. The False Claims Act Correction Act is badly needed legislation to stop the hemorrhaging of the public treasury by unscrupulous beltway bandits.” The Legislation corrects the following defects in the current law:
GRASSLEY QUESTIONS FBI ON MORE ALLEGED Washington, D.C. September 10, 2007. – Senator Chuck Grassley has again reminded the FBI that the law does not allow retaliation against government whistleblowers. Grassley reiterated his concerns to FBI Director Robert Mueller in a letter sent yesterday. The Senator’s letter forwards allegations of retaliation against FBI Agent Bassem Youssef, chief of the Communications Analysis Unit. Youssef is the highest ranking Arab-American in the FBI. After the 9/11 terrorist attacks, Youssef raised concerns within the FBI that he, as one of the highest ranking Arabic-speaking agents, was not being assigned to cases related to the attacks. “It seems like every time I turn around, there’s another allegation of whistleblower retaliation at the FBI. It appears to be second nature for them,” Grassley said. “Director Mueller has talked often about the fact that he won’t tolerate retaliation, but it doesn’t look like the message is getting through to his management team.” Grassley is a senior member of the Senate Judiciary Committee and has conducted oversight of the FBI since the mid 1990s. A copy of the letter can be found here. LEADING PRESIDENTIAL CANDIDATES ENDORSE NATIONAL Senators Obama, Clinton, and Governor Huckabee Among Supporters Washington, D.C. September 3, 2007. Presidential candidates Sen. Hillary Clinton, Sen. Chris Dodd, former Senator John Edwards, former Senator Mike Gravel, Governor Mike Huckabee, Representative Dennis Kucinich, Sen. Barak Obama, Congressman Ron Paul, and Governor Bill Richardson, have agreed in writing to specifically endorse a national whistleblower protection law modeled on the Civil Rights Act. Today, the National Whistleblower Center announced that, in response to a detailed survey, these nine candidates pledged “to advocate for the passage of a law which would give employees who are illegally terminated for blowing the whistle the same procedural and substantive protections as other wrongfully discharged employees under laws such as Title VII of the Civil Rights Act of 1964 (i.e. the law that prohibits discrimination on the basis of race or sex).” Title VII protections apply to nearly every employee in the country, including those employed by private businesses as well as federal, state and local governments. Two candidates (Senator Sam Brownback and Representative Tom Tancredo) responded to the survey with statements in support of whistleblower protection, but declined to specifically support the civil rights proposal. Four candidates, Senator Biden, Former Mayor Rudy Guliani, Senator John McCain and former Governor Mitt Romney, declined to respond to the survey. In releasing the results of the survey, National Whistleblower Center President Stephen Kohn stated: “We are encouraged that nine presidential candidates have publicly demonstrated their commitment to supporting whistleblower protection. It is shocking that on Labor Day, 2007 the majority of American workers still have no adequate federal protection when they risk their jobs and disclose illegal or unsafe conduct. We sincerely hope that all candidates for President will publicly endorse civil rights for whistleblowers and use their positions to ensure that by next Labor Day all whistleblowers are finally protected under a federal law.”
National Whistleblower Center Joins Coalition in Calling Washington, D.C. - August 23, 2007. The National Whistleblower Center, along with a broad coalition of liberal, libertarian and conservative groups including the American Civil Liberties Union, the National Security Whistleblowers Coalition, and the Liberty Coalition, condemns the Government's abuse of the State Secrets Privilege in the case of Federal Bureau of Investigation (FBI) Whistleblower Sibel Edmonds, and calls for swift action by Congress and the courts to stop this abuse. Ms. Edmonds, a former FBI Language Specialist, brought charges of wrongdoing, criminal activity, cover-ups, and national security threats, inside the agency following the terrorist attacks of 9/11. Edmonds was promptly fired. The United States Department of Justice Office of Inspector General (OIG) investigated her allegations, and confirmed most of her claims. The OIG concluded that her firing was illegal and that the FBI failed to investigate Ms. Edmonds' credible allegations of security breaches and possible espionage inside the FBI language services division. However, the Attorney General invoked the "State Secrets Privilege," which covered up the FBI's wrongdoing and malfeasance and resulted in the dismissal of Ms. Edmonds' retaliation case. The OIG report is publicly available. On August 23, 2007, it was revealed that the Justice Department recently publicly revealed information that it had claimed was "privileged" and "secret" in Ms. Edmonds' case. The DOJ's recent actions show that it abused the State Secrets Privilege in Ms. Edmonds' whistleblower case in order to convince the court to dismiss her case. NWC President, Stephen M. Kohn, issued the following statement in support of Ms. Edmonds: "The 'State Secrets' privilege undermines whistleblower protections. Despite the fact that the Department of Justice's own watchdog, the Inspector General, confirmed that Sibel Edmonds had been illegally fired, the government used that alleged 'privilege' to