False Claims Act & FIRREA
Practice Overview
The Department of Justice (DOJ) has been aggressive in its enforcement of the False Claims Act (FCA) and the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), and Buckley’s enforcement attorneys have extensive experience guiding our clients through the enforcement process in this uniquely challenging environment and at each stage of that process.
First, we work with clients on proactive measures to identify compliance risk and take corrective action with the goal of avoiding any investigation or enforcement action. On these efforts, our FCA/FIRREA enforcement attorneys routinely work hand-in-hand with the firm’s regulatory and compliance attorneys, who are steeped in the intricate regulatory issues that often underlie such investigations. Buckley also assists clients throughout the life cycle of government agency audits, which can often provide the impetus for an investigation or enforcement action. Our experience includes the preparation of responses to audit reports, reviewing and revising compliance documents, conducting risk assessments, overseeing loan file reviews, assisting with annual recertification, and responding to notices of violation and matters involving the Mortgagee Review Board (MRB). We also help clients minimize the risk of FCA/FIRREA exposure by conducting effective internal investigations into the allegations of whistleblowers.
Second, our team has extensive experience handling FCA/FIRREA matters at the investigative stage, helping our clients manage their compliance with the often burdensome civil investigative demands (CIDs) and subpoenas issued by the DOJ, U.S. Attorney's Offices, and federal agency offices of inspectors general (OIGs). FCA/FIRREA investigations can be extensive in their reach and extremely costly to comply with, and we successfully work with our clients to minimize the burden and intrusiveness of these sometimes sprawling investigations by engaging in effective negotiations with the government. Also, at the conclusion of these investigations, we have a proven track record of convincing the government to decline enforcement action against our clients, and in negotiating successful pre-suit settlements when litigation cannot be avoided. Our team includes several former government enforcement attorneys, who provide our clients with unique insight into the government’s approach to these cases, and who can lend additional credibility in pre-suit negotiations.
Finally, when FCA/FIRREA litigation cannot be avoided, we know how to litigate — and win — these cases. Our FCA/FIRREA attorneys are not only steeped in the subject matter and recognized thought leaders in this area, but they are also experienced trial and appellate attorneys. We have regularly been successful in getting litigated FCA cases dismissed by the courts at the earliest possible stage.
Significant representations include:
- Successfully represented multiple large mortgage lenders in FCA investigations into Federal Housing Administration (FHA) lending, reaching pre-suit settlement agreements with the DOJ in each case that included no admission of liability, no administrative sanction, and no prospective relief
- Successfully represented multiple top banks in responding to the DOJ’s “Operation Choke Point” FIRREA investigation into third-party payment processing, in which the government declined to pursue enforcement action
- Successfully represented a top research university in reaching a favorable, pre-suit settlement of an FCA qui tam investigation relating to federally sponsored research grants
- Successfully represented a top mortgage loan servicer in an FCA qui tam investigation into servicing and loss mitigation activities, in which the government declined to intervene in the case; the district court dismissed the case on motion, and the Sixth Circuit upheld the dismissal
- Successfully represented a national financial services firm in an FCA qui tam investigation by the U.S. Attorney’s Office for the Southern District of New York, in which the government declined to intervene in the case and the relator’s case was voluntarily dismissed
Articles
"5 FCA enforcement predictions after Coronavirus relief bill" by Andrew W. Schilling (Law360)
On March 27, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act. Although the False Claims Act is not mentioned in this stimulus bill, the implications of the act on FCA enforcement are likely to be significant. Click here to...
ArticlesSpecial Alert: HUD, DOJ sign MOU on mortgage False Claims Act violations
On October 28, HUD and DOJ announced a long-awaited Memorandum of Understanding (MOU), which provides prudential guidance concerning the application of the False Claims Act to matters involving alleged noncompliance with FHA guidelines. The announcement was made by HUD Secretary Dr. Benjamin S...
Special Alerts"FHA enforcement: What decreased reliance on the False Claims Act means for FHA lenders and servicers" by Melissa Klimkiewicz, Michelle L. Rogers, and Katherine Brockway Katz (HousingWire)
Top offcials at the U.S. Department of Housing and Urban Development are looking to chart a new course to win back banks that have fled the Federal Housing Administration lending program following a series of multimilliondollar False Claims Act settlements. In the past, HUD has partnered with the U...
Articles"Cooperation in False Claims Act investigations: The benefits of conducting a proactive internal investigation" by Andrew W. Schilling (Bloomberg Law)
Most companies that receive a civil investigative demand (CID) in a False Claims Act (FCA) investigation decide early that they will ‘‘fully cooperate’’ with the government’s investigation. That’s an easy decision because there really is no alternative: Failure to cooperate with the Justice...
