And the Wall Street Journal put two reporters on the story and still managed to butcher it. An Allstate Hurricane Katrina Fraud Update.

I recently met with a group of political strategists that noticed our little blog in Soggy Bottom and the information exchange was very enlightening for me.  I’m as interested in the mechanics of the story as the story itself and the tales I was told of how these folks manipulated the traditional media were very interesting.  More than any other skill set these folks had a keen understanding of human behavior which is a shared passion with us at Slabbed.

The garden variety bashing I sometime engage in to drive traffic sometimes obscures the fact Slabbed is in reality a quest for knowledge as in getting all the facts that surrounded the blanket denials of insurance coverage  after Katrina no matter where those facts may lead.  This may sound elementary, indeed even simplistic, but I’d submit we stand in stark contrast to our own insurance regulators that ignored all the evidence of fraud on part of their corporate benefactors from the insurance industry after Katrina, Mike Chaney even going so far as to attack the Rigsby sisters, who exposed the fraud perpetrated by State Farm on the US Treasury here in Mississippi.  This frankly came as no surprise to me, especially after it came out that the lawyer who ran the market conduct study for Mr Chaney left the Mississippi Department of Insurance for State Farm’s Jackson based law firm.

Insurance companies have lots of money to throw around and spend vast sums of money on shills, propagandists and their own in-house PR departments. These folks are mostly rent an opinion hookers that dispense half-truths in furtherance of their own paychecks.  Armed with lots of factoids and ready made quotes, deadline pressed journalists flock to them in droves, often uncritically lapping up the intellectually dishonest drivel folks like the III’s Robert Hartwig, who this past summer passed off a bogus poll about the NFIP to the media.  To her credit, Becky Mowbray over at the T-P busted Hartwig and frankly I was amused at Mike Chaney’s blatant duplicity in the Sun Herald’s reporting on the same topic.  I guess Chaney tells so many whoppers he can’t keep them all straight but that is another post.

I mention all this because Ashby Jones and Joanne Lublin recently wrote a story for the Wall Street Journal on the topic of corporate whistleblowers and the new financial re-regulation legislation which is so full of self-serving corporate PR spin these two journalists should be ashamed, especially since they work at a national media outlet that often does great straight reporting.  By way of comparison this story is akin to asking an armed robber what changes they would like to see made to the criminal justice system. Since armed robbers don’t spend big money advertising with WSJ we’ll thankfully never see that story.  In this instance one of Jones and Lublin’s major sources is Allstate’s Richard Crist, chief ethics and compliance officer.  Allstate, of course is a named defendant in 3 different false claims act cases down here in Soggy Bottom and that doesn’t count Allstate defrauding the NFIP as exposed in Weiss v Allstate.   The premise of the article seems to be that would be whistleblowers should first turn themselves in to the company because the monetary incentives for blowing the whistle are somehow bad compared to the illegal acts being exposed.  The comments to the story are far more insightful than the reporting itself, which my 7th grade son could have written solo.

Maybe the WSJ editor forced this story on Jones and Lublin.  Maybe they simply don’t have the intellectual rigor it takes to do a bit of basic research on their sources but whatever the problem this dynamic duo really laid an egg.

I have some insights into this topic as an auditor but figured I’d use our own James Barbieri as our source. James is a retired World Bank financial analyst who is also a whistleblower turned lawyer. So how well do internal whistleblower programs work James?:

While working for (the Government Accountability Project), I itemized the 200+ government employee whistleblower cases that went before the Merit System Protection Board and know first hand that the system is stacked. The only person to win, lost on appeal.

Now one naturally wonders why the WSJ didn’t ask the Government Accountability Project for some insight on this topic.  According to Wikisource the Government Accountability Project:

The Government Accountability Project (GAP) is the United States’ leading whistleblower protection organization. Through litigating of whistleblower cases, publicizing concerns and developing legal reforms, GAP’s mission is to protect the public interest by promoting government and corporate accountability. Founded in 1977, GAP is a non-profit, non-partisan advocacy organization in Washington, D.C..

And of course I loved this part:

In early 2007, GAP was responsible for exposing fraud and abuse at the highest levels of the World Bank.  In May 2007, World Bank President Paul Wolfowitz left the international organization in the wake of wide-ranging scandals based on multiple releases of documents over the previous two months by GAP.

GAP released evidence or exposed information showing that: Wolfowitz’s companion, Shaha Riza, received salary raises far in excess of those allowable under Bank rules; Riza received a questionable consulting position with a U.S. defense contractor in 2003 at Wolfowitz’ direction that has resulted in State and Defense Department inquiries; Juan José Daboub, Bank Managing Director and Wolfowitz-hire, attempted to remove references and funding for “family planning” in Bank projects; Wolfowitz’ office was responsible for weakening a “climate change” strategy document; Bank Senior Management delayed reporting to Bank staff that a fellow staffer had been seriously wounded in a shooting in Iraq; World Bank lending to Africa during Fiscal Year of 2007 has plummeted; and Wolfowitz was trying to broaden the Bank’s portfolio in Iraq over Board opposition.