have her case thrown out of court and to cover up FBI wrongdoing. The government abused a 'privilege' to undermine constitutionally protected free speech and ignore an Inspector General's findings of retaliation. Every national security whistleblower was threatened by this improper assertion of a privilege. The NationalWhistleblowerCenter joins in asking Congress and the courts to place limits on this privilege so that national security whistleblowers, such as Ms. Edmonds, can expose serious wrongdoing, free from retaliation." NWC General Counsel, David K. Colapinto, commented on the recent developments in Ms. Edmonds' case: "This latest revelation proves that throwing Ms. Edmonds' case out of court was a travesty because no state secrets would have been revealed. The dismissal rewarded the FBI wrongdoers and, as the Inspector General found, Ms. Edmonds' whistleblowing was the "most significant factor" in her firing by the FBI. If the courts won't prevent the government from using the State Secrets privilege as a trump card to cover up agency wrongdoing and to defeat meritorious claims, like Ms. Edmonds' whistleblower case, then Congress must act to stop this odious practice." Stephen Kohn and David Colapinto represented Ms. Edmonds during the OIG investigation, and witnessed first hand the improper use of the State Secrets Privilege in her case. Related Item: Full Court Review Requested In Key Tax Case
Reversal of setback for whistleblowers and civil rights victims urged. Washington D.C. – August 17, 2007. The full U.S. Court of Appeals for the District of Columbia Circuit has been asked to reconsider last month’s decision by a three-judge panel that reversed itself on a key civil rights tax case. On July 3, 2007, the panel held that the IRS can tax damage awards based solely on compensating victims who suffer personal injuries. However, on August 22, 2006, the same panel in the same case held that such taxes were unconstitutional, as compensation for a documented "loss" was not "income" subject to the tax code. In a major reversal, the three-judge panel, (Chief Judge Douglas H. Ginsburg, and Judges Judith W. Rogers and Janice Rogers Brown), held that make whole compensation to restore personal injuries losses are taxable. The case arose as a result of the Department of Labor ruling in the whistleblower case of Marrita Murphy. In that case, the Labor Department held that Ms. Murphy suffered substantial damages to her health and reputation, and awarded her $70,000 in compensatory damages strictly related to her losses. The IRS taxed Ms. Murphy's damages and she asked for a refund of the tax on the grounds that her damages were not income. In an August 22, 2006 decision, Judge Ginsburg, writing for the 3-judge panel, agreed with Ms. Murphy, and found that compensation for actual documented personal injury losses were not subject to an income tax. The IRS forcibly argued that decision was wrong and the panel agreed to vacate its original decision and rehear the case to consider issues that were never timely raised on appeal by the IRS. Rather than overrule its prior decision (Murphy v. IRS, Aug. 22, 2006) holding that taxing Murphy’s damages was unconstitutional, the panel simply held that Congress intended to amend the tax code “by implication” to tax personal injury damages under its authority to create an excise tax on people who use the courts to vindicate their rights. No court in the history of the United States has ever upheld such an implied tax. In a remarkable ruling, the Court held that compensation for damages for emotional distress suffered by a whistleblower were not paid to make the employee “whole,” but were instead paid as part of a “forced sale” which Congress could tax under its excise tax authority. The Court reasoned: Murphy's situation seems akin to an involuntary conversion of assets; she was forced to surrender some part of her mental health and reputation in return for monetary damages. Murphy v. IRS (July 3, 2007). Attorneys for Marrita Murphy have asked the full U.S. Court of Appeals for the D.C. Circuit to reconsider the panel’s holding because it conflicts with Supreme Court and other legal precedent, and it raises questions of exceptional importance. "The Court's reversal stands reality on its head," said David K. Colapinto, who argued on behalf of Ms. Murphy. “This case marks the first time that a court has interpreted the gross ‘income’ statute, 26 U.S.C. § 61(a), to be amended ‘by implication’ to create a tax not expressly enacted by Congress. Additionally, this is the first time that any court has construed the tax code to imply an “excise tax” on the ‘privilege’ of utilizing the ‘legal system’ to vindicate a federal statutory right,” Colapinto added. "When whistleblowers suffer retaliation, they do not 'sell' their mental health. If people are injured in a car accident, they do not 'sell' their arms and legs. These are real human losses, and compensation to restore that human loss was never intended to be 'income' under our Constitution or the tax code," Colapinto said. Stephen M. Kohn, the President of the National Whistleblower Center and co-counsel for Ms. Murphy, stated: "This decision is a terrible setback for all victims of civil rights abuses. Congress did not pass a special tax demanding payment from people who use the legal system to prevent retaliation against whistleblowers. It was error for the Court to imply such a tax. This decision threatens fundamental human rights, including access to the courts."
