NEW YORK (JTA) — A former employee is suing a New York county, saying she was penalized for reporting evidence of $40 million in Medicaid fraud among haredi Orthodox Jews.

In her lawsuit against Orange County, Nicole Latreille claims she was demoted and transferred earlier this year after reporting to the FBI evidence of massive fraud among the residents of Kiryas Joel, Hudson Valley News 12 reported.

Founded in the late 1970s inside the town of Monroe, Kiryas Joel is populated almost exclusively by Hasidic Jews affiliated with the Satmar sect.

READ: How to build an American shtetl: See Bloomingburg NY

An unidentified “county source” told News 12 that Latreille had been disciplined for alleged prejudiced comments she made that could interfere with the investigation. Latreille denied the source’s explanation.

“She was simply following the evidence that was available, and quite frankly she should’ve gotten an award rather than be disciplined,” said her attorney, Michael Sussman.

According to the Times Herald-Record based in Middletown, New York, the complaint says that Latreille was accused of acting “outside the scope of her work responsibilities” and suggests she was punished because her investigation “revealed corruption by persons associated with political allies” of County Executive Steve Neuhaus in Kiryas Joel.

In a statement issued Tuesday, county spokesman Justin Rodriguez called the lawsuit “baseless,” saying the Neuhaus administration “has prosecuted fraud at levels never seen before” and reports all suspected crimes to the District Attorney’s Office “regardless of location of the residence.”