A Potential Sea Change In Visa Fraud Cases

[Also available on LinkedIn.]

If the reasoning of this case becomes widely adopted, there will be a sea change in how visa fraud cases are enforced in the future. In this case, the Court confirmed its previous conclusion that knowingly improper use of less expensive visas when more expensive visas are appropriate (for instance, using B-1s where H-1Bs are required) may give rise to liability under the False Claims Act (FCA).

This is very significant because the liability exposure for cases prosecuted under the FCA is tremendous. FCA liability could include treble damages to the government, interest, penalties of over $23,000 per violation plus attorneys fees. Total damages to companies in these cases can become stratospheric very quickly using this formula.

Just as importantly, if the FCA becomes a go to enforcement option here, enforcement is not only more damaging, but also much more likely. That is because FCA cases typically originate with a highly incentivized whistleblower.  Whistleblowers with evidence of the fraud  benefit from the Qui Tam provisions of the FCA which reward whistleblowers with 15-30% of the proceeds of what the government recovers. This amount frequently runs well into the millions of dollars. The prospect of multi-million dollar awards get people talking.  Under the FCA, these cases can also be enforced privately by the whistleblower in the event the government declines to prosecute.

This is great news for potential whistleblowers. Properly reporting a large scale visa fraud could result in a life changing sized award and also afford some valuable retaliation protections. This is horrible news for companies committing large scale visa fraud and those that knowingly enable it. Given the scale of potential liability and the increased likelihood of getting caught, the risk of committing visa violations could soon be an order of magnitude greater than it was in the past.