Whistleblowers play an important role in our country and reveal government corruption or theft that robs money from our society. In fact, a little over ten years ago, Time Magazine named whistleblowers as its people of the year. Recently, a former Vice-President at Countrywide Financial blew the whistle on the company’s alleged fraudulent practices. Specifically, the former employee, who oversaw loan quality, alleged that the mortgage lender defrauded government backed mortgage finance companies (i.e., Fannie May and Freddie Mac) by selling and churning shoddy mortgage products and related securities that were not as good as portrayed. Not only will the whistleblower collect more than fifty million dollars, Countywide Financial’s current owner – Bank of America – will pay over 16 billion dollars in a penalty as part of a settlement and a company executive to pay 1 million dollars as a fine. Our New York Whisteblower Attorney counsels employees (current or former) and witnesses who are potential whistleblowers – contact our office and to confidentially learn your rights and options. As evidenced by this case, whistleblowers can collect substantial rewards while unmasking fraud.
The whistleblower filed federal lawsuits under the Federal False Claims Act and provided information to federal prosecutors. After intervention from the United States Attorney for the Southern District, the case went to trial. One the key allegations in the case was that Countrywide had a program called “the hustle” wherein employees were rewarded for selling loans including shoddy loans. The whistleblower alleged that the company “continued to push loan production to record levels in spite of clear signals that there were problems with early loan repayment performance.”
Bank of America is not the only company to pay a penalty for allegations related to the 2008 financial crisis. JP Morgan Chase agreed to pay 2 billion dollars and Citigroup agreed to pay 4 billion dollars.
While the amount expected to be collected by this whistleblower is substantial, it is not the highest award. In fact, it is over 40 million dollars less than what the IRS paid to a former banker at UBS who provided information on an alleged tax avoidance scheme. In that case, the whistleblower in that case collected over 100 million dollars.
A common misperception people have is that all alleged fraudulent conduct can form the basis for a complaint – that is not true. It is critical to seek counsel at an early stage. Different statutes apply depending on the alleged conduct. For example, there is a different process to file a whistleblower complaint to the IRS than for other alleged fraud. The process to pursue a claim can be a daunting process and while many of the statutes provide for anti-retaliation protection – some whistleblowers suffer adverse employment actions (e.g., harassment, demotion, etc.). To learn if you qualify as a whistleblower, your options and how to best protect yourself, contact our office at (800) 893-9645 for a confidential consultation.
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