By Ralph Vartabedian, Times Staff Writer
While the
federal government was enticing hundreds of defense industry whistle-blowers to risk blowing the
whistle on alleged, fraud, top Justice Department officials were adamantly
opposed to the whole effort, according to a 1989 internal agency memo.
The memo, a copy of
which was obtained Tuesday by The Times, reveals for the first time that Atty.
General William Barr was personally opposed to the federal False Claims Act, which empowers
individuals to sue contractors on behalf of the government and share in any monetary awards.
The
issue carries enormous stakes. Virtually every major defense company has been sued under the False
Claims Act, resulting in settlements to whistle-blowers totaling $500 million so far. Even so,
whistle-blowers have accused the Justice Department of half-hearted prosecution of their cases.
Disclosure of the memo,
however, could aid the industry's still unsuccessfull efforts to overturn the law. The industry says
the law panders to disgruntled workers who bring phony allegations.
Barr, who was then
assistant attorney general, asserted in the 1989 memo that the law was unconstitutional. He argued
that individuals have no role in prosecuting civil fraud and that the law was an encroachment on
presidential powers.
The
memo was released Jan. 15, the last day Barr held office in the Bush Administration. It was
filed in a federal appeals court, which is hearing a case that challenges the constitutionality of
the amended False Claims Act.
Barr could not be reached
for comment, and a Justice Department spokesman said he no longer works at the agency.
In its 38 pages, the memo
argues that the law is "patently unconstitutional" and its legitimacy is "not even a close question."
It argues that upholding federal laws is a core power" of the executive branch and that Congress
encroached on that authority by passing the law.
Sen. Charles Grassley
(R-Iowa), who authored amendments that strengthened the law in 1986, said the disclosure of the memo
was upsetting because Barr had agreed to keep the Justice Department (Please see MEMO, D2)(Continued
from Dl) neutral on the issue of the law's constitutionality.
Grassley
said the Barr memo reflects an "institutional attitude" opposing the law and impeding
the prosecution of the cases. Grassley said private suits make the Justice Department look bad and
that federal prosecutors are reluctant to prosecute fraud that undermines the Pentagon.
The Justice Department
spokesman said of the memo: "We are unaware of any public position that the Department of Justice
has taken concerning the constitutionality of the Qui Tam provision of the False Claims AcL Beyond
that, we have no comment"
Amid criticism that
the Justice Department was not vigorous enough in, prosecuting defense fraud, Congress increased
the power of whistle-blowers in 1986.
The amendments to the
law, known as the Qui Tam provisions, set up a bounty hunter system to help the Justice Department
police fraud.
But
the whistle-blowers soon began to complain that the Justice Department was delaying their cases,
avoiding thorough investigations and refusing to share awards at minimun
levels specified by the law.
At the same time, many
whistle-blowers lost their jobs, were black-balled from the industry and left embittered by the
experience. The defense industry was outraged by the flood of suits, contending many of them involved
specious allegations by disgruntled workers.
Phillip Benson, an
attorney who represents a large number of whistle-blowers, said it appears the memo was released as
a final gesture of support by Barr for the defense industry.
Benson said the memo appears to confirm his long-held contention that the Justice Department was impeding the prosecution of the cases.
"We now know that, after four years of hell, this anti-whistle-blower bias went all the way to the top of the agency," Benson said.
William Ramsey, a Valencia, California attorney, said: "I did not jump to conclusions, but after several years of working on these cases, I am now certain there is a concerted effort by the Department of Justice to circumvent the intent of Congress.
"The Department of Justice would rather blow a case and get no money for the government than have a whistle-blower succeed, and has always been antagonistic toward whistle-blowers."
