Environmenmtal Fraud
Learn about the different types of environmental fraud.
Table of Contents
The United States spends billions to make sure that wildlife is protected, natural resources are preserved, and our energy comes from clean sources. There are several laws and government programs that can give rise to fraudulent activity.
Whistleblowers who report environmental fraud may be eligible to receive a share of the government’s recovery as a financial reward.
Here are some of the most common types of environmental fraud:
Misrepresentations about Natural Resource Extraction and Underpaid Royalties
This type of whistleblower case involves companies misrepresenting the quantity of oil, gas, or other resources extracted from public lands to underpay royalties owed to the government. By underreporting the value or volume of extracted resources, these companies can evade paying the correct amount in royalties, which may be considered a violation of the False Claims Act. Whistleblowers play a crucial role in exposing these fraudulent practices to recover funds that rightfully belong to the public.
False Representations to Avoid Environmental Fines
In this scenario, entities make false statements or provide misleading information to avoid paying fines or penalties related to environmental violations. These misrepresentations could be about compliance with pollution limits, waste management practices, or other regulatory standards. When a company falsifies compliance data to dodge environmental fines, it not only undermines enforcement but also jeopardizes environmental protection efforts.
Overcharging for Environmental Cleanup Projects
Whistleblower cases may also arise when contractors working on government-funded environmental cleanup projects overcharge for their services or inflate costs. Such fraud often involves billing for work that was never completed, charging for unnecessary tasks, or misrepresenting expenses. These actions violate the terms of government contracts and may fall under the False Claims Act, as the government is defrauded in the process.
False Representations of Compliance by Government Contractors
Government contractors working on environmental projects may falsely claim they are in compliance with regulations or contract terms. These misrepresentations could involve failure to meet environmental standards or fulfill key contract provisions. When contractors misrepresent their adherence to such requirements, whistleblowers can expose this fraud, which may also give rise to False Claims Act actions, ensuring that companies are held accountable.
Misrepresentations in ESG Disclosures by Securities Issuers and Investment Advisors
Companies or investment advisors may provide false or misleading information about environmental liabilities, sustainability risks, or climate-related factors. Misrepresentation in disclosures about environmental, social, and governance (ESG) factors can deceive investors, violating securities laws. These cases have become a focus for the Securities and Exchange Commission (SEC), which now actively enforces rules around ESG-related disclosures to ensure transparency and accountability in financial markets.
Fraudulent Claims for Renewable Energy or Conservation Tax Credits
This type of fraud occurs when companies or individuals wrongfully claim tax credits intended to incentivize renewable energy development or conservation efforts. By falsely asserting eligibility for these credits, fraudsters can undermine the integrity of government programs designed to promote environmental sustainability. Whistleblowers can report these fraudulent claims, helping to ensure that tax benefits are distributed fairly and for their intended purposes.
Violations of Wildlife Protection Laws
Companies or individuals who violate laws designed to protect wildlife, such as illegal hunting, habitat destruction, or trafficking in endangered species, may be subject to whistleblower claims. These violations can have serious ecological impacts, and whistleblowers can help bring these activities to light, ensuring that perpetrators are held accountable under applicable environmental regulations and laws.
