False Claims Act and FIRREA Resource Center
Introduction
Buckley has unparalleled experience handling matters for financial institutions under the False Claims Act (FCA), the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), and the Program Fraud Civil Remedies Act (PFCRA). Today, Buckley is representing financial services clients in approximately two dozen False Claims Act and FIRREA investigations by the Department of Justice, various U.S. Attorneys’ Offices, and federal agency Inspectors General. Buckley represents clients in every major civil fraud initiative, and has experience handling investigations led by Main Justice and other U.S. Attorneys Offices involved in FCA and FIRREA enforcement, including the U.S. Attorney’s Office for the Southern and Eastern Districts of New York. Buckley attorneys are also experienced in handling cases pursued by the government under the Program Fraud Civil Remedies Act (PFCRA). Our experience in False Claims Act matters extends beyond the financial services industry as well, having handled FCA and qui tam matters in health care, defense contracting, and other industries.
Buckley’s False Claims Act and FIRREA practice attorneys are on the leading edge of FCA, FIRREA, and PFCRA trends and developments affecting the financial services industry. Our partner Andrew W. Schilling is the former chief of the Civil Division of the U.S. Attorney's Office for the Southern District of New York (S.D.N.Y.) where he helped lead the first wave of False Claims Act and FIRREA cases filed against financial services companies.
Thought Leadership & Analysis
2nd 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...
InfoBytes"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...
Articles3rd 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...
InfoBytes5th Circuit upholds $298 million fine in FCA/FIRREA mortgage fraud action
On August 8, the U.S. Court of Appeals for the 5th Circuit affirmed a district court ruling that ordered two mortgage companies and their owner to pay nearly $300 million in a suit brought under the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA...
InfoBytesDistrict Court orders mortgage company founder to pay $500,000 FIRREA fine in mortgage fraud suit
On July 10, the U.S. District Court for the Northern District of Illinois ordered the founder and president of a mortgage company to pay $500,000 in a suit brought under the False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). The suit accused the...
InfoBytesMultinational retailer settles FCPA claims by DOJ and SEC for $282 million
On June 20, the DOJ announced a $137 million settlement with a U.S.-based multinational retailer (the Retailer) and its wholly owned Brazilian subsidiary (the Subsidiary) to resolve claims they violated the FCPA. The Retailer entered into a non-prosecution agreement , while the Subsidiary pleaded...
InfoBytes10th Circuit: Compliance employees must show they went beyond established protocols to obtain FCA whistleblower retaliation protection
On April 30, the U.S. Court of Appeals for the 10th Circuit affirmed the dismissal of a former employee’s False Claims Act (FCA) whistleblower retaliation claims, holding that employees with compliance responsibilities bear the burden of showing that their alleged protected activities are not...
InfoBytesSupreme Court holds FCA relators have 10 years to bring nonintervened suit
On May 13, the U.S. Supreme Court unanimously held that a relator has up to 10 years to bring a qui tam suit under the False Claims Act (FCA) whether or not the government intervenes in the suit. According to the opinion, in November 2013, a relator brought a suit against two defense contractors...
InfoBytesDOJ issues False Claims Act guidance
On May 7, the DOJ (or the “Department”) announced the release of formal guidance to the Department’s False Claims Act (FCA) litigators, which explains how the DOJ awards credit to defendants who cooperate with the Department during a FCA investigation. Under the formal policy, which is located in...
InfoBytesDOJ settles with multinational corporation for $1.5 billion over RMBS
On April 12, the DOJ announced that a multinational corporation will pay $1.5 billion in a settlement resolving claims brought under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) that a financial services subsidiary of the corporation misrepresented the quality...
InfoBytesDistrict Court dismisses whistleblower’s mortgage fraud claims
On March 12, the U.S. District Court for the Northern District of Illinois granted a national bank’s motion to dismiss a former associate vice president/lending manager’s whistleblower claims that it violated the False Claims Act (FCA) by submitting fraudulent claims and providing false information...
InfoBytesMortgage lender settles FCA allegations
On February 13, the U.S. Attorney for the Eastern District of California announced a $3.67 million joint settlement with HUD and the Fair Housing Administration (FHA) to resolve allegations that a mortgage lender violated the False Claims Act by falsely certifying compliance with FHA mortgage...
InfoBytesUniversity settles whistleblower FCA claims
On February 11, the DOJ announced a $2.5 million settlement with a South Carolina university to resolve allegations that the university violated the False Claims Act (FCA) by submitting false claims to the U.S. Department of Education. According to the announcement, between 2014 and 2016, the...
InfoBytes4th Circuit affirms jury’s verdict clearing student loan servicer in FCA suit
On January 8, the U.S. Court of Appeals for the 4th Circuit affirmed a federal jury’s unanimous verdict clearing a Pennsylvania-based student loan servicing agency (defendant) accused of improper billing practices under the False Claims Act (FCA). As previously covered by InfoBytes , the plaintiff—...
