Paramjeet Malhotra v. Robert Steinberg

Paramjeet and Sunita Malhotra, a married couple, filed this qui tam action under the False Claims Act, 31 U.S.C. §§ 3729-3733 . The district court held that it lacked subject matter jurisdiction because the Act’s “public disclosure” bar applies. We are asked to decide whether a deposition taken by the Office of the United States Trustee triggered the bar and, if so, whether the Malhotras fall within the “original source” exception to the bar.

I

In 2006, the Malhotras sought bankruptcy protection under Chapter 11 after experiencing cash-flow difficulties in their real estate business. The bankruptcy court appointed Robert Steinberg as the trustee to administer the Malhotras’ bankruptcy estate. From their very first meeting with Steinberg, the Malhotras suspected he was corrupt'. They turned out to be right.

The Malhotras’ initial meeting with Steinberg took place at their home shortly after Steinberg had been appointed trustee. He showed up with a real estate agent named James Grace. Steinberg informed the Malhotras that he would be selling their home and other properties (which he oddly referred to as “my properties”) immediately and that Grace would be handling the…