FBI Whistleblower Wins Final Judgment After a Nine Year Fight, Department of Justice Closes Jane Turner Case Washington, D.C. August 14, 2007. The U.S. Department of Justice (DOJ) vetoed the request of the Federal Bureau of Investigation (“FBI”) to continue appealing jury verdict which found the FBI guilty of illegally retaliating against one of its top child-crime agents. As a result, on August 10, 2007 the FBI’s appeal was summarily dismissed, and final judgment was entered on behalf of Jane Turner. The FBI campaigned against Jane Turner for more than nine years, first attempting to block her bid to have her case heard by a jury, and then attempting to get the jury verdict overturned. After losing one round of battles before the U.S. Court of Appeals for the Eighth Circuit, losing in front of a jury and losing its attempt to have the trial judge dismiss the verdict, the FBI filed another round of appeals in the Eight Circuit. After three months of review the Department of Justice determined that the FBI’s vindictive campaign against former Agent Turner had no merit and unilaterally withdrew the appeal. The Eight Circuit entered final judgment for former agent Turner on August 10, 2007. “The FBI’s conduct in this case was a disgrace,” said Stephen M. Kohn, Jane Tuner’s lead trial attorney. “The FBI ruined the career of its top child-crime agent in North Dakota, recklessly spent millions of dollars in taxpayer monies trying to silence Agent Turner and tried improperly tried to get the Department of Justice to cover-up their misdeeds. The jury, the judges, and finally the Department of Justice itself saw through the FBI’s nonsense, and put an end to Jane Turner’s nightmare. The FBI must be held accountable. The General Counsel of the FBI, who authorized the improper legal campaign against Agent Turner, even when the evidence clearly indicated that FBI managers engaged in misconduct and FBI Inspection Reports were falsified, must be fired,” Kohn added. Stillwater, Minnesota attorney Robert Hill, who served as Agent Turner’s co-counsel, bluntly stated: “The FBI must be cleaned up. Too much is at stake for the American people to accept an FBI which violates the law, retaliates against its own agents, misspends taxpayer monies and ignores its essential law enforcement duties.” As a result of the final judgment, Jane Turner will obtain the maximum allowable compensatory damage award under Title VII of the Civil Rights Act and reimbursement for all attorney fees and costs incurred. The total judgment is expected to exceed one million dollars. Turner worked as a Special Agent with the FBI for 25 years, retiring under fire in 2002. For 12 years she was the FBI's top child-crimes investigator in North Dakota's "Indian Country." In 1998-99, she filed discrimination and retaliation claims arising from the FBI's mishandling of its crimes against children program. Turner won her jury trial on February 5, 2007 and The FBI appealed her jury verdict on May 29, 2007. Today, Senator Charles Grassley also issued a Press Statement in support of Jane Turner, that statement can be found here: Senator Grassley’s press statement. New Labor Department Rules Undermine Corporate Whistleblower Protections DOL Seeks to Limit Federal Court Review Washington D.C. - August 13, 2007. The U.S. Department of Labor Occupational Safety and Health Administration ("OSHA") published a new "Interim Final Rule" designed to undercut the ability of private sector whistleblowers to obtain federal court relief in claims under federal corporate whistleblower protection laws. The new rules, published in the Federal Register on Friday, August 10, 2007, were made immediately effective. The new DOL rules seek to undermine a major Congressional reform implemented in the 2002 Sarbanes-Oxley corporate whistleblower law (the "SOX" law), which permitted whistleblowers to file claims in federal court after exhausting administrative procedures within the DOL. These procedures have been incorporated into other private sector whistleblower laws, including the Energy Reorganization Act and the recently enacted transportation whistleblower laws. The current law requires employees to file claims with the DOL, but permits them to file in federal court within 180 or 365 days, depending on the statute involved. Federal court claims can be denied only if an employee, in "bad faith," attempts to delay the administrative process. Under the Interim Final Rule, the DOL set forth an unprecedented rule in which employees could be compelled to agree not to file claims in federal court in exchange for the right to conduct the discovery necessary to win a case. If they did not agree to waive their federal court rights, the DOL could rush a case to trial, with limited or no discovery. Such rushed trials would radically favor the corporate defendants. The DOL also proposed language which would limit an employee’s right to file in federal court pending the review of a case before the DOL Administrative Review Board ("ARB"). The ARB, was delegated the authority by the Secretary of Labor to issue rulings in corporate whistleblower cases. Since 2002, the ARB has ruled against the employee in every SOX whistleblower case which has gone to trial, and has gone so far as to permit corporate lobby firms, including the Chamber of Commerce and the American Bankers Association, permission to file briefs against the employee whistleblower. According to Marshall Chriswell, Public Affairs Director of the National Whistleblower Center, "the new rules seek to trap employees in an administrative process controlled by Bush political appointees. Given the abysmal record of the Bush-appointed ARB, most corporate employees are now seeking independent court remedies." Although the DOL made the rules effective immediately, the Department set an October 9, 2007 deadline to file written objections to the Interim Final Rule. The DOL regulation affected by the new rule is located at: USDOL Regulation 29 CFR Part 24. The disputed sections are located on page 44960 (first column) and page 44962 (second column). Transportation Employees Get Whistleblower Protection Bush signs 9/11 bill, important whistleblower laws
