Replies to post #170780 on Liberty Star Uranium and Metals Corp (LBSR)

[mstoneinv]

Audits are being done for FRAUDULENT applications and the papers have been full the last couple of weeks of criminal prosecutions.

Civil False Claims Act (FCA): This is another powerful tool in the government’s enforcement arsenal. Under the FCA, the government can bring an enforcement action against any party who, among other things, “knowingly presents or causes to present a false claim for payment or approval” or “knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” Many companies receiving CARES Act aid have never done business with the government before. These “first timers” may not know that FCA violations can lead to treble damages and statutory penalties for each payment. Further, the FCA’s “reverse false claims” provision could be used to civilly prosecute companies that improperly took advantage of loan forgiveness. Note also that the FCA provides a right of action not only for law enforcement, but also private whistleblowers (called “relators”), often (but not always) insiders who witness fraudulent conduct. Employees can turn violators in for a share of the government’s recovery.

Financial Institutions Reform, Recovery and Enforcement Act (FIRREA): FIRREA provides the government with a potential alternative to the FCA in civil CARES Act enforcement. FIRREA imposes civil penalties if the government can prove violations of 14 specified criminal statutes, including bank fraud and mail/wire fraud affecting a federally insured financial institution. DOJ can seek statutory penalties for violations up to $1 million per violation (today, $1,963,870 which includes mandated inflation adjustments) or up to $5 million for a continuing violation. FIRREA has a lower burden of proof than criminal statutes. DOJ must prove only that a defendant committed one of FIRREA’s predicate offenses by a preponderance of the evidence. Thus, FIRREA makes it easier for DOJ to bring an enforcement action based upon conduct that is already actionable under the criminal code. Like the FCA, FIRREA permits whistleblowers to report potential violations in a confidential declaration, which the DOJ may then investigate to determine whether to pursue FIRREA charges.