Articles"The False Claims Act seal: Does it bind and gag the defendant?" by Andrew W. Schilling and Megan E. Whitehill (Business Crimes Bulletin)
A company that finds itself the target of a federal fraud investigation often faces the fraught question of whether it may, or even must, disclose the existence of that investigation to third parties, such as its investors, shareholders, major creditors, or insurers. The question can be even more...
ArticlesSpecial Alert: Second Circuit Rules Fraud Claim Based on Contractual Promise Cannot Support FIRREA Violation Without Proof of Fraudulent Intent at Time of Contract Execution
On May 23, in an opinion delivered by Circuit Judge Richard Wesley, the Second Circuit Court of Appeals reversed the District Court for the Southern District of New York’s (SDNY) July 30, 2014 judgment ordering a bank and its lender subsidiary to pay penalties in excess of $1.2 billion for alleged...
ArticlesA False Claims Act Win for the Banks
In the years following the financial crisis, the U.S. Department of Justice and the relators bar have aggressively used the False Claims Act to target banks and nonbank mortgage lenders and servicers, using increasingly creative theories of liability to hold these companies responsible for failing...
ArticlesAmending FIRREA: An Alternative Proposal
Near the end of his tenure, Attorney General Eric Holder publicly raised the prospect of amending FIRREA—the Financial Institutions Reform, Recovery, and Enforcement Act of 1989—to increase the incentives for blowing the whistle on financial fraud. FIRREA is the federal statute the Department of...
ArticlesFannie And Freddie Loans Could Be Next FCA Targets
By now, lenders that make loans insured by the federal government are well acquainted with the False Claims Act. Following the financial crisis, the U.S. Department of Justice has aggressively used the FCA to collect billions of dollars in settlements from mortgage lenders whose loans are backed by...
ArticlesSpotlight on the False Claims Act: Wartime Suspension of Limitations Act Suspends Statue of Limitations in False Claim Act Cases
The False Claims Act (FCA), which allows both the government and whistleblowers to seek treble damages for claims of civil fraud on the United States, is a powerful tool. In the past two years, the government has aggressively used the FCA to target financial institutions for claims of reckless...
ArticlesWhy Getting the FHA's Loan Servicing Rules 'Right' Matters
In recent years, servicing U.S. Federal Housing Administration-insured loans has become risky business. The U.S. Department of Housing and Urban Development has heightened its monitoring and enforcement, with servicers experiencing increased Quality Assurance Division (QAD) reviews, HUD Office of...
ArticlesUS v. Heinz May Bolster Expansive FIRREA Interpretation
The U.S. Department of Justice’s aggressive use of the Financial Institutions Reform, Recovery, and Enforcement Act to sue banks for fraud just received an unexpected boost, and from an unlikely source: In a criminal case decided last week,the Second Circuit endorsed an expansive approach to the...
ArticlesDOJ's Pursuit of Admissions - And The Risk of Settling
On March 19, 2015, the U.S. Attorney’s Office for the Southern District of New York announced a proposed settlement of a civil fraud lawsuit against a large financial institution (bank).[1] As with many of the U.S. Department of Justice’s recent settlements, the proposed settlement includes a...
ArticlesShould FIRREA Whistleblower Bounties Be Higher?
On Sept. 17, U.S. Attorney General Eric Holder raised the prospect of amending FIRREA — the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 — to increase its whistleblower awards with the goal of further incentivizing cooperation in financial fraud cases.[1] While FIRREA has...
ArticlesLook Before You LEAP - This Year's FHA Annual Recertification Process
It’s that time of year again. No, not spring break; the Federal Housing Administration’s ("FHA") annual recertification deadline is upon us (or, more specifically, FHA program participants). The good news is that, this year, mortgagees with a December 31st fiscal year end will have some extra time...
ArticlesFHFA Inspector General Emerging as Key Enforcement Player: What to Expect in 2014
These days, there is certainly no shortage of investigators, auditors, regulators, and prosecutors inundating the financial services industry with audits, inquiries, civil investigative demands, and subpoenas. Some of these inquiries, such as audits by an entity’s regulator, are familiar territory...
ArticlesChallenging FIRREA Subpoenas: The RMBS Working Group Faces Subpoena Fight
As the Justice Department has stepped up its pursuit of financial institutions, there has been a surge of civil fraud lawsuits brought by the government under FIRREA — the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 — a law that allows the government to sue for civil...
ArticlesAnother Court Affirms DOJ Financial Fraud Strategy
On Sept. 24, 2013, Judge Jesse Furman in the Southern District of New York released his widely anticipated decision allowing the U.S. Department of Justice’s False Claims Act and Financial Institutions Reform, Recovery and Enforcement Act case against a major financial institution to proceed. The...
ArticlesAvoiding the FCA & FIRREA Trap: Practical Tips for Compliance Professionals
As the government becomes increasingly aggressive in its efforts to fight financial fraud, companies naturally are looking for new ways to avoid becoming the next target. In the last two years, the Department of Justice (‘‘DOJ’’) has filed lawsuits seeking billions of dollars in damages from...