Nonpartisan? Exposing double-dealing?? The good folks at GAP sound like my kind of people folks and frankly I think they know more about this topic than every source in that bogus WSJ article I linked above combined. I’ll add my 20 years plus as a CPA/auditor tell me that after the fact initiatives like hot lines, etc are not effective internal controls to prevent things like Allstate grossing up the Weiss’ NFIP contents claim with non-existent furs and jewelry or paying more for sheet rock when the bill is on the taxpayers.

We’re whistleblower positive at Slabbed, in part because Nowdy and I don’t like seeing the hard-earned money that we pay in taxes looted by those entrusted to spend it in the public interest.  In my opinion the problem isn’t that taxes are not high enough, rather we must clear the rats off the pile of money in the public treasuries, federal, state and local.

sop

4 thoughts on “And the Wall Street Journal put two reporters on the story and still managed to butcher it. An Allstate Hurricane Katrina Fraud Update.”

  1. Sop, Allstate was a named defendant in four qui tam cases – starting with Rigsby, then Branch, and most recently a stand-alone defendant in Denenea and Sonnier.

    The last two are particularly interesting – or rather there’s a particularly interesting “coincidence” that I’d be remiss not to point out.

    Despite the fact that the description of Allstate’s fraud is exceedingly detailed – making both cases the “easy picking” the government seems to favor, the government declined to intervene in either case.

    The “coincidence” – check the date of the government’s notice in Denenea and the date Allstate sang the Obama song:

    http://slabbed.wordpress.com/2010/09/23/breaking-news-new-katrina-qui-tam-unsealed-ex-rel-denena-v-allstate/

    http://money.cnn.com/2010/09/13/news/companies/allstate_tom_wilson.fortune/index.htm

    Now, tell me, was the “issue” really “the first to file” or could it have been “the first to smile”?

  2. On the issue of bounty-hunting as a whistleblower’s motivation:

    Whistleblowing in the corporate world is a very different animal from government whistleblowers. Under the False Claims Act (or SOX or FinReg), the motivation is often money….bounty-hunting is the term that was used by Senators who disliked the FCA at its inception or amendment. [legislative history will document that]…The WSJ article is an anecdote in this line of reasoning….the quality assurance manager whistleblower has intimate knowledge of quality control problems for sometime before stabbing the corporation in the back. The case law is filled with such anecdotes. Isn’t the whistleblower part of the fraud for some time? Why doesn’t the whistleblower come forward earlier?

    They have a point…and it can’t be dismissed.

    However, most whistleblowers do not fall into the “bounty hunter” taxonomy…..most whistleblowers resist wrongdoing from the start, are often rebuffed by management numerous times before going external. Most, like the Rigsbys, stumble into the role.

    In my experience, “martyrdom” is the signature of many whistleblowers. I noticed that in one of Ms. Lee’s interviews of the Rigsby sisters, a statement was made to the effect…”I would do it all again.” (Really?) I can’t tell you how many times I’ve heard that mantra….inspite of the trauma that usually defines the whistleblower’s life post-whistle.

    My view is that whistleblowers are like the body’s white cells. They are created by the body (or body politic) to counteract infection and other corruptive influences. In the performance of their duty they usually die….thereby maintaining the health of the system.

    On government whistleblowing and the Government Accountability Project:

    The Government Accountability Project is a terrific organization because the “professionals” who work there BELIEVE in the “noble” fight, i.e. the David vs. Goliath fight. (Sounds crazy. Would you encourage David, or stand next to David?) They know the odds and continue to fight the hypocrisy with little compensation.

    They are sought out by Federal government workers who are desperate and/or can’t afford private representation. Most of their claims emanate from dismissal, demotion, reassignment, loss of “top secret” security clearances, etc…. as “retaliation” for something they said or did, that they genuinely thought was “wrong.” This falls under the Whistleblower Protection Act; but you could easily see how the Constitution intended to protect Free Speech, particularly people who stand-up to testify as to what they’ve seen, heard, know first hand…

    As Civil Servants, government workers’ employment-related claims are handled under Administrative Law…hence the Merit System Protection Board. It doesn’t matter whether you look at Republican or Democratic Administrations…the whistleblower always loses. Sometimes they lose on merit grounds, but even those with slam-dunk evidence end-up as losers. And it is predictable.

    As for me….I’m a typical guy….I can’t be on a team that has a record of 0-226….oh no, I’ve been drafted by Buffalo.

    By the way: today’s WikiLeak data dump is a testimonial to how corrupt and hypocritical the system has become. We talk about “transparency” but we really don’t want to know.

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