ATTORNEY NEWSLETTER
Former Mortgage Underwriter Blows Whistle
Allegations Of False Mortgage Eligibility Certifications
Realtor Will Receive $11.5 Million Reward
The False Claims Act (FCA), 31 U.S.C. §§ 3729 et seq., allows individuals with knowledge of fraud against the federal government to initiate actions on behalf of the government to recover government funds paid out as a result of fraudulent claims. 31 U.S.C. §3730(b). In Fiscal Year 2021, private citizens helped the government recover $1.6 billion in cases of fraud against the government. The citizens, known as “relators,” brought the cases, referred to as “qui tam” cases,” under the FCA. If the government recovers, these individuals are eligible for rewards. 31 U.S.C. § 3730(d). Relators of fraudulent conduct are often employees, or former employees, of the business engaging in the fraud. Each year relators in FCA cases recover billions of dollars for the government. Any business billing the government for products or services is subject to government regulation affecting that business and its billing practices for government work, and is also subject to the fines and penalties of the FCA. False certification of eligibility for government funds is one significant source of government fraud, as the reported case below illustrates. If you have credible information of government fraud in San Francisco or elsewhere in California, call us today at (415)441-8669 and we can help. Our toll-free number is 1-888-50EVANS (888-503-8267).
Mortgage Provider Settles FCA Allegations For $31.5 Million
In a recent settlement announced by the U.S. Department of Justice,[1] a mortgage company has agreed to pay $38.5 million to resolve allegations it violated the False Claims Act by improperly originating and underwriting mortgages insured by the Federal Housing Administration (FHA). The settlement announced today resolves allegation made in a lawsuit filed and litigated by a former mortgage underwriter under the qui tam or whistleblower provisions of the False Claims Act.
In her lawsuit filed in the Northern District of California, relator alleged that from January 2008 through April 2017, defendant had an underwriting process that allegedly led employees to disregard FHA rules and falsely certify compliance with underwriting requirements. Relator further alleged that, as a result of defendant’s knowingly deficient mortgage underwriting practices, the government paid insurance claims on loans improperly underwritten by the company.
“Lenders that knowingly cause the government to guarantee loans that are materially deficient put both homeowners and the public fisc at risk,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The settlement announced today is a result of the relator’s efforts to develop this case in litigation and complements the department’s actions to prevent abuse of government programs designed to foster home ownership.” Under the terms of the settlement, defendant will pay $38,500,000 to the United States. The relator will receive $11,511,500 as her share of the settlement proceeds.
The Basics Of A Qui Tam Case
Qui tam cases begin with filing a complaint in the federal district court where the allegedly fraudulent conduct occurred. 31 U.S.C. § 3730(b). The complaint is filed under seal. The government has sixty days to review the allegations and decide whether to intervene. This review period can be extended. If the government decides to intervene, the government essentially takes over the litigation. 31 U.S.C. § 3730(c). If the government decides not to intervene, the relator has the right to continue the litigation on his or her own. If the relator continues the litigation alone, he or she receive a larger percentage of the amount the government eventually recovers. 31 U.S.C. § 3730(d). The relator may also pursue claims for wrongful retaliation against the defendant if the relator was fired or demoted as a result of blowing the whistle. 31 U.S.C. § 3730(h).
Contact Us
If you have credible information of government fraud call Ingrid M. Evans at (415) 441-8669, or toll-free at 1-888-50EVANS (888-503-8267) or by email at <a href=”mailto:info@evanslaw.com”>info@evanslaw.com</a>. In addition to FCA and CFCA whistleblower cases, Ingrid and Evans Law Firm, Inc. also handle bank fraud whistleblower cases under FIRREA/FIAFEA, commodity trading and securities fraud under the Commodities Futures Trading Commission Whistleblower Program and the Securities and Exchange Commission Whistleblower Program, and tax fraud under the Internal Revenue Service Whistleblower Program.
[1] Evans Law Firm, Inc. was not involved in the case in any way.
