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Archive for the 'Whistleblowers' Category

Appraiser Blocked by Court from Collecting Whistleblower Reward

December 3rd, 2015 at 12:03pm

The appraiser who was the whistleblower on the Mutual Bank of Harvey has been blocked by a federal judge from receiving any of the proceeds of the case as a relator.

Kenneth Conner worked for the bank from 2000-2007 and first noticed and pointed out the fraud to his superiors at the bank. They told him they were aware of the appraisal values and to sign-off on them anyway; he was fired in 2007.

In June 2011, Conner filed suit against the bank, it’s owners, officers and some members of the board, as well as Oakbrook Terrace-based Adams Appraisal Corporation. The federal government declined to intervene in the suit, but the FDIC did, demanding $130 million in damages from the Veluchamy family, which owned 95% of the bank’s shares.

U.S. District Judge Sharon Johnson Coleman has blocked the bid of a former appraisal reviewer who blew the whistle on alleged fraud at a failed suburban bank from collecting as much as a quarter of any settlement the directors of the bank may reach with the Federal Deposit Insurance Corporation, upholding the ruling of another judge who ruled that “the FDIC did not constitute the government as contemplated” in the law, and therefore “Conner did not have a legally protectable interest in any settlement money that the FDIC recovered in that action.”

Read the original article in CookCountyRecord.com

Whistleblowers victorious in qui tam lawsuits against BofA, Fifth Third for appraisal fraud

November 5th, 2015 at 11:18am

Two qui tam lawsuits filed by the U.S. Department of Justice (USDOJ) against Fifth Third and Bank of America have recently been settled.

George Mann, the former chief appraiser for Fifth Third, had filed a whistleblower lawsuit against his employer, which has resulted in the bank agreeing to pay almost $85 million in settlement for fraudulent appraisal practices. The lawsuit alleged that “… fraudulent and misleading appraisals were used by Fifth Third to qualify for funding from the Troubled Asset Relief Fund (TARP), the Federal Deposit Insurance Corporation (FDIC), Fannie Mae, Freddie Mac, and other federal funding and securitization programs.” The $85 million compensates the government for over 1,400 loans that were insured through the FHA loan program and were later discovered to be defective.

Earlier, Kyle Lagow, of Countrywide, received $14 million in a whistleblower case that led to a $1 billion settlement between Bank of America (BoA) and the USDOJ, and Robert Madsen, who received $56 million for his part in a $16.65 billion settlement, also with BoA.

Read the original article in Mortgage News Daily.

Countrywide Whistleblower to Get $57 Million

December 22nd, 2014 at 1:32pm

There is no category of businessperson I admire more than the whistleblower. Without them, our country would be even more corrupted by the acts of large corporations and our citizens would be the victims of that corruption. So it gives me a great deal of satisfaction to post the following story, published in DSNews.

Edward O’Donnell, a former executive with  Countrywide Financial Corp., will be getting $57 million for the key role he played in the government recovering more than $15 billion against Bank of America.

O’Donnell filed two whistle-blower lawsuits under the False Claims Act: the first having to do with Countrywide’s sale of faulty mortgage-backed securities to Fannie Mae and Freddie Mac through a program known as the High Speed Swim Lane (HSSL, or “Hustle”) (see this report from Bloomberg News). That suit, filed in 2012, resulted in the government negotiating a settlement with Bank of America, which bought Countrywide, for $1.27 billion.

The second suit O’Donnell filed against Countrywide resulted in a record $16.65 billion settlement with Bank of America with the government in August 2014.

Bank of America bought Countrywide for $4 billion in 2008. It probably doesn’t look like such a good investment anymore.

Zillow the Target of Two Employee Lawsuits

December 1st, 2014 at 10:19am

Orange County resident and former Zillow employee Ian Freeman has filed a federal lawsuit against Zillow. His attorney, Mark Geragos, is seeking class-action status on the behalf of Freeman and at least 120 of Zillow’s hours “inside sales consultants,” alleging they were forced into working early, late and through lunch breaks without pay. The amount of overtime in dispute is $5 million.

Freeman is alleging that Zillow’s time timekeeping system was automated to record employee’s hours as 8 a.m. to 4 p.m., whether or not the employee worked more actual hours.

A current Zillow sales associate named Ashley Boehler has filed a second lawsuit claiming that he was “written up, given poor work reviews, had lucrative sales accounts stripped from him and given to others and was micromanaged in retaliation for exposing credit card fraud, forged contracts and the use of unlicensed agents to consult with clients.” Boehler further claims he was harassed after Zillow’s upper-management violated a promise to keep his name confidential.

Read the original article in the OC Register.

Is Eric Holder a Traitor to the People and a Shill to the Banks?

