• David Slarskey

Taking the Lid off of Corporate Fraud

I have recently posted about the options available to employees who become aware of unethical and fraudulent practices in the workplace, in particular with respect to government contracts or in publicly-traded companies.

On Friday, the Court of Appeals for the Second Circuit issued an opinion in Employees' Retirement System v. Green Mountain Coffee Roasters, which highlighted the kinds of facts and circumstances to which I was referring, i.e., employees' knowledge that public statements made by management were false and misleading. While management was telling the marketplace that inventory was down, demand up, and that the company had lots of room to grow (all positive indicators for the share price), in fact the company had excess stockpiles of inventory, was discarding product, concealing its backstock from internal auditors, and engaged in accounting shenangians to hide the facts.

I wrote a bit more extensively about the lawsuit and the allegations here. Reporting this kind of information -- which may be done anonymously, through counsel, to protect the employee -- can lead to substantial recoveries for the whistleblower.