Cheating the federal government has long been an unpardonable sin. During the Civil War, amidst reports that Union soldiers were opening crates of rifles to find only sawdust, Congress passed the False Claims Act (FCA) in an effort to reduce rampant war profiteering. Over the years, with the expansion of the federal government, the FCA has been called upon to reach far beyond war profiteering and has extended to all sectors of the economy where federal dollars are spent. More recently, Congress has extended the FCA's scope in a monumental and unsound manner - it now includes liability for fraud against entities other than the United States.
The FCA, 31 U.S.C. ?? 3729 et seq., imposes liability for seven separate types of conduct, including submitting a false or fraudulent claim for payment, using a false record or statement that is material to a false or fraudulent claim and avoiding an obligation to the United States. The Act provides for treble damages plus statutory penalties. It also contains a whistleblower provision permitting a private citizen to sue in the name of the United States and to receive a bounty of as much as 30 percent of any recovery.