The financial crisis of 2008 was caused in large part by “too big to fail” banks recklessly offering subprime mortgage loans. Subprime means that the people who were taking the loans were unlikely to be able to pay them back. Large tranches, or groups, of these loans were bundled and sold to banks across the country as investments; unfortunately, we now know that they were horrible investments with a high likelihood of mass default. The banks made these risky loans without fear because there was actually very little risk for them, as the Federal Housing Administration (FHA) operated a program insuring these mortgage-backed securities in case they failed. As a result, the U.S. government took the brunt of the financial damage for the banks’ recklessness, but as more information came to light, it became increasingly clear that the banks had not followed government standards regarding how mortgage loans were made.
As you likely know from other blog posts I have posted, if you knowingly sell the government a product that does not meet government specifications—whether it is a missile or mortgage-backed security—you are violating the False Claims Act, a 150-year-old law written to prevent war profiteering. Attorneys for whistleblowers and the U.S. Department of Justice have used the False Claims Act to pursue cases against banks and mortgage-bundling institutions for misrepresenting the toxic loans that the U.S. government eventually insured.
These fiscal crisis cases result in billion-dollar settlements and whistleblowers can receive 15% to 30% of any recovery the government makes after prosecuting their case. The rich bounty program and robust legal prohibitions against retaliation are aimed at enticing employees with insider financial information regarding fraud to take the risk of reporting it to the government. There have been several massive settlements against mortgage originators in the last few years:
Deloitte & Touche LLP settled a case this year for $149.5 million for failing to adhere to proper auditing standard and failing to detect fraud in its audits of a mortgage bundling bank.
Branch Banking & Trust Company paid $83 million in its settlement with the Department of Justice to settle a claim that continued to market loans to the FHA after it knew that they were of a lower quality than they had advised the government.
JPMorgan Chase paid $614 million for originating and underwriting non-compliant mortgage loans that were submitted to the federal government for insurance coverage.
Wells Fargo paid $1.2 billion for knowingly certifying mortgage loans for FHA insurance that did not meet the insurance specifications required by the federal government.
Cases like these highlight the need for those who work inside the finance, banking, and mortgage loan industry to step forward and report corporate efforts to defraud the U.S. government. These banks victimized the people of the United States, and only the bravery of whistleblowers can make financial remediation possible.
What Should You Do if You are Considering a Whistleblower Claim?
Do you know about fraud occurring against the government? Are you considering filing a whistleblower case? The reward for submitting a successful claim can be massive. But you will only receive this sort of reward with the help of an experienced False Claims Act attorney. The United States Department of Justice receives thousands of potential whistleblower claims each year, and only those that are reported in a way that triggers their interest are investigated. Whistleblowers who notice that a company is failing to comply with relevant contract terms while certifying loans with the Government can contact Barrett Law now at (800) 707-9577.
Experienced whistleblower lawyer Barrett can provide you with the advice you will need to file a successful qui tam case. Having expert legal advice by your side can mean the difference between receiving your share of a whistleblower reward and losing your career and livelihood. Call us today.
