Utah offers big reward to blow the whistle on financial scams

SALT LAKE CITY -- The Beehive State is one of two in the nation with a “whistleblower” law, allowing the state to pay out rewards to people who help uncover any kind of financial fraud.

Only one person had collected on a reward since the law was enacted in 2011. Lamond Syphus, a financial advisor in St. George, received a $15,000 check for reporting such criminal activity in 2014.

Syphus was meeting with a new client, an 88-year-old widow, who had invested $100,000 with Richard Loveday, a man she considered a friend.

As Syphus pushed for information, he got more suspicious it was a scam.

“I just started to feel like something was a little bit fishy,” Syphus said.

He reported it to the Utah Division of Securities and an investigation began into what Loveday was really doing with the money.

“Within 30 days of the first $70,000 hitting his account, it’s all been spent,” said Keith Woodwell, Director of the Utah Division of Securities.

Woodwell said the widow's money was going to personal expenses and taken as cash.

Loveday was found guilty of two felonies and deported to Canada.

Because the case was caught early in the scam, the state was able to recover the $100,000 and return it to the victim. For being a whistleblower, Syphus was awarded $15,000.

Early detection is a big reason why the whistleblower law was enacted. Woodwell said typically, they don’t uncover fraud until all the money is gone.

It makes it nearly impossible to recover any funds for the victims. When whistleblowers come forward, the odds go up that money will be recouped.

“We were more than happy to pay that whistleblower award to Lamond Syphus because it’s a case we wouldn’t have known about,” Woodwell said.

Two thresholds have to be met for a whistleblower to be eligible for an award. The case has to reach some form of prosecution or administrative action and at least $50,000 has to be recovered.

The award is based on how critical the whistleblower’s information was to the case as determined by the Utah Division of Securities Commission. By law, it can be up to 30 percent of the money recovered.

Since the law was enacted, Woodwell said, roughly 80 cases have been reported by whistleblowers, and 15 to 20 have reached prosecution.

However, Woodwell said the law is working. He expects two upcoming cases, still in the investigation phase, to result in awards.