Legal Question in Business Law in California

Re: unethical or illegal?

Yes, kickbacks are illegal. It is cheating the customer (the victim).

Cal. Penal Code � 641.3(c) provides that "commercial bribery is punishable by imprisonment in the county

jail for not more than one year if the amount of the bribe is one

thousand dollars ($1,000) or less, or by imprisonment in the county

jail, or in the state prison for 16 months, or two or three years if

the amount of the bribe exceeds one thousand dollars ($1,000)." Since the amount is over $1,000, your boss has committed a felony.

There are also specific laws relating to bribes and kickbacks in the health care, real estate, insurance, and financial industries; and within publicly traded companies.

If your boss has a boss, consider telling him or her, or the company's lawyer. By the way, who is approving your boss's expense reports, and are they complicit in the scheme? If you report the activity, and they fire you, you may have a free lawsuit for wrongful termination in violation of publc policy. After all, the crime is easily proved since there are credit card records and other written records of the transaction.

You could also report the activity to the police. If your company is big wnough to have a formal ethics policy, read it. Do not under any circumstances put yourself in a position where you could be accused of aiding or abetting the illegal activity, or of being a co-conspirator or an accessory, it's not worth it.

If the victim is a government agency, you might well be able to file a lawsuit under the False Claims Act and you would very likely be eligible for a cash "bounty" (plus your attorney fees).