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Jan 24, 2023 by |

San Francisco Whistleblower Attorney: Mortgage Lender Settles False Claims Act Suit For $38.5 Million

ATTORNEY NEWSLETTER

Settlement Despite Government Attempt To Dismiss

Mortgage Underwriting Compliance Issues

Whistleblower Will Receive $11.5 Million Reward

Fraud against the government includes cases where a business is paid by the government despite the fact that the business has knowingly failed to comply with compliance regulations tied to any payments.  A case alleging this type of fraud is discussed below. Any individual with knowledge of fraud against the government is authorized to bring an action on behalf of the government to recover money paid out on fraudulent claims. See False Claims Act (FCA), 31 U.S.C. §§ 3729 et seq.  These cases are known as “qui tams” and the plaintiffs are referred to as “relators.” Relators can be rewarded 15-30% of the amounts and penalties recovered. 31 U.S.C. § 3730(d). Every year private individuals recoup more money for the government lost to fraud than the government itself does. Last year alone, of the $2.1 billion recovered by the government from wrongdoers, over 80% came from actions brought by private individuals against those businesses perpetrating the fraud. The majority of the fraud is perpetrated in the health care field.  Evans Law Firm, Inc. represents individuals in bringing qui tam actions against those who defraud the government in Los Angeles and throughout California, call us today at (415)441-8669 and we can help. Our toll-free number is 1-888-50EVANS (888-503-8267).

Recent Settlement By Mortgage Lender[1]  

In a recent settlement announced by the U.S. Department of Justice (DOJ), a mortgage lender has settled False Claims Act allegations for $38.5 million despite the Department of Justice wanting the case dismissed.  The suit was brought against the lender by its former underwriter alleging that defendant’s underwriting process had employees disregard Federal Housing Authority rules and falsely certify compliance with underwriting requirements. Relator further alleged that, because of the lender’s knowingly deficient mortgage underwriting practices, the government paid insurance claims on loans improperly underwritten by the lender.

“Lenders that knowingly cause the government to guarantee loans that are materially deficient put both homeowners and the public fisc [treasury] at risk,” Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division, said. “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.” 

The Relator pursued the case even after the Justice Department sought unsuccessfully to dismiss it over objections, a step the department has increasingly taken under a 2018 policy encouraging it to seek the dismissal of “meritless” cases. As an award, the Relator will receive $11.5 million as her share of the settlement, according to the Justice Department’s statement.

How A Qui Tam Case Begins

Qui tam cases begin with filing a complaint under the FCA in the federal district court where the allegedly fraudulent conduct occurred.  31 U.S.C. § 3730(b).  The complaint is filed confidentially under seal and the government has sixty days to review the allegations and decide whether to intervene.  This review period can be extended, and often times is, for a year or more as the government continues to investigate the allegations.  If the government decides to intervene, as in the reported case, 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 were fired or demoted as a result of blowing the whistle.  31 U.S.C. § 3730(h).

Contact Us

If you have credible information of healthcare fraud against the government here in San Francisco or elsewhere in California, 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 whistleblower cases, Ingrid also handles 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. is not involved in the case in any way.

 

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