Whistleblowers and the Expanding Reach of Cybersecurity Enforcement under the False Claims Act

The Department of Justice’s Civil Cyber-Fraud Initiative continues to evolve, extending the reach of the False Claims Act (FCA) into new industries where cybersecurity is mission-critical. While the initiative initially focused on defense and technology contractors, enforcement now spans healthcare, higher education, and even private equity. These developments reflect a clear message from the DOJ: cybersecurity compliance is not a box-checking exercise but a binding legal obligation tied to the receipt of federal funds.

The False Claims Act, which dates back to the Civil War, has long been the government’s most powerful civil tool to combat fraud involving federal programs and contracts. Under the Civil Cyber-Fraud Initiative, it now serves as the primary mechanism to hold entities accountable for failing to protect federal data, misrepresenting cyber compliance, or concealing breaches. Contractors and grant recipients must take this new enforcement landscape seriously, as whistleblowers and investigators continue to bring cyber-related cases to light.

Additional False Claims Act Cybersecurity Settlements

In recent years, several major FCA settlements have expanded the boundaries of what constitutes “cyber fraud,” sending a strong message that every entity handling government data must uphold strict security standards.

Aerospace Company & Private Equity Owner (Aero Turbine, Inc. and Gallant Capital) – Settlement: $1,750,000 (2025)

In this groundbreaking case, the DOJ not only pursued the contractor but also its private equity owner. Aero Turbine (ATI) had an Air Force contract requiring compliance with DFARS 252.204-7012 and NIST 800-171 standards to protect Controlled Unclassified Information (CUI). DOJ alleged that ATI failed to implement those controls and that a Gallant Capital employee helped transmit export-controlled technical data to a foreign subcontractor, a major cybersecurity and export control violation. The settlement marked the first time a private equity firm was held jointly responsible for its portfolio company’s cybersecurity noncompliance. The outcome reinforced that owners and investors cannot turn a blind eye to cybersecurity failures—they, too, may face FCA liability if they play an active role in misconduct.

Illumina, Inc. – Settlement: $9,800,000 (2025)

Illumina, a biotech and medical device manufacturer, became the first company in its industry to face a cyber-related FCA case. The DOJ alleged that Illumina sold DNA sequencing devices to federal agencies with known software vulnerabilities that it failed to fix or disclose. The company had claimed compliance with NIST and ISO security standards, but those statements were false. Although no data breach occurred, the misrepresentation itself was material because it induced government agencies to purchase products that were not as secure as promised. A whistleblower, a former director, brought the issue forward after internal warnings were ignored, resulting in a $1.9 million award. The Illumina case highlights that cybersecurity misrepresentations can lead to FCA exposure even when no actual breach occurs and that product security claims are now part of the enforcement focus.

Georgia Tech Research Corporation – Settlement: $875,000 (2025)

Even academic institutions are not exempt from the reach of the Civil Cyber-Fraud Initiative. Georgia Tech’s research arm faced allegations of failing to implement mandatory cybersecurity controls on a Department of Defense (DoD) project. Whistleblowers claimed the university’s research lab waited three years to create a System Security Plan (SSP) and submitted false self-assessment scores to the DoD. DOJ intervened, and the university settled for $875,000, roughly double damages, with the two whistleblowers receiving about $201,000. The case was particularly notable because no cyber incident occurred; the violations were procedural and contractual. The DOJ emphasized that even well-regarded institutions must take cybersecurity obligations seriously when handling government-funded research.

Broader Enforcement Themes

The above cases reveal how the DOJ’s approach to cybersecurity enforcement has matured into a multi-industry effort. FCA cyber cases now involve a broad spectrum of misconduct—from failure to safeguard sensitive information to misrepresentation of compliance with security standards.

Several key lessons stand out:

No Actual Breach Needed. DOJ does not need to prove a data breach to bring an FCA action. The fraud lies in the false promise of compliance. When a contractor attests to cybersecurity standards it hasn’t met, the misrepresentation itself is actionable.

Whistleblowers Are the Spark. Every major cyber FCA case to date has been triggered by a whistleblower. Insiders—often cybersecurity professionals, engineers, or compliance staff are uniquely positioned to see where corners are being cut.