November 18th, 2014 at 9:49am

If you have time – maybe a long coffee break – you may want to read this fascinating article in Rolling Stone about the settlement between Attorney General Eric Holder, “his” Department of Justice and how time-after-time he has allowed banks that mislabeled and sold mortgage-backed securities to get off-the-hook by paying monetary fines.

This article shows that the upstart Occupy Movement has had some effect on President Obama, but still not enough to get meaningful justice for homeowners and institutional investors, both of which were financially beat-up by the banks. It reveals that the primary banker who is the focus of the article, Jamie Dimon of Chase Bank and much of upper-management, allegedly knew Chase was packaging subprime securities as “Alt-A” (a higher-quality category) and getting rid of them before the borrowers defaulted, saving Chase billions but again causing significant losses to the credit unions and small financial institutions that purchased them, not knowing these shoddy mortgages would blow-up in their faces.

Besides the research performed by Rolling Stone writer Matt Taibbi, much of the information comes from his interview with former Chase transaction manager Alayne Fleischman, an attorney by profession. Ms. Fleischman tells the actual story of how Jamie Dimon and Chase Bank wiggled out what she termed “criminal fraud” and how almost every government agency that should have investigated this and other mega-bank misdeeds (think: SEC) either dropped the ball, aided in the cover-up or dragged their feet to allow the statute of limitations to expire on prosecutions.  A reluctant whistleblower, Ms. Fleischman is the model for the ethical behavior so devoid in most of the banks and the government agencies charged with protecting Americans.

How much do you want to bet that Eric Holder is going to end up working for his banking friends?

JPMorgan Chase Whistleblower Gets $63.9 Million

March 19th, 2014 at 5:51pm

Keith Edwards, a former assistant vice president supervising a government insuring unit for JPMorgan, will be paid $63.9 million for providing the information that led to the banking giant’s agreement to pay the U.S. government $614 million. JPMorgan also promised (don’t hold your breath) to change the procedures and oversight that resulted in it being charged with defrauding the government into insuring toxic home loans.

The settlement was filed with the U.S. District Court in Manhattan and besides indicating the amount paid to Edwards, included an admission by JPMorganthat for over a decade it had submitted thousands of mortgages to be insured with the FHA and VA that did not qualify for guarantees by the government. The bank also admitted that when its own internal auditing turned up these problems, it did not inform the agencies.

Keith Edwards originally filed his lawsuit in January 2013 under the False Claims Act. His attorney, David Wasinger, also represented Edward O’Donnell, whose tips regarding defective mortgages by Countrywide led to a verdict against Bank of America in October 2013, for which the government is seeking $2.1 billion in penalties.

The case is U.S. ex rel. Edwards v. JPMorgan Chase Bank NA et al, U.S. District Court, Southern District of New York, No. 13-00220.

Read the original article in MSN Money.

Whistleblower Lawsuit Results in $614 Million Settlement by JPMorgan Chase

February 6th, 2014 at 7:53am

In yet another settlement with the federal government, JPMorgan Chase & Co has agreed to pay $614 million to the U.S. government. In a rare admission, the bank acknowledged it had defrauded the Federal Housing Administration and the Department of Veterans Affairs by underwriting sub-standard mortgage loans that were ineligible for insurance by those agencies. When losses from the sub-standard loans occurred, both agencies – meaning taxpayers – were required to cover them.

The case began when whistleblower, Keith Edwards sued JPMorgan in January 2013 under the False Claims Act, which allows individuals to sue government vendors for defrauding taxpayers. Edwards worked with Preet Bharara, the U.S. Attorney in Manhattan, whose office joined the lawsuit.

Similar allegations have already resulted in settlements with Bharara’s office with Citigroup Inc. and Deutsche Bank AG. The U.S. Attorney is still pursuing $2.1 billion in penalties from Bank of America after a jury decided it was liable for fraud with respect to the mortgages sold by its Countrywide unit.

Read the original article in the Chicago Tribune.

New York Judge Rejects Wells Fargo Motion to Dismiss U.S. Lawsuit of Fraud

September 27th, 2013 at 3:16am

In a surprise defeat to Wells Fargo, U.S. District Judge Jesse Furman in Manhattan has rejected the bank’s motion to dismiss the U.S. Attorney’s lawsuit accusing it of fraud in the sale of mortgages to HUD.

Judge Furman is following the decisions of his fellow judges on the Manhattan federal court, Jed Rakoff and Lewis Kaplan, in cases they are hearing against Bank of America Corp and Bank of New York Mellon Corp., respectively. He agreed with the interpretation of the U.S. Department of Justice’s interpretation of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). FIRREA was enacted following the savings-and-loan meltdown in the mid-1980s and gives the government the right to sue for fraud when a federally-insured financial institution is involved.

