Prosecutor Accusing Sprint of Swindling Feds Can’t Intervene in Suit

SAN FRANCISCO (CN) – A career prosecutor who accused Sprint of swindling the federal government out of millions of dollars in surveillance services suffered a stinging loss when the Ninth Circuit ruled he couldn’t intervene in the government’s lawsuit against the telecom.

Prosecutor John Christopher Prather did not have a “significantly protectable interest” in the government’s False Claims Act suit against Sprint, a three-judge appeals panel ruled Friday, and so he had no right to intervene. The court also found that Prather was not entitled to a share of the settlement in that case just because he had filed a related qui tam – or whistleblower – suit in 2009, which the same panel ruled in February was jurisdictionally barred.

“In sum, Prather cannot obtain a monetary bounty under the FCA on his jurisdictionally barred claims, whether in the action he brought as a qui tam plaintiff … or, as he attempts to do here, by joining a related FCA action brought by the government after the dismissal of his qui tam action,” U.S. Circuit Judge Marsha Berzon wrote for the court in a 20-page opinion.

While working for the New York Attorney General’s Organized Crime Task Force and the Metropolitan Transportation Authority’s Office of the Inspector General in the 2000s, Prather said he noticed the cost of government wiretapping services surging wildly.

Prather claimed that before the mid-1990s, starting a wiretap entailed a lot of work for the telecoms – namely, attaching a bugging device to a telephone and setting up a separate line on which law enforcement could listen to conversations. But the advent of cellphones meant that telecoms had only to flip a switch to start a wiretap, he said.

The reduced labor should have lowered costs, Prather argued – but instead, the telecoms began charging law enforcement agencies, including the FBI and the Justice Department, more. In fact, Prather estimated that the fees were 10 times what they should have been.

The prosecutor grew suspicious, filing a whistleblower suit in 2009 under the FCA against Sprint, AT&T, Verizon and two other phone companies. The government chose not to intervene in the case.

U.S. District Judge Charles Breyer dismissed the suit in 2013 because Prather wasn’t the original source of the fraud allegations – an FCA requirement before the law was amended in 2010, a year after Prather sued. The Ninth Circuit affirmed Breyer’s finding following a contentious September 2016 hearing.

While Prather’s appeal was pending, the government filed its own FCA suit against Sprint, accusing the telecom of overcharging it by $21 million. Prather moved to intervene, arguing that he had a right to a share of any settlement.

Breyer denied the motion in 2014, ruling that Prather had no standing to intervene in the government’s suit, since his own suit had been dismissed.

Sprint settled with the government the following year for $15.5 million.

On Friday, the Ninth Circuit said that whether Prather had a significantly protectable interest in the government’s case to intervene depended on whether he would have been entitled to an award in his whistleblower suit if the government had intervened. Backing Breyer’s ruling, the court said government intervention in the qui tam suit would not have entitled Prather to an award.

Citing the Supreme Court’s 2007 decision in Rockwell International Corp. v. United States, the panel nonetheless found that even if the government had intervened in the qui tam case, Prather would not have been entitled to a recovery, and so lacked a significantly protectable interest in the government’s case against Sprint.

In Rockwell, the Supreme Court ruled that government intervention couldn’t override an individual’s failure to qualify as an original source under the FCA.

“Prather cannot obtain a monetary award due to the government’s pursuit of an ‘alternate remedy’ to a proceeding in which he could not possibly have obtained any remedy,” Berzon said of the government’s suit against Sprint.

In its decision, the court also addressed the fact that Sprint settled the government’s case in 2015, while Prather’s appeal to intervene was ongoing. The court found that the settlement didn’t moot his appeal because reversing the lower court could give him “a possible avenue to some remedy.”

U.S. Circuit Judge Ronald Gould and U.S. District Judge William Sessions III, sitting by designation from the District of Vermont, joined the panel.

Prather was represented by John Balestriere of Balestriere, Fariello & Abrams in New York; the government by Justice Department Attorney Kimberly Friday in San Francisco; and Sprint by Ed Barnidge with Williams & Connolly in Washington.

They did not return requests for comment Monday.

Justice Department spokesperson Abraham Simmons also declined to comment on the ruling, and a spokesperson for Sprint did not return a request for comment.

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