The whistleblower laws, contained in sections 1413, 1536, and 20109 of the Implementing Recommendations Act, broadly protect surface transportation employees who disclose safety violations, security threats and misuse of taxpayer funds. The laws also provide protection for transportation workers who testify before Congress or raise safety concerns to their managers. Whistleblowers who suffer illegal retaliation may obtain reinstatement, compensatory damages, attorney fees and up to $250,000.00 in punitive damages. Employees must file their initial claims with the Department of Labor, but can elect to have their claims tried before a jury of their peers. “The whistleblower provisions of the 9/11 bill represent a significant advancement in the rights of employees in surface transportation industries. It is crucial that whistleblowers have access to jury trials and the ability to obtain damage awards when they have suffered retaliation from an employer. Now, it is up to Congress to pass a law that will protect all employees, in all sectors of our society, rather than using the current piecemeal approach,” stated National Whistleblower Center President Stephen Kohn. “Just as truck drivers and railroad workers who expose safety problems need protection, so do other honest employees who expose taxpayer rip-offs and safety threats. The whistleblower protections contained in the Implementing Recommendations Act should serve as a model for badly needed whistleblower reforms for other sectors of the economy,” Kohn added. The whistleblower provisions of the bill were championed by both Rep. Bennie Thompson (D-MS), Chairman of the House Homeland Security Committee, and Rep. Edward Markey (D-MA), a majority member of the committee. The Open Case Of Agent Turner Court Reverses Itself on Key Tax Case New decision setback for whistleblowers and civil rights victims. Washing, D.C. - July 3, 2007. The U.S. Court of Appeals for the District of Columbia Circuit reversed itself on a key civil rights tax case and held that the IRS can tax damage awards based solely on compensating victims who suffer emotional injuries. On August 22, 2006 the same court held that such taxes were unconstitutional, as compensation for a documented "loss" was not "income" subject to the tax code. In a major reversal, the Court held that compensation for personal injuries are taxable. The case arose as a result of the Department of Labor ruling in the whistleblower case of Marrita Murphy. In that case, the Labor Department held that Ms. Murphy suffered substantial damages to her health and reputation, and awarded her $70,000 in compensatory damages strictly related to her losses. The IRS taxed Ms. Murphy's damages and she asked for a refund of the tax on the grounds that her damages were not income. I an August 22, 2006 decision, the U.S. Court of Appeals for the D.C. Circuit agreed with Ms. Murphy, and found that compensation limited to making a human being whole for actual documented losses to physical or mental health were not subject to an income tax. The IRS forcibly appealed that decision and the Appeals Court agreed to vacate its original decision and hear reargument on the case. On rehearing the IRS urged the Court to treat damages to people differently from damages to property. The IRS contended that compensation awarded to a person for the loss of an arm or a leg was not payment to make a person "whole," but was payment obtained as part of a "forced sale." In other words, if a person suffered a mental breakdown after witnessing her/his child being murdered, payment for that mental breakdown was taxable - as the victim (according to the IRS) simply was "forced" to sell his or her mental health, and obtained "income" based on the forced sale theory. In a remarkable reversal of its prior decision, the Court adopted this baseless argument. The Court held as follows: Murphy's situation seems akin to an involuntary conversion of assets; she was forced to surrender some part of her mental health and reputation in return for monetary damages. Murphy v. IRS, p. 2. "The Court's reversal stands reality on its head," said David K. Colapinto, who argued on behalf of Ms. Murphy. "When whistleblowers suffer retaliation, they do not 'sell' their mental health. If people are injured in a car accident, they do not 'sell' their arms and legs. These are real human losses, and compensation to restore that human loss was never intended to be 'income' under our Constitution or the tax code." Stephen M. Kohn, the President of the National Whistleblower Center and co-counsel for Ms. Murphy, stated: "This decision is a terrible setback for all victims of civil rights abuses. it permits Congress to enact retaliatory taxes, stripping people from the Constitutional protections afforded property. Damages to whistleblowers are not part of a business transaction - forced or otherwise. They are part of harm caused by illegal conduct. This decision threatens fundamental human rights." Murphy v. IRS Decision, July 3, 2007 D.C. Circuit Reverses Course In Murphy Redux Twenty-five Whistleblower Advocacy Groups Present Washington, D.C. May 17, 2007. In recognition of Senator Chuck Grassley’s “Quarter Century as the Champion for Whistleblowers in the United States Senate,” twenty-five public interest groups - from across the political spectrum – joined together to present Senator Grassley with a Lifetime Achievement Award. The award honors the Senator’s “leadership” in obtaining Congress’ approval of “landmark whistleblower protections in the False Claims Act, Civil Rights Tax Fairness Act, Whistleblower Protection Act and the Sarbanes-Oxley Act." The Award was presented by Bunnatine H. Greenhouse, the Army Corps Of Engineers’ Former Top Contracting Officer. View Mrs, Greenhouse’s statement. The National Whistleblower Center hosted the ceremony, as part of Whistleblower Week in Washington, on behalf of twenty-five public interest organizations, including: the American Library Association, Californians Aware, Doctors for Open Government, Ethics in Government Group, Georgians for Open Government, Government Accountability Project, Integrity International, Minnesota Coalition on Government Information, National Employment Lawyers Association, National Whistleblower Legal Defense and Education Fund, No FEAR Coalition, OMB Watch, Project on Government Oversight, Public Citizen, Public Employees for Environmental Responsibility, Semmelweis Society International, Taxpayers Against Fraud, The Health Integrity Project, The New Grady Coalition, The Liberty Coalition, The Student Health Integrity Project, Union of Concerned Scientists, VA Whistleblowers Coalition and Whistleblowers USA. The President of the National Whistleblower Center, Stephen M. Kohn, issued the following statement when announcing Senator Grassley’s selection for the award: “No other member of Congress has so consistently supported whistleblowers. For Senator Grassley, it never mattered if the President was a Democrat or Republican. It only mattered that the public safety was protected, that the taxpayers were not robbed and that government was responsive to its citizenry. His efforts have saved the taxpayers billions of dollars and have protected the careers of hundreds of honest employees who simply wanted to do their jobs and properly report misconduct.” Appeals Court Hears New Arguments in Murphy Tax Case Washington, D.C.