I might be straying a bit from our usual debtor-creditor fare with this post, but I hope you’ll indulge me–there is a small bankruptcy hook. The President’s newly created $1.8 billion Anti-Weaponization Fund has been the subject of substantial political uproar. It’s not clear, however, that Congress is going to do anything to prohibit or limit the fund.  Yet there might already be an existing legal tool that would make it very risky for anyone to accept a payment from the fund: the federal False Claims Act.

The False Claims Act originated during the Civil War as a tool for combating government contractor fraud, but it has since expanded to cover government benefit fraud as well. The language of the statute, however, is arguably broad enough to encompass Anti-Weaponization Fund payments. The statute prohibits “knowingly present[ing], or caus[ing] to be presented, a false or fraudulent claim for payment or approval” or a conspiracy to do so. There are fearsome treble damages for a violation and the action can be brought either by the federal government or by a relator—that is a private person acting in the name of the government—in what is known as a qui tam action. That’s short for “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which means “Who sues on behalf of the King, as well as for himself.” (Or in this case, on behalf of the no-Kings, it would seem…) If successful, the relator gets a bounty of 15%-30% of the recovery, creating a powerful incentive for private parties to bring qui tam suits.

So what’s the False Claims Act theory here? The idea is that the entire Anti-Weaponization Fund is a scheme to defraud the government because of the unconstitutionality of the Fund’s structure. It’s done knowingly because of the reckless disregard for its constitutionality. Therefore, any payment from the fund would be part of that fraudulent scheme, leaving the recipient potentially liable for treble damages (plus their own court costs and interest at the federal judgment rate). That could be more than $5.4 billion in liability, if the fund were to pay out every cent. And the President, the Acting Attorney General, and whoever is on the committee to administer the Fund would have their own treble damage civil liability for a false claims conspiracy.

This legal theory takes the False Claims Act places it hasn’t been before, using it to challenge an entire federal payment program as knowingly unconstitutional and therefore fraudulent. Would a court go for that? That’s the big question here.

But if you think the legal theory is plausible, notice what it accomplishes. First, it solves the standing problem that might bedevil other attempts to litigate the constitutionality of the Anti-Weaponization Fund. Qui tam actions avoid the standing problem by suing individuals (including officers of the United States) in the name of the United States. (Expanding the scope of qui tam actions in general might be a good constitutional safeguard.) Second, qui tam liability is civil liability, so it is not pardonable. And, then there’s that promised bankruptcy hook: False Claims Act liability is not dischargeable in bankruptcy.

The possible catch (as far as I can see) is that if the government chooses to intervene in the qui tam suit, then it can dismiss the case, although it will have to show a reasonable basis for doing so. The current Department of Justice would presumably attempt to do so, although it would raise an interesting conflict problem if the Acting Attorney General were a personal defendant. But remember that a False Claim Act suit can be filed six years after the claim (and up to 10 under a discovery rule). So it might well be a different administration evaluating things.

Would this theory work? I can’t say for certain, and I’m not a False Claims Act expert, so there might be nuances I’ve missed. But there might be enough to it to pose a credible threat to anyone who gets a payment. Would you risk getting the payment if it meant that you could be sued for non-dischargeable treble damages by any private bounty-seeker or the government itself in the six years after the payment? For small payments, the answer is surely yes, but once the payments hit the tens of millions, the calculus might start to change.

I’d love to hear (respectful) thoughts on the plausibility of the False Claims Act theory in the comments.