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Archive for the 'Whistleblowers' Category

Wells Fargo Pays Out Again, This Time For Fraudulent Anti-Veteran Lending Practices

August 18th, 2017 at 9:08am

Banking giant Wells Fargo must pay over $100 million to settle allegations of fraud that included overcharging military veterans using the VA Home Loan to refinance their mortgages. The victims were not only veterans but U.S. taxpayers.

Brokers Victor Bibby and Brian Donnelly were the two whistleblowers in the lawsuit who sought to recover the losses that the federal government suffered when the loans it guaranteed loans defaulted. The two men sued Wells Fargo and seven other lenders to recoup losses; notably the federal government declined to join the qui tam lawsuit, which was filed under the federal False Claims Act, aka Lincoln’s Law (31 USC §§ 3729-3733.

The other banks are Bank of America Corp (BAC.N), Citigroup Inc (C.N), First Tennessee, JPMorgan Chase & Co (JPM.N), PNC Financial Services Group Inc (PNC.N) and SunTrust Banks Inc (STI.N). The total pay-out is $161.7 million.

Depending on whether the federal government offers to assist, the private person can receive a portion of the recovered damages, from 10% to 30%. If the government intervenes, the person bringing the lawsuit, the “relator”, receives between 15%-25%. If the government does not, the relator receives between 25%-30%. If the government intervenes and most of the information is already public, the relator is only entitled to 10%.

Read the full article, including Wells Fargo’s boilerplate “apology,” in

Steve Mnuchin’s Former Bank Pays $89 Million to Settle Reverse Mortgage Claims

May 19th, 2017 at 10:05am

Reverse mortgage company Financial Freedom of Austin, Texas, has agreed to pay $89 million to settle claims that it misused a federal home insurance program, which was under investigation by federal officials.

The payment closes a U.S. government investigation into its practice of allegedly accelerating home foreclosures without following the requirements of the Department of Housing and Urban Development requirements. Mnuchin led a group of investors that bought IndyMac Bank and its Financial Freedom unit in 2009. The investors realized a large profit when they reorganized IndyMac, based in Pasadena, Calif., as OneWest Bank.

Sandra Jolley, the Oxnard, California, consumer advocate and whistleblower, was awarded $1.6 million of the settlement, according to the U.S. Department of Justice, which announced the settlement Tuesday.

Read the original article in NBC News.


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

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.

© Copyright 2007-2018 Monique Bryher

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