Court: District Court, M.D. Florida; July 30, 2015; Federal District Court
The Court is addressing the Motion for Relator Share Award filed by Nurdeen Mustafa, the Relator, in a case involving Samir Najjar, who owed the United States several million dollars. To evade this debt, Samir and his brother, Lee Najjar, transferred Samir's real estate into Lee's name while Samir falsely claimed he could not afford to pay his debt. Mustafa, a real estate agent, uncovered this scheme and filed a lawsuit on March 8, 2010, under the False Claims Act, identifying hidden properties and detailing the brothers' involvement, although he only named Samir as a defendant. The United States intervened on April 18, 2011, filing its own complaint that included Lee as a defendant and added counts of fraud and conspiracy. A settlement was reached, resulting in a $10.1 million judgment against Samir and granting Mustafa a 20 percent share of any collections, including assets from Lee equitably owned by Samir. The Government separately settled with Lee for $250,000, prompting Mustafa to claim a share of this settlement through his current motion.
The False Claims Act (FCA), enacted in 1863 to address profiteering during the Civil War, prohibits false claims and fraudulent conduct related to government payments. This includes the making of false records or statements that are material to an obligation to pay money to the United States (31 U.S.C. 3729(a)(1)(G)). The FCA allows for civil actions initiated by the Attorney General or by private individuals in a "qui tam" capacity (31 U.S.C. 3730). Violators face civil penalties of $5,000 to $10,000 per violation, along with treble damages to the government (3729(a)(1)). If a private individual brings a suit, the government may intervene and take control of the action (3730(b)(2), (c)(1)), or opt for alternative remedies like administrative proceedings (3730(c)(5)). Successful qui tam relators are entitled to 15% to 25% of any recovery, alongside reasonable attorneys' fees (31 U.S.C. 3730(d)(1)). The qui tam provisions aim to incentivize individuals to report fraud against the government, reinforcing the importance of whistleblowing in protecting public funds.
The parties are in dispute over whether the $250,000 payment from Lee Najjar to Mustafa constitutes a "settlement of the claim," which would grant Mustafa a relator share under 31 U.S.C. § 3730(d)(1). The Government contends that Mustafa’s claim was solely against Samir Najjar, while Mustafa argues that his complaint, although naming only Samir as a defendant, contained sufficient details to implicate Lee Najjar’s involvement in the conspiracy to conceal Samir’s assets. This issue is being considered for the first time in this Circuit, as the False Claims Act (FCA) does not specify what constitutes an "action" or "claim" for relator share eligibility.
The Government cites case law that requires relators' complaints to be evaluated on a claim-by-claim basis for determining entitlement to settlement shares. In U.S. ex rel. Merena v. SmithKline Beecham Corp., relators sought a share of a settlement covering multiple fraudulent schemes, but the Government argued that some claims were barred by the public disclosure bar, thus limiting the relators' share to claims not affected by this bar. The appellate court sided with the Government, emphasizing that relators’ claims must be analyzed individually, and awarding a share for claims barred by public disclosure would undermine the FCA's intent.
The court noted that allowing such awards could result in significant financial benefits for relators whose claims would otherwise be dismissed, raising concerns about Congress's intent to prevent rewards for claims based on publicly available information. This interpretation could lead to similar awards being granted to relators who contribute meaningfully to public service and those who do not, suggesting that Congress likely did not intend for these groups to be treated equally.
The Court determines that the objectives of the False Claims Act support awarding the Relator, Mustafa, for his role in exposing fraudulent activities by Lee Najjar. Unlike other relators in similar cases, Mustafa provided significant public service by alerting the Government to the full scope of Lee Najjar's involvement in fraudulent conduct linked to his brother, Samir Najjar. Mustafa detailed several fraudulent transactions, including a General Power of Attorney executed by Samir Najjar on April 4, 2000, which allowed Lee Najjar to manage his brother's assets. Subsequently, Lee Najjar executed quitclaim deeds on May 2 and May 7, 2001, transferring valuable properties from Samir to himself shortly after a judgment was entered against Samir.
Mustafa further described Lee Najjar's involvement in real estate transactions, including a significant deal for the "Goldenrod Property," where Lee acted as a purchaser while Samir sought to conceal his ownership due to existing legal judgments. Despite not directly communicating with Lee Najjar during these transactions, Mustafa raised concerns over why Lee's name was included in contracts, revealing Samir's intent to avoid detection by Government authorities. The Government acknowledges that its settlement with Lee Najjar encompasses the conduct identified in Mustafa's complaint and agrees that he could have added Lee as a defendant but lost the opportunity once the Government intervened. The Court concludes that Mustafa’s service in exposing the brothers' misconduct remains valid, despite only naming Samir Najjar in his complaint.
The FCA encourages whistleblowers to report government fraud and rewards them for doing so. In the case of Roberts v. Accenture, LLP, the court awarded a relator's share of a settlement based on misconduct revealed by the relator's allegations, even when the relator was initially unaware of the misconduct. Mustafa’s actions align with the FCA's purpose, leading the court to determine he is entitled to a 20 percent relator's share of the settlement with Lee Najjar, consistent with the Government's prior agreement regarding a similar case with Samir Najjar. The court granted Mustafa's Motion for Relator Share Award, providing him this percentage of the amounts collected from the settlement. Mustafa did not explain his choice not to include Lee as a defendant. Relator's shares can be reduced under certain conditions, such as when claims are primarily based on publicly disclosed information, which limits the share to ten percent. Mustafa argues that his case is similar to instances where the Government pursues alternative remedies, ensuring he retains rights to a share equivalent to a resolved litigation or settlement. Additionally, Section 3730(e)(4) stipulates that a relator’s claim will be dismissed if it is based on allegations or transactions that have been publicly disclosed through various government or media channels.