-March 22, 2007. The U.S. Court of Appeals for the District of Columbia Circuit has scheduled argument in the Murphy v. IRS tax case for April 23, 2007 at the U.S. Courthouse in Washington, D.C. The case will determine whether “make whole” compensatory damages paid to whistleblowers (and other employees) as compensation for a “loss” constitutes taxable income. The case concerns Marrita Murphy, who was illegally blacklisted in retaliation for raising concerns about environmental violations committed by the New York Air National Guard. After a contested trial on the merits, the U.S. Department of Labor found that the NY Air Guard violated six federal environmental whistleblower laws when it blacklisted Ms. Murphy. She was awarded compensatory damages for significant losses to her reputation and health and the NY Air Guard was ordered to “make her whole.” The IRS demanded that Ms. Murphy pay a tax on these “make whole” damages and Ms. Murphy filed a tax refund action in federal court. On August 22, 2006 the D.C. Circuit Court of Appeals agreed with Ms. Murphy and ruled that compensation limited to making a damaged employee “whole” was not “income” under the 16th Amendment of the U. S. Constitution. That Amendment has long been interpreted as excluding taxes on “make whole” type remedies, such as fire and life insurance and workers compensation claims. At the request of the IRS, the Court agreed to re-hear arguments on the case before the same panel of judges who earlier ruled in favor of Ms. Murphy. In a statement issued by the National Whistleblower Center’s General Counsel, and an attorney for Ms. Murphy, David K. Colapinto stated:
The IRS’s position punishes whistleblowers and other civil rights victims. In a radical break from past precedent, the IRS is demanding that Ms. Murphy pay a tax on compensation designed to make her whole for physical and emotional injuries. If the IRS’ position is sustained, whistleblowers will be obligated to pay a tax on damages related to pain and suffering. Such a tax undermines the whistleblower and civil rights laws, and would set a dangerous precedent permitting the IRS to tax all forms of make whole remedies, including life and property insurance payments. Survey Results Of Major Presidential Candidates Washington, D.C. May 25, 2007. As part of its voter education program, the National Whistleblower Center has requested that each major Presidential candidate respond to a six question survey setting forth their position on whistleblower protections. The questions seek to clarify the candidates’ position on the key legislative and appointment issues the candidate would face if she or he were elected. The survey responses as linked at http://whistleblowers.org/htm/2008_ survey.html. Currently, Senator Barack Obama and former Senator Mike Gravel fully responded to the questionnaire, and indicated their unqualified support for the six major whistleblower issues identified in the survey. Former Senator John Edwards and Congressman Tom Tancredo issued general statements in support of whistleblower protections, but did not specifically commit to the six issues set forth in the survey. Congressman Tancredo responded to the Survey Question Number 1, which indicated the candidate’s support for H.R. 985, the Whistleblower Protection Enhancement Act, which passed the House by a 331-94 vote. Although Congressman Tancredo stated his support for H.R. 985, he was one of only 94 House members to vote against the bill. “We hope that Congressman Tancredo’s change of position on H.R. 985 is an indication that other members of Congress who voted against that legislation are having second thoughts and will, in the future, join in fully supporting whistleblowers,” Kohn said. “All major Presidential candidates should go on record regarding their position on whistleblower rights. The voters have a right to know where the candidates stand on this vital issue,” said Stephen M. Kohn, the President of the National Whistleblower Center. The Center is a non-partisan organization and does not endorse any candidate. The candidates have been asked to respond by June 7, 2007. The full results of the survey will be released on that date. “Whistleblower Week” Training Program Set for May 16th Washington, D.C -- May 16, 2007. As part of the Whistleblower Week in Washington programming, the National Whistleblower Center is sponsoring an all-day attorney training program/CLE program at the Willard Hotel on May 16, 2007. This program will focus on training attorneys and whistleblowers in critical skills necessary to successfully prosecute a whistleblower case, and covers topics ranging from “The ABC’s of Whistleblower Protection,” to remedies available to environmental whistleblowers, federal employees, private sector employees and claims filed under qui tam laws. Attorneys must register for the seminars by clicking this link to the full day seminar page or by contacting Estelle Kohn, Seminar Coordinator. In addition to the attorney training program, the National Whistleblower Center is also offering a limited number of seats for special seminars dedicated to whistleblowers and their non-attorney community advocates. These limited seats are being offered on a scholarship basis, free of charge. Anyone interested in attending these seminars is urged to pre-register ASAP by clicking this link to the scholarship seminars page or contacting Marshall Chriswell. Enrollment is filling up quickly so register today.