Broad Range of Violations. Misconduct can take many forms, including false certifications, failure to disclose known security flaws, or using unauthorized systems. Even skipping routine tasks such as software patching or antivirus updates can be treated as fraudulent if the contract requires those measures.

National Security and Privacy at Stake. The DOJ has repeatedly stressed that cyber fraud endangers not just taxpayer funds but also national defense and personal privacy. In several cases, investigators from multiple agencies—including the DoD, HHS, and NCIS worked jointly, underscoring the gravity of cybersecurity failures in government contracting.

Together, these principles show that cybersecurity compliance is now a front-line issue for both the DOJ and whistleblowers.

Whistleblowers: The First Line of Defense

Whistleblowers remain the foundation of the Civil Cyber-Fraud Initiative. The FCA’s qui tam provisions allow private individuals, known as relators, to file lawsuits on behalf of the United States when they believe a company is defrauding the government. Successful whistleblowers receive between 15% and 30% of the recovery and are protected from retaliation.

In the cybersecurity context, insiders often have technical expertise that enables them to detect issues others might overlook. Many try to address concerns internally first. When their efforts fail, they turn to the FCA.

• In Aerojet Rocketdyne, a former cybersecurity executive reported that his company had falsely claimed full compliance with DoD cybersecurity requirements. His information led to a $9 million settlement and a $2.6 million personal award.

• In Insight Global, a program manager revealed that employees were sharing unencrypted COVID-19 contact tracing data. The company settled for $2.7 million, and the whistleblower received roughly $500,000.

• In Georgia Tech, two IT professionals exposed their university’s delayed security planning and inaccurate compliance scores.

• In Illumina, a terminated employee exposed product vulnerabilities that were concealed from federal customers, sparking a $9.8 million recovery.

Each of these individuals took significant professional risks, but their actions ultimately protected taxpayer dollars and sensitive data. The DOJ has made clear that it depends on such insiders to identify knowing cybersecurity failures.

Consequences of Noncompliance

The repercussions for failing to meet cybersecurity obligations can be severe:

• Financial Penalties: The FCA imposes treble damages plus per-violation civil penalties, which can exceed $25,000 each. Settlements often reflect reduced penalties for cooperation, but full liability could reach several times the contract value.

• Loss of Contracts and Debarment: Contractors that violate cybersecurity clauses risk termination for default and debarment from future federal work—a devastating outcome for any business dependent on government contracts.

• Reputational Harm: Public DOJ press releases often highlight the risks companies posed to national security or privacy, damaging credibility with customers and investors.

• Remediation Requirements: Many settlements include enhanced monitoring, mandatory cybersecurity audits, or compliance training, forcing companies to fix their programs under government oversight.

• Industry Impact: These actions have ripple effects. Competitors often improve their own practices after seeing peers penalized, driving higher industry-wide cybersecurity standards.

The underlying message is clear: the cost of prevention is far lower than the cost of a False Claims Act violation.

A Call to Whistleblowers

The DOJ has publicly encouraged individuals with inside knowledge of cybersecurity fraud to come forward. For those who do, the law offers two key assurances: protection and reward. Whistleblowers can file their FCA cases confidentially under seal, giving the government time to investigate before notifying the employer. If the DOJ intervenes and secures a recovery, the whistleblower earns a share of the proceeds.

If you are an employee, contractor, or IT professional who has witnessed false statements about cybersecurity compliance, you may be eligible for both protection and compensation under the FCA.

Brown, LLC is a nationally recognized whistleblower law firm that represents clients across the country in False Claims Act and other whistleblower matters. Its attorneys include former FBI agents and prosecutors who understand both the technical and legal aspects of cybersecurity fraud. The firm provides confidential consultations and assists clients in safely disclosing wrongdoing to the government.

By stepping forward, whistleblowers not only protect national interests but also contribute to building a culture of accountability in cybersecurity. The Civil Cyber-Fraud Initiative has shown that individual voices can drive meaningful change, and insiders who speak up can be rewarded for their integrity.

Brown, LLC represents whistleblowers nationwide in FCA, SEC, CFTC, IRS, and other fraud-related cases. This article is for informational purposes only and does not constitute legal advice.