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In a landmark ruling in favor of corporate whistleblowers, the U.S. Court of Appeals for the Seventh Circuit gave the green light to Michael DeGuelle's RICO claim of retaliation. The court's opinion gives life to a provision in the 2002 Sarbanes-Oxley Act (SOX) that makes it a felony to retaliate against whistleblowers who provide information about corporate fraud to law enforcement officers.

I reported earlier on the Seventh Circuit's extraordinary decision last year to appoint a prominent Chicago corporate and pro bono lawyer to represent DeGuelle in this appeal. DeGuelle's prior lawyer abandoned his case after the district court dismissed it in 2010.

Mike DeGuelle sent me a message about his victory:

This is a giant step in the right direction for protecting the rights of employees who refuse to participate in unlawful conduct at work and then suffer retaliation. I did the right thing by reporting unlawful conduct to law enforcement. Finally, it is safe to do the right thing for no reason other than because it is the right thing to do. In this case, the court put the rights of the American people ahead of the greed of corporate America. This is an outstanding court decision for all workers to celebrate in the ongoing struggle to take back our country from the greed of corporations that have corrupted American values. 

DeGuelle blew the whistle on a prolonged tax cheating scheme by S. C. Johnson & Son, Inc. The scheme included taking advantage of IRS audit mistakes, destroying records, and buying a tax shelter from the now defunct accounting firm of Arthur Anderson.

DeGuelle filed a lawsuit against the company in federal court in Milwaukee.  The lawsuit claimed that the company engaged in a pattern of racketeering activities that included the tax fraud, and firing DeGuelle in retaliation for providing the government with information about the fraud. One issue is whether a victim of retaliation can seek damages under the Racketeer Influenced and Corrupt Organizations Act (RICO). The company said the law does not permit such a recovery, and the district court agreed, dismissing DeGuelle's lawsuit in 2010. DeGuelle appealed, without the representation of his original lawyer.

As part of SOX, Congress made it a crime to:

“knowlingly, with intent to retaliate, take[] any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any Federal offense[.]” 18 U.S.C. 1513(e).

Stephen M. Kohn, Executive Director of the National Whistleblowers Center, wrote about this section after Congress passed SOX.

By Richard Renner

Read More http://www.whistleblowersblog.org/2011/12/articles/corporate-1/major-victory-for-whistleblowers-in-seventh-circuit-says-retaliation-is-a-rico-violation/

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