Defendant of Qui Tam Action Cannot Use Collateral Estoppel to Escape Criminal Liability for Fraud

Taipei_Taiwan_Military-sound-truck-01-300x200The U.S. District Court for the Western District of Virginia decided in December of 2016 that the government can pursue criminal charges against a defendant even if that person also faced a qui tam action brought by a private individual. In the case of U.S. v. Whyte, William R. Whyte, the owner and CEO of Armet Armored Vehicles, Inc., was charged with six counts of wire fraud, three counts of major fraud against the U.S., and three counts of false, fictitious, and fraudulent claims based on Whyte and Armet delivering vehicles that did not conform to the agreed upon specifications and were late after being contracted to manufacture and supply armored vehicles for the U.S. to use in Iraq. While these criminal charges were pending, Whyte was sued by the former president of Armet through a civil qui tam action under the False Claims Act. The federal government chose not to intervene and become a party to the qui tam suit, which was later decided in favor of White and Armet. This funding in favor of him led Whyte to seek to dismiss the criminal charges against him on the basis of collateral estoppel. His request was denied.

Understanding the Doctrine of Collateral Estoppel

Under collateral estoppel, a criminal defendant cannot be tried for the same issue in more than one criminal trial. This means there cannot be later lawsuits regarding legal and factual questions that were previously litigated, in a civil or criminal trial and resulted in a valid judgment. This doctrine is related to the protection from double jeopardy in the Fifth Amendment of the U.S. Constitution, which prohibits a person from being prosecuted twice for substantially the same crime. In essence, a plaintiff, whether it is the state or federal government, only has one chance to litigate an issue.

Why Collateral Estoppel Did Not Apply to Whyte’s Case

When a qui tam action is filed against a person, the federal government is provided notice and time to investigate the claim. The government then gets to decide whether it wants to join the claim as a party or not. When the government does not join the qui tam action, it remains only a party of interest. It is not a party that has any control over the lawsuit. Since the federal government had no influence over the qui tam action, the court determined it was not fair to hold the government’s rights based on the ruling in a separate civil case.

The decision was also based on policy. It is on purpose that the federal government is given the choice in whether or not to join a qui tam suit. The government specifically has the option to become a party in the civil suit or not join and pursue federal charges against the defendant. The court pointed out that if Whyte’s argument were true, then the federal government would always be forced to join qui tam suits since it would have no other remedy for the defendant’s fraudulent actions.

Do You Have Information About Fraud Against the Government?

If you believe you have evidence of a person or business benefiting from fraudulent claims against the government, then you should contact the San Francisco qui tam attorneys of Brod Law Firm at (800) 427-7020. We can provide you with an initial opinion on your case during a free consultation.

(image © CEphoto, Uwe Aranas)