InfoBytesReverse mortgage servicer settles FCA allegations for $4.25 million
On December 21, the DOJ announced a $4.25 million settlement with a Michigan-based servicer in connection with alleged violations of the False Claims Act related to the servicing of federally-insured home equity conversion mortgages (reverse mortgages). According to the DOJ, for the period between...
InfoBytesForeclosure firm and affiliates agree to DOJ settlement resolving FCA allegations
On December 4, the U.S. Attorney for the Southern District of New York announced that a New York foreclosure law firm and its wholly-owned affiliates—a process server and a title search company (defendants)—have agreed to pay $4.6 million to resolve False Claims Act allegations claiming that...
InfoBytesDOJ sues international bank for RMBS fraud
On November 8, the DOJ announced it filed a complaint in the U.S. District Court for the Eastern District of New York against an international bank and several of its U.S. affiliates for allegedly defrauding investors in connection with the sale of residential mortgage-backed securities (RMBS) from...
InfoBytesAndrew W. Schilling quoted in New York Times article, “Trump administration spares corporate wrongdoers billions in penalties”
Andrew W. Schilling was quoted on November 3, 2018 in a New York Times article, “Trump administration spares corporate wrongdoers billions in penalties,” which discussed the decline in penalties for financial fraud following the change from the Obama administration to the Trump administration. The...
In The NewsDOJ settles FCA allegations with mortgage lender for $13.2 million
On October 19, the DOJ announced a $13.2 million settlement with a mortgage lender resolving allegations that the company violated the False Claims Act (FCA) by falsely certifying compliance with the Federal Housing Administration (FHA) mortgage insurance requirements in violation of the False...
InfoBytesJapanese bank's U.S. branch and affiliates settle RMBS misconduct claims for $480 million
On October 16, the U.S. Attorney for the Eastern District of New York announced that the U.S. branch of a Japanese bank and several of its affiliates would settle claims related to the bank’s marketing, sale, and issuance of residential mortgage-backed securities (RMBS) in the lead-up to the 2008...
InfoBytesInternational bank agrees to pay $4.9 billion in civil penalties to settle allegations of RMBS misconduct
On August 14, the DOJ announced a settlement with an international bank to resolve federal civil claims of misconduct in the bank’s underwriting and issuing of residential mortgage-backed securities (RMBS) to investors in the lead-up to the 2008 financial crisis. According to the press release, the...
InfoBytesNational bank settles with DOJ for $2.09 billion over RMBS misrepresentations
On August 1, the Department of Justice (DOJ) announced a settlement with a national bank and several of its affiliates (bank) for allegedly misrepresenting the quality of certain loans originated by the bank that were packaged and sold in residential mortgage-backed securities (RMBS). The alleged...
InfoBytesDistrict Court rules that Federal Reserve Banks are not federal agencies under False Claims Act
On May 9, the U.S. District Court for the Eastern District of New York dismissed a qui tam action brought under the False Claims Act (FCA) against a national bank and its predecessors-in-interest (defendants), which alleged that the defendants presented false information to Federal Reserve Banks (...
InfoBytesInternational bank agrees to pay $2 billion in civil penalties to settle allegations of RMBS misconduct
On March 29, the DOJ announced a $2 billion settlement with an international bank and several of its affiliates to resolve allegations of misrepresentation in the sale of residential mortgage-backed securities, in violation of the Financial Institutions Reform, Recovery, and Enforcement Act. The...
InfoBytesD.C. Circuit will not rehear False Claims suit against national bank
On February 16, the U.S. Court of Appeals for the D.C. Circuit denied a petition for an en banc rehearing of its December 2017 ruling affirming the dismissal of a False Claims Act suit against a national bank. The petition resulted from a 2013 lawsuit filed by a consumer against the bank, which...
InfoBytes"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...
ArticlesU.S. government, national bank parties enter $5 million False Claims Act settlement
On January 5, the U.S. Government reached a $5 million settlement with a national bank and its affiliates (together, the bank parties) to resolve a lawsuit concerning allegations that the bank parties violated the False Claims Act (FCA) by engaging in improper foreclosure-related practices. The...
InfoBytesDistrict Court Allows Government to Intervene in False Claims Act Litigation
On January 3, the District Court for the Southern District of Florida granted the U.S. Government’s motion to intervene in a False Claims Act (FCA) lawsuit against a national bank. The lawsuit , filed by a foreclosure attorney and relator, alleges that the national bank submitted false claims in...
InfoBytesAndrew W. Schilling Quoted in Inside Mortgage Finance Article, “FHA Lenders Win Big in Seventh Circuit FCA Ruling That Makes It Harder for DