Tuesday, November 20, 2012

Six banks have paid $162 million to settle whistleblower lawsuit alleging hidden fees charged on veterans’ loans

Five more banks and mortgage companies have agreed to pay the federal government a total of $116.7 million to settle a whistleblower lawsuit that alleged the banks illegally charged veterans hidden fees on refinanced home loans backed by the Veterans Administration.

The latest settlements bring the total amount recovered so far from the whistleblower lawsuit to $162 million.

The mortgage lenders that settled the whistleblower lawsuit and the amounts they paid are: Countrywide Home Loans Inc. ($45 million), PNC Bank ($38 million), First Tennessee Bank ($16 million), SunTrust Mortgage ($10.2 million) and CitiMortgage ($7.5 million).

In March, JPMorgan Chase agreed to pay $45 million to settle similar claims against it.

The whistleblower lawsuit, which is being litigated by three private law firms on behalf of the federal government, will proceed against Wells Fargo and Mortgage Investors Corporation ("MIC"). A federal district court in Atlanta on Nov. 19 rejected motions by Wells Fargo and Mortgage Investors Corp. to dismiss the “qui tam” lawsuit.

The lawsuit was filed in 2006 in federal district court in Atlanta, Georgia, by Victor Bibby and Brian Donnelly. The lawsuit was brought under the federal False Claims Act, which allows whistleblowers to sue companies that are defrauding the government and collect recoveries on the government’s behalf.

Friday, November 16, 2012

SEC received 3,000 whistleblower tips in the past year.

In the past year, the Securities and Exchange Commission (SEC) received over 3,000 whistleblower tips, according to the SEC’s 2012 “Annual Report on the Dodd-Frank Whistleblower Program” released this week.

That is an astonishing number of tips and shows how successful the two-year-old SEC whistleblower program is. The annual total averages out to roughly 12 tips each business day.

"In just its first year, the whistleblower program already has proven to be a valuable tool in helping us ferret out financial fraud,” said SEC Chairman Mary L. Schapiro in a press release. “When insiders provide us with high-quality road maps of fraudulent wrongdoing, it reduces the length of time we spend investigating and saves the agency substantial resources."

Whistleblower tips to the SEC came from all 50 states and from 49 countries. California was the U.S. state where the most tips originated (435). New York followed closely with 246. The top four outside countries with the most tips were the United Kingdom (74), Canada (46), India (33) and China (27).

The most common complaints were related to corporate disclosures and financials (18.2 percent), offering fraud (15.5 percent) and manipulation (15.2 percent).

The SEC whistleblower program was created under the Dodd-Frank Act in 2010. If the SEC and other government authorities recover more than $1 million based on the whistleblower’s information, the whistleblower is entitled to 10 percent to 30 percent of the recoveries.