But lawyers and government officials had this warning for anyone thinking about following in Mr. Birkenfeld’s footsteps: Make sure you understand what you are getting into.
“It’s a life-changing experience,” said John R. Phillips, founder of the law firm Phillips Cohen and the man credited with devising the amendments that strengthened the government antifraud law, the False Claims Act, in 1986. “If you look at the field of whistle-blowers, you see a high degree of bankruptcies. You may find yourself unemployable. Home foreclosures, divorce, suicide and depression all go with this territory.”
As if that were not sobering enough, he added, “You can’t believe how long these things take.”
And the payoff for putting your career and family at risk is usually a fraction of what Mr. Birkenfeld received. Last year, the I.R.S. paid $8 million to 97 people. This year, it said it was on track to pay $24 million to about 100 people, excluding the amount awarded to Mr. Birkenfeld.
But even the Justice Department, which administers awards through the False Claims Act, generally pays out 16.8 percent of what it takes in, and the average penalty is $2 million to $3 million. That works out to about $330,000 to $500,000, before taxes and lawyer fees are deducted.
That is a not a lot of money considering the risks. (Mr. Birkenfeld will probably pocket around $40 million, if the usual third of his award goes to his lawyers and 40 percent of what is left goes to taxes.)
Still, the interest in inducing whistle-blowers to come forward is on the rise. Under the Dodd-Frank Act, the Securities and Exchange Commission created the Office of the Whistleblower. It began operating in August 2011, and received 2,700 tips in the first year, said Sean McKessy, chief of the office.
“Not every tip was a home run, but I’ve been surprised by the quality,” he said. “We require that people sign a declaration under penalty of perjury that the information they are submitting is true. It’s a control. We didn’t want to be inundated with nonsense.”
Last month, the office made its first award of $50,000, which was a third of the fine collected. Mr. McKessy defended what was a meager sum by whistle-blower standards, saying he would be happy if his office consistently paid out small sums over many years. “That will show that we’re getting to things before they get to a catastrophic level,” he said.
So if you still want to be a whistle-blower, what should you do?
The short answer is to think long and hard about it. All the lawyers I talked to — and they’ve all made millions of dollars from cases like these — said they discouraged anyone who walked into their offices from becoming a whistle-blower. Doing the right thing, they said they tell their visitors, will be emotionally costly, even if there’s eventually a monetary award.
“There is a 100 percent chance that you will be unemployed — the question is, Will you be forever unemployable?” said Patrick Burns, a spokesman for Taxpayers Against Fraud. “The other 100 percent factor is the person who fired you, the person who designed and implemented the fraud, won’t be fired. He’ll probably be promoted again.”
Stephen M. Kohn, one of Mr. Birkenfeld’s lawyers and the author of “The Whistleblower’s Handbook,” said that despite laws to protect whistle-blowers against retaliation, companies still marginalized and harassed employees who came forward.
Then, there is the length of these trials to consider. Mr. Phillips said he spent 10 years representing two of the whistle-blowers in a case against GlaxoSmithKline that centered on accusations that the company promoted its antipsychotic drugs for unapproved uses. The case was settled in July for $3 billion.
There was a divide on how much the award mattered to whistle-blowers. Mr. Kohn said the rewards were often the deciding factor in whether to go ahead with a case.
Other people said whistle-blowers were motivated more by the desire to right a wrong, particularly in instances where people’s lives were at risk. “When people talk about the big whistle-blower payouts, I say, you don’t get it,” Mr. Burns said. “You don’t see the train of pain I see every day. They can’t tell you their story without quivering and crying, even though they’re millionaires.”