Wiretap-Costs Whistleblower Fights for Credit

SAN FRANCISCO (CN) — A career prosecutor who blew the whistle on surging wiretap costs fought Wednesday to have the Ninth Circuit revive his fraud case against the nation's largest communications carriers.

John Prather was working for the New York attorney general's organized crime task force, and later for the Metropolitan Transportation Authority's Office of the Inspector General, in the 2000s when he noticed the cost of government eavesdropping surging wildly.

For telecoms, however, beginning a wiretap is as simple as flicking a switch. Assuming minimal labor involved on the part of the telecoms, Prather began to question why his government employers were paying such inflated invoices for wiretaps.

Prather filed his federal whistleblower complaint in San Francisco, but a federal judge tossed his claims in 2013 for failing to show that he was the "original source" of the information.

While Prather's appeal has been pending, the government has been pursuing similar claims against Sprint in the same court. If the claims stick and Prather achieves whistleblower status, he would be entitled to up to 10 percent of any funds the government recovers.

The courts have doubted so far, however, whether Prather's mere observations equate to knowledge of fraud.

Mark Haddad, an attorney for the telecoms with Sidley Austin, told the three-judge panel on Wednesday that Prather is being held to a provision of the False Claims scrapped in 2010 that says he must demonstrate direct knowledge of the fraud being alleged.

"He doesn't have direct knowledge of fraud," Haddad said. "He doesn't even have direct knowledge of overcharging."

Sitting by the panel by designation from Vermont, U.S. District Judge William Sessions seemed to side with Prather.

Sessions noted Prather's claim that he personally reviewed invoices from before and after a technological overhaul that made wiretaps possible.

"That review showed a fairly significant increase in the cost, but he knew it should be costing less," Sessions said.

Haddad denied that this makes a difference.

"What he doesn't know is why," the attorney said.

Haddad argued that the telecoms' costs actually rose after the upgrades.

The court also looked Wednesday at whether Prather's fraud disclosures to the Federal Communications Commission in 2004 were voluntary - another False Claims Act requirement.

The FCC had been seeking comment on the cost of the cost of Communications Assistance to Law Enforcement Agencies Act. Better known as CALEA, this 1994 provided telecoms with $500 million to update eavesdropping capabilities.

In tossing Prather's case three years ago, U.S. Distict Judge Charles Breyer had ruled that Prather's disclosures were involuntary because his supervisor had ordered him to make them.

Prather's attorney John Balestriere said Wednesday, however, that the supervisor had ordered Prather only to give the FCC information on CALEA implementation costs. Prather then asked the supervisor's permission - twice - to include information on the overcharges, making his fraud disclosure voluntary.

"He has been complaining for 17 years and used every opportunity he could to come forward," said Balestriere, an attorney with Balestriere Fariello.

In addition to challenging the dismissal of his case, Prather also wants to intervene in the government's case. Both matters went before the appellate panel Wednesday.

Sprint attorney Ed Barnage urged the panel to keep Prather out.

"He has no rights in the first case because he's not an original source, and he has no rights to recover in this case because he's not an original source," Barnage said.

The appeals are before Sessions and U.S. Circuit judges Marsha Berzon and Ronald Gould.

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