ArticlesHUD Sets Stage for FCA Claims Against Fund Recipients
The Fair Housing Act requires agencies to administer their programs and activities relating to housing and urban development “affirmatively to further” fair housing. Recipients of U.S. Department of Housing and Urban Development program funding currently are required to conduct a fairly...
Articles
News & Blogs
DOJ reaches $2.47 million settlement to resolve alleged lending violations regarding FHA-insured reverse mortgages
On March 31, the DOJ announced a $2.47 million settlement with an Oklahoma-based mortgage lender in connection with alleged violations of the False Claims Act (FCA) related to an acquired predecessor entity’s origination and underwriting of home equity conversion mortgages (HECM). According to the...
InfoBytesDistrict court dismisses FCA claims against student loan collectors
On February 11, the U.S. District Court for the District of Columbia dismissed a relator’s False Claims Act claims, which alleged that a group of prime private student loan debt collectors (defendants) defrauded the federal government of funds intended for small businesses in relation to contracts...
InfoBytes9th Circuit affirms no jurisdiction without exhaustion of administrative remedies
On December 27, the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of a TILA case brought by a consumer against his mortgage lender, citing lack of subject matter jurisdiction under the provisions of FIRREA that require claims involving a bank that is in receivership to be...
InfoBytesInternational bank’s motion to dismiss denied in RMBS suit
On December 10, the U.S. District Court for the Eastern District of New York issued a memorandum and order denying an international bank’s motion to dismiss a DOJ suit filed in 2018. As previously covered in InfoBytes , the DOJ alleges the bank and several affiliates violated the Financial...
InfoBytes2nd Circuit says loan requests at Fed banks are claims under the FCA
On November 21, the U.S. Court of Appeals for the Second Circuit vacated the dismissal of a relator’s qui tam action, concluding that allegedly fraudulent loan requests made to one or more of the Federal Reserve Banks (FRBs) qualify as claims within the meaning of the False Claims Act (FCA). In the...
InfoBytesSpecial Alert: HUD, DOJ sign MOU on mortgage False Claims Act violations
On October 28, HUD and DOJ announced a long-awaited Memorandum of Understanding (MOU), which provides prudential guidance concerning the application of the False Claims Act to matters involving alleged noncompliance with FHA guidelines. The announcement was made by HUD Secretary Dr. Benjamin S...
InfoBytesFifth Circuit affirms dismissal of reverse-false-claims action in benefits payment fraud matter
On October 7, the U.S. Court of Appeals for the Fifth Circuit affirmed the dismissal of a whistleblower’s reverse-false-claims action because it was barred by the False Claims Act’s (FCA) public-disclosure provision and the alleged scheme was not plead with sufficient detail. The relator, a former...
InfoBytes3rd Circuit: FCA does not guarantee an in-person hearing before dismissal
On September 12, the U.S. Court of Appeals for the Third Circuit held that the False Claims Act (FCA) does not guarantee relators an automatic in-person hearing before a case can be dismissed. According to the opinion, a relator filed a qui tam action against a Delaware non-profit organization,...
InfoBytesFCA claims move forward against California mortgage company
On September 11, the U.S. District Court for the Southern District of California denied a mortgage company’s motion to dismiss an action by the U.S. government alleging the company violated the False Claims Act by falsely certifying compliance with FHA mortgage insurance requirements. According to...
InfoBytes3rd Circuit: FCA claims not barred by state’s equitable “entire controversy” doctrine
On August 12, the U.S. Court of Appeals for the 3rd Circuit vacated the dismissal of a relator’s qui tam action, concluding that the federal action was not barred by New Jersey’s equitable entire controversy doctrine. In the case, an employer brought a defamation and disparagement suit against a...
InfoBytes
Our False Claims Act & FIRREA Team
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FYI
View Buckley's FCA/FIRREA Case Tracking Chart (featuring links to key documents and details on the status of cases)
Special Alert: HUD, DOJ sign MOU on mortgage False Claims Act violations
"FHA enforcement: What decreased reliance on the False Claims Act means for FHA lenders and servicers" by Melissa Klimkiewicz, Michelle L. Rogers, and Katherine Brockway Katz (HousingWire)
Recent Blog Posts
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April 2, 2020
DOJ reaches $2.47 million settlement to resolve alleged lending violations regarding FHA-insured reverse mortgages
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February 14, 2020
District court dismisses FCA claims against student loan collectors
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January 9, 2020
9th Circuit affirms no jurisdiction without exhaustion of administrative remedies
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December 13, 2019
International bank’s motion to dismiss denied in RMBS suit
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December 5, 2019
2nd Circuit says loan requests at Fed banks are claims under the FCA