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Whistleblower Can't Profit From Criminal Conduct

A whistleblower who exposed massive fraud by a Hanford Nuclear Complex clean-up contractor has found to his dismay that he can't claim part of a large settlement because he took part in the fraud.

Carl Schroeder, a one-time radiologic technician for the CH2M Hill Company, stepped forward in 2009, claiming that the Hanford contractor routinely allowed about 500 employees to claim inflated hours worked.

The company had a cost-plus contract with the Department of Energy which allowed it to collect higher fees based on the fraudulent payroll costs.

Until he blew the whistle, Schroeder claimed, the department thought the scheme involved only a handful of employees. Therefore, he should be entitled to a share of the 19 million dollar settlement CH2M Hill ultimately agreed to pay the government.

But he and seven other former employees pleaded guilty in 2011 to felony charges stemming from the fraud. Schroeder admitted he pocketed about 50-thousand dollars he was not entitled to.

Government lawyers argued he forfeited any right to a reward because of his criminal conduct, even though Schroeder contended the on-going scheme would not have unraveled unless he had blown the whistle.

A panel of federal appeals judges agreed that the plain language of the whistleblower law bars Schroeder from sharing in the settlement. In other words, he can't have it both ways = profiting first from illegal payroll padding and later from proceeds of a settlement.

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