Whistleblower Advocates Rally In Washington To Oppose Presidential Veto Threat WASHINTON - April 30 - Over 50 public interest groups, and whistleblowers from across the United States, are planning the first-ever “Whistleblower Week in Washington” scheduled for May 13-19, 2007 in Washington DC. Scheduled events will include press conferences on major whistleblower issues, seminars and panels attended by leading whistleblowers and Congressional-related events. Most events will be open to the press. Among the groups participating in Whistleblower Week in Washington are the National Whistleblower Center, the No FEAR Institute (NFI), the Government Accountability Project (GAP), Doctors for Open Government, Semmelweis Society International, the National Security Whistleblower Coalition, the Veterans Affairs Whistleblower Coalition, the Liberty Coalition, "Project On Government Oversight (POGO)", and the Make it Safe Coalition have committed to the event. Whistleblower Week was sparked by passage of The Whistleblower Protection Enhancement Act of 2007 in the U.S. House of Representatives and the issuance of a veto threat by President George Bush. “There is overwhelming grass roots support for strong whistleblower protections. Not even President Bush’s veto threat will slow down the momentum for this law. Once it is passed, we are certain he will sign it into law. The House has already passed the law with a veto-proof majority. Whistleblower Week in Washington is a first step in ensuring that the Senate follows through and enacts the law with overwhelming bi-partisan support.” said Stephen M. Kohn, the President of the National Whistleblower Center. Supreme Court Again Undermines Whistleblower Rights Majority Opinion Permitted Contractor to Profit from Fraud Washington, D.C. - March 27, 2007. The U.S. Supreme Court, in a 6-2 ruling, permitted a major federal contractor to escape liability for fraud against taxpayers on a technicality. In the case, Rockwell International was found guilty of defrauding taxpayers of 1.3 million dollars. The fraud was disclosed by a whistleblower. However, because the fraud had been “disclosed” to the “public” prior to the whistleblower filing a claim, the Supreme Court overturned a jury verdict, permitting the contractor to profit from its fraud. In response to the decision, the President of the National Whistleblower Center, Stephen M. Kohn, issued the following statement:
The Supreme Court overturned the jury verdict, and permitted the contractor to pocket the fruit of its fraud. Rockwell stole from the taxpayers when it failed to adhere to the terms of a binding federal contract. It profited from its fraud. And now the Supreme Court has ruled that it can pocket over one million dollars in illegally obtained taxpayer money. This is a disastrous ruling for the American public. By discouraging witnesses from going forward, the Supreme Court has cut the legs off of America’s most effective anti-fraud law. FBI WHISTLEBLOWER EXPOSED VIOLATIONS OF NSL LETTERS IN 2005
Washington, DC, March 19, 2007. In response to the Department of Justice Inspector General report on the Federal Bureau of Investigation’s (“FBI”) improper use of National Security Letters (“NSL”), the President of the National Whistleblower Center (and an attorney for Mr. Bassem Youssef) issued the following statement: Bassem Youssef did the right thing by reporting NSL violations to his managers and fully cooperating with the Inspector General’s investigation. He is a loyal public servant who has put his loyalty to the U.S. Constitution and national security above his own career. He has paid a price. It is time for the FBI to stop its retaliation of Mr. Youssef. The Sunday Washington Post and Monday New York Times published articles briefly describing Mr. Youssef’s role in reporting the NSL violations these articles are posted below:
Background information on FBI Counter-terrorism Unit Chief Bassem Youssef:
Also see Inside the FBI: Counterterrorism DOE IG Reveals FBI Abused PATRIOT Act Washington, DC, March 9, 2007. Today the Department of Justice Inspector General issued a report finding that the FBI has engaged in gross abuses of power in implementing searches without warrants, including electronic surveillance, in conjunction with the PATRIOT Act. The IG Report found that, among other things, FBI conducted hundreds, and perhaps thousands, of improper searches without warrants, including searches in case in which no authorized investigations even existed. The DOJ IG was assisted in its investigation by a whistleblower.
