FBI Lawyer Sting Rattles Billion-Dollar Whistle-Blower Unit

(Bloomberg) -- The Justice Department offers secrecy and cash to whistle-blowers for information about companies that cheated the government.

But one former government attorney is accused of using that information for his own gain. Turning the tables on a unit that can spend years investigating fraud cases, FBI agents are now questioning Justice Department lawyers about their ex-colleague, who was accused last month of trying to sell secrets about a case for $310,000.

Prosecutors say Jeffrey Wertkin attempted to sell a whistle-blower’s confidential lawsuit against a Silicon Valley company -- while wearing a wig in disguise. FBI agents want to know whether Wertkin, who left the government in April, got the lawsuit from someone inside the Justice Department and if he sold other secrets while working there, according to two people familiar with the matter who weren’t authorized to discuss it publicly.

“They’re going to have to review all his cases,” said Glenn Grossenbacher, a San Antonio whistle-blower attorney not involved in the case. “Did somebody give this case to him? Did he take it with him? Are there other cases involved? It’s a Pandora’s Box of questions.”

Justice Department spokeswoman Nicole Navas and FBI spokesman Matthew Bertron declined to comment.

Secret Lawsuits

The case has riveted the legal community. Justice Department lawyers specializing in False Claims Act cases conduct their investigations in secret after whistle-blowers file a lawsuit accusing companies of defrauding the government; in such cases, they have recovered $24 billion over eight years. Companies usually don’t learn about a suit until the government nears the end of its probe.

"It’s shocking to everyone who knows him,” said lawyer Nola Hitchcock Cross, who also represents whistle-blowers.

Wertkin, 40, won a coveted job at the Justice Department in 2010. Working on cases related to health-care, he remained there until April 2016, when he left for a job at Akin Gump Strauss Hauer & Feld LLP in Washington. His government pay was about $150,000 per year. At a firm like Akin Gump, where Wertkin defended companies sued under the whistle-blower law, attorneys with his credentials earn as much as $600,000, said Jeffrey Lowe of legal recruiter Major, Lindsey & Africa.

According to prosecutors, Wertkin told a man he thought worked for the unidentified technology-security company that the sealed lawsuit would help the firm “get out ahead of the investigation.” The man turned out to be an undercover FBI agent alerted by the company. Akin Gump fired Wertkin after his arrest in the lobby of a California hotel. Defense attorney Cristina Arguedas declined to comment. Wertkin has yet to enter a plea to the charges.

A Novel

"Wertkin’s case is like something out of a John Grisham novel,” said David Stone, a partner at Stone & Magnanini LLP who represents whistle-blowers. “You can’t make this stuff up.”

Wertkin cut an impressive figure among friends and colleagues. “Smart as a whip, good-looking, articulate,” said Jeremy Mayer, a political science professor at George Mason University in Arlington, Virginia, who was Wertkin’s business partner. “He was always the best-dressed guy in the room.”

Wertkin earned a bachelor’s degree from Haverford College, and a law degree and Ph.D in government from Georgetown University. “Never seemed to need money,” Mayer said.

In 2014, while at the Justice Department, Wertkin teamed with Mayer to set up a firm called MW Consulting LLC, according to public records. Mayer said they established the venture to bid on a contract to teach State Department employees how to testify before Congress.

Meyer said in a Feb. 16 interview that they bid but didn’t get the contract. The next day, Mayer said, Wertkin called him after a reporter contacted his lawyer to ask about the consulting firm. Wertkin said he never submitted the bid because he “noticed in the fine print that federal employees were barred” from bidding, Mayer said.

Georgetown Course

Before that, Wertkin and Mayer worked on another State Department contract, overseen by a fellow Georgetown professor, to teach foreign-service officers how to handle embarrassing questions while on overseas postings, he said. Wertkin earned about $2,000 a year teaching the course called “Composure Under Fire,” Mayer said.

At the Justice Department, Wertkin tried a case claiming that hospice chain AseraCare Inc. falsely certified patient eligibility for Medicare funding. The case is on appeal after a judge overturned a verdict for the government. He also handled a case alleging Pharmerica Corp. submitted false claims to Medicare for improperly dispensed drugs, which ended in a $31.5 million settlement, and a suit against Medco Health Solutions Inc. over kickback allegations. That settled for $7.9 million.

Company representatives declined to comment or didn’t respond to phone calls.

Wertkin investigated other whistle-blower claims, lawyers said. According to one of the people familiar with the case, investigators haven’t found evidence that he previously sold secrets.

It isn’t just the FBI that wants answers.

Whistle-blowers need to know “a Justice Department official is not going to corruptly take advantage of that information for his or her own agenda, reporting back to that whistle-blower’s company for a private deal,” said Neil Getnick, chairman of Taxpayers Against Fraud.

--With assistance from Tom Schoenberg

To contact the reporters on this story: Jef Feeley in Wilmington at jfeeley@bloomberg.net, David Voreacos in Newark at dvoreacos@bloomberg.net, Neil Weinberg in New York at nweinberg2@bloomberg.net.

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Jeff Grocott at jgrocott2@bloomberg.net, Paul Cox