The lawsuit was brought by then U.S. Attorney Preet Bharara in Manhattan in October 2012. Bharara cited Wells Fargo’s alleged “longstanding and reckless trifecta of deficient training, deficient underwriting and deficient disclosure, all while relying on the convenient backstop of government insurance.”

Wells Fargo had argued that the FIRREA claim should be dismissed because the only institution affected by its conduct was itself.

Trial began earlier this week in the Bank of America case being heard in front of Judge Rakoff. In that case, the government is accusing the second-largest U.S. bank of violating FIRREA through the fraudulent sale of risky loans to Fannie Mae and Freddie Mac. Read more by clicking on the link to this post on the California Real Estate Fraud Report.

In 2012, the government settled False Claims Act mortgage cases for $1 billion with Bank of America, $202.3 million with Deutsche Bank AG, $158.3 million with Citigroup Inc and $132.8 million with Flagstar Bancorp Inc.

The case is U.S. v. Wells Fargo Bank NA, U.S. District Court, Southern District of New York, No. 12-07527.

Read the original article in Reuters.

Whistleblower Finally Receives His Reward for Reporting Countrywide Appraisal Fraud

July 16th, 2012 at 9:26am

Kyle Lagow is a hero and now, after suffering for his integrity, he’s about to be rewarded for it.

Lagow was formerly an appraiser for subprime mortgage lender Countrywide Financial. He had reported two areas where he was sure there was appraisal fraud:

First, LandSafe, Inc., a subsidiary of Bank of America, had been pressuring both in-house and independent contractor appraisers to inflate the values of properties, not only to ensure that sales closed, but to increase commissions for loan officers.

Second, Lagow was certain that homebuilder KB Home, which was in a joint venture with Bank of America, cherry-picked appraisers who would cooperate with inflating home values, also appraisal fraud.

Lagow emailed former Countrywide CEO Angelo Mozilo after his supervisors failed to address his concerns. Mozilo assigned Countrywide’s COO, Jack Schakett, and its chief compliance officer, Richard Wentz to look into the matter but they replied there was no basis for Lagow’s complaint after “investigating” it.

Six months after being fired in November 2008, Kyle Lagow heard about a False Claims lawsuit against KB Home being filed on behalf of home buyers by the Seattle-based law firm of Hagens Berman. He found out he had a whistleblower‘s case, filed his own lawsuit and later was interviewed by prosecutors in the U.S. Attorney’s Office in the Eastern District of New York. Investigators not only verified there had been appraisal fraud but also that Countrywide had had issues in its underwriting of FHA loans (loan which allow consumers to purchase a home with only 3.5% down-payment).

Lagow’s share of the settlement of the whistleblower case against Bank of America, which purchased Countrywide in 2008, is $14.5 million before taxes and legal fees. After being blacklisted as an appraiser and suffering severe financial repurcussions, he certainly deserves it.

Bank of America must pay $500 million to the Federal Housing Administration (that’s YOU, the taxpayer) as restitution and fund a loan modification program for Countrywide borrowers whose loan balances exceed the worth of their properties.

Read the original article on the Linesch Law Firm website.

CitiMortgage Employee Sues Her Employer – and Wins Big

May 31st, 2012 at 11:00pm

Sherry Hunt, a 55-year old Missouri woman who joined CitiMortgage in 2004 as a vice-president in order to oversee its acquisition of loans underwritten by other banks, has struck gold for making honesty her first priority.

Hunt’s job was to audit the outside loans for fraud or other irregularities. In the mid-2000s, the hottest commodity was securitized mortgages and CitiMortgage, which was the sixth biggest lender at the time, was buying loans at breakneck speed. Before selling the mortgages to investors or vouching that they were eligible for government mortgage insurance, the loans had to be reviewed for complete signatures and documentation, the latter of which had to be verified. Citi’s guarantee to its investors was serious: it promised to pay on loans if the borrowers defaulted.

In March 2011, Hunt and another employee were ordered by Citi executive Jeffery Polkinghorne to lower the amount of loans they were classifying as defective – or else (bank fraud).  Hunt refused and sued Citigroup in Manhattan federal court under the federal Whistleblower’s Act. Her lawsuit, which accused the lender of violating U.S. home mortgage regulations, attracted the attention of the U.S. Justice Department, which joined the suit because Citigroup had accepted $45 billion in bailout (TARP) money from both the U.S. government and the Federal Reserve. Citigroup not only did not challenge her allegations, it did not defend itself in court and agreed to pay $158.3 million to settle the case. Of that amount, Sherry Hunt will receive $31 million.

Read the original article in Businessweek.

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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