Whistleblower Center Joins Coalition Calls For "State Secrets" Whistleblower Hearings Petition with strong left-right support headed to Capitol Hill Washington, DC, March 8, 2007. The National Whistleblower Center, along with a broad coalition of 30 liberal, libertarian and conservative groups including the American Civil Liberties Union, Citizen Outreach, OMB Watch, Electronic Privacy Information Center, Government Accountability Project, Electronic Frontier Foundation, the Liberty Coalition, the National Coalition Against the Censorship, the National Security Whistleblowers Coalition and the Project on Government Oversight sent a letter to the House Committee on Oversight and Government Reform urging prompt hearings on the case of Federal Bureau of Investigation (FBI) Whistleblower Sibel Edmonds. Ms. Edmonds, a former FBI Language Specialist, brought charges of wrongdoing, criminal activity, cover-ups and national security threats inside the agency following the terrorist attacks of 9/11. Edmonds was promptly fired. The United States Department of Justice Office of Inspector General (OIG) investigated her allegations, and confirmed most of her claims. The OIG concluded that her firing was illegal and that the FBI failed to investigate Ms. Edmonds' credible allegations of security breaches and possible espionage inside the FBI language services division. However, the Attorney General invoked the "State Secrets Privilege," which covered up the FBI's wrongdoing and malfeasance and resulted in the dismissal of Ms. Edmonds' retaliation case. The OIG report is publicly available at http://www.usdoj.gov/oig/special/0501/index.htm. NWC President, Stephen M. Kohn and NWC General Counsel, David K. Colapinto, issued the following statement in support of the hearings: "The 'State Secrets' privilege undermines whistleblower protections. Despite the fact that the Department of Justice's own watchdog agency, the Inspector General, confirmed that Sibel Edmonds had been illegally fired, the government used that alleged 'privilege' to have Ms. Edmonds' case thrown out of court and to cover up FBI wrongdoing. The government abused a 'privilege' to undermine Constitutionally protected free speech and ignore an Inspector General's findings of retaliation. Every national security whistleblower was threatened by this improper assertion of a privilege. The National Whistleblower Center joins in petitioning Congress to place rational limits on this privilege so that national security whistleblowers, such as Ms. Edmonds, can expose serious wrongdoing, free from retaliation." Stephen Kohn and David Colapinto represented Mrs. Edmonds during the OIG investigation, and witnessed first hand the improper use of the State Secrets privilege in her case. The petition drive is being coordinated by the Liberty Coalition. In a statement issued by the Coalition's National Director, Mr. Michael Ostrolenk stated: "Mrs. Edmonds is not a national security threat but a national hero and the American public deserves to hear the truth of her case. Congress must act and act now by having public hearings. Without them, the cover-ups and criminal activities will just continue." The National Whistleblower Center is a member of the Liberty Coalition. The petition is posted on the Coalition's web site, located at www.libertycoalition.org. National Poll Shows Overwhelming Support For New Whistleblower Protections Survey of 1014 “Likely Voters” Demonstrates 79% Support Washington, DC. March 1, 2007. A survey conducted of 1014 “likely voters” between February 14-19, 2007 found overwhelming public support for Congress to “institute a strong whistleblower law to protect government employees from retribution if they report waste or corruption.” The poll, conducted by the firm of Greenberg Quinlan Rosner, found that whistleblower protection was among the most popular issues for likely voters, with 79% of those surveyed supporting a strong whistleblower protection act, and 41% of those surveyed stating that they would be “much more likely” to support a Congress that enacts such legislation. The survey, commissioned by the group “Democracy Corps” was designed, in part, to test which issues voters wanted Congress to act on. A copy of the poll is linked here at http://www.democracycorps.com/reports/surveys/Democracy_ Corps_ February_ 14-19_ 2007_ Survey.pdf . The whistleblower question is Q. 95, on page 16. Stephen M. Kohn, the Executive Director of the National Whistleblower Center, issued the following statement in response to the polling data: “The American people know that whistleblowers have saved taxpayers billions of dollars, that they have risked their careers to expose weakness in the war on terror and that without “a strong whistleblower law” Congress cannot exercise its oversight duties. It is time for Congress, in a bi-partisan manner, to do its duty and enact a comprehensive national whistleblower protection law. This is not a Democratic issue. This is not a Republican issue. It is a good government issue. Only crooked politicians benefit when whistleblowers are silenced. It is now time for the public to demand effective Congressional action.” The specific question polled was whether the Democratic controlled Congress should “Institute a strong whistleblower law to protect government employees from retribution if they report waste or corruption.” In response, a total of 79% of likely voters stated that they would be “much more likely” or more likely to support Congress if such a law was passed In order to ensure that Congress acts to protect whistleblowers, the National Whistleblower Center has initiated a