Practice Areas

Whistleblower/Qui Tam

Finance, Banking and Mortgage Fraud

Financial institutions that receive federal funds may be subject to liability if the funds are received as the result of false information. For example, residential mortgages insured though the Federal Housing Administration (FHA) are backed by the federal government. Providing false information about the borrower or the subject property to qualify a mortgage for FHA insurance may violate the False Claims Act.

In a notable example, in February 2012, Bank of America agreed to pay $1 billion to resolve claims under the False Claims Act. The federal government alleged that the bank, through its Countrywide Financial subsidiaries, defrauded the FHA by recklessly and fraudulently underwriting loans to unqualified borrowers. This conduct involved originating mortgage loans that were based upon inflated appraisals, and resulted in hundreds of millions of dollars in damages to the FHA. Similarly, a whistleblower lawsuit against Citigroup claimed that the bank defrauded the government by falsely certifying that thousands of its loans qualified for FHA insurance. In February 2012, that case resulted in a $158.3 million dollar settlement.

Bonnie M. Smith

Whistleblower Attorney
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