Whistle-Blower Bounties May Encourage Residential Mortgage-Backed Securities Fraud ReportingAndrew W. Schilling
The False Claims Act, 31 U.S.C. § 3729, which has been around since the Civil War, permits whistle-blowers with information about fraud perpetrated upon the U.S. government to bring civil fraud suits on behalf of the United States and share in the recovery. While much attention is paid to the multibillion-dollar payments the Department of Justice has recovered in suits against big pharmaceutical companies, whistle-blowers are increasingly targeting financial services companies with FCA qui tam suits. For example, when the DOJ announced the settlement with five of the nation's largest mortgage servicers, a group of whistle-blowers walked away with more than $46 million. And, in a civil fraud lawsuit against a mortgage lender announced earlier this year, a single whistle-blower earned $31.6 million. These staggering amounts will surely motivate other whistle-blowers and put win in the sails of the plaintiffs' bar.