petition drive calling for the passage of a National Whistleblower Protection Act. The petition is linked at http://www.ipetitions.com/petition/Whistleblower_ Law/ . Senator Grassley Urges FBI To Discipline Agents Senator’s Letter follows Up on Unanimous Jury Verdict Minneapolis, Minnesota, February 27, 2007. Senator Charles Grassley (R-Iowa), a member of the Senate Judiciary Committee, released a letter today urging FBI Director Robert Mueller to discipline the supervisors responsible for retaliating against former FBI Special Agent Jane Turner. In a statement released today, Senator Grassley stated: “The high standards of the FBI do not allow for anything less than the truth. It’s time for the supervisors who retaliated against Jane Turner, and other whistleblowers for that matter, to be held accountable. This jury verdict is vindication for Agent Turner. She had the courage to stand up alone, in the face of resistance, and say what happened was wrong.” On February 5, 2007 a federal court jury unanimously held that the FBI illegally retaliated against Jane Turner, a 25-year veteran FBI agent, and awarded her $565,000.00 in damages. Among the FBI officials who participated in the retaliatory actions against Ms. Turner were James Burrus, the current Assistant Director of the FBI's Criminal Division and James Casey, a high level “Section Chief” in the FBI’s counterintelligence program. Stephen M. Kohn, one of Jane Turner’s attorneys, and the President of the National Whistleblower Center, issued the following statement: "The FBI has refused to reform itself. We hope that aggressive oversight by Congress can put an end to the retaliatory culture that undermines the FBI’s law enforcement mission. A copy of Senator Grassley’s press statement and letter to Director Mueller can be found at
Iraq For Sale Featured by DC Independent Film Festival The NationalWhistleblowerCenter is co-sponsoring the showing of Iraq for Sale, as a benefit for the Bunny Greenhouse Legal Defense Fund. The Center will hold a reception prior to the showing of the film at 5:30 pm, in the theater. There will also be a panel discussion after the film. Tickets for this event are $10 per person. Tickets may be purchased by calling 202-342-1903 or online. More information at this event can be found here. House Oversight Committee Introduces Whistleblower Reform Legislation Whistleblower Protection Enhancement Act would effectively Washington, DC. February 13, 2007. Last night the Chairman, Ranking Member and other leaders of the House Committee on Government Reform introduced a bi-partisan bill to protect federal employee whistleblowers from retaliation. If passed, the Whistleblower Protection Enhancement Act (H.R. 985) would strengthen federal employee protections in three major areas:
The National Whistleblower Center strongly endorses the Whistleblower Protection Enhancement Act of 2007 and supports its prompt passage. Stephen Kohn, the Center’s Executive Director issued the following statement: “The Whistleblower Protection Enhancement Act of 2007 would end the second class citizenship of Federal employee whistleblowers. Federal employee whistleblowers have radically less protection than other employees who file discrimination claims. This law closes loopholes and sets up procedures which would permit judicial review and oversight for whistleblower cases.” FBI WHISTLEBLOWER WINS RETALIATION CLAIMS Unanimous Jury Verdict Awards Former Agent Minneapolis, Minnesota, February 5, 2007. In a historic ruling against the Federal Bureau of Investigation, a federal court jury unanimously held that the FBI illegally retaliated against Jane Turner, a 25-year veteran FBI agent. The federal jury found that the FBI retaliated against Ms. Turner when it downgraded her performance reviews. She was awarded $60,000.00 in lost wages and $505,000.00 for damages to reputation and emotional distress caused by the FBI’s retaliation. The case was previously heard by the U.S. Court of Appeals for the 8th Circuit, which had unanimously upheld the right of Jane Turner to go before a jury and state her claims. That decision can be found at Turner v. Ashcroft , 421 F.3d 688 (8th Cir. 2005). Ms. Turner’s performance had been attacked by FBI managers after she filed a civil rights case and disclosed serious FBI misconduct in its handling of child abuse cases. In one case, Ms. Turner vigorously complained that the FBI had improperly classified the brutal rape of a two year old Native American child as a "motor vehicle accident." At the trial, government witnesses confirmed that Ms. Turner had successfully “dogged” the case for over one year and forced the government to re-open the prosecution. Her investigation led to a guilty plea by the rapist. Among the FBI officials who participated in the retaliatory actions against Ms. Turner were James Burrus, the current Assistant Director of the FBI's Criminal Division and James Casey, a high level official in the FBI’s counterterrorism program. Ms. Turner is the same FBI agent who also blew the whistle on FBI theft from Ground Zero (the 9/11 WorldTradeCenter crime scene). As a result of her disclosures the DOJ Office of Inspector General confirmed widespread FBI-takings from Ground Zero. Stephen M |
Washington D.C. – August 3, 2007. Transportation employee-whistleblowers were among the big winners in the anti-terrorist legislation signed into law today by President George Bush. As part of the “The Implementing Recommendations of the 9/11 Commission Act of 2007,” Congress extended whistleblower protections to commercial truck drivers, railroad employees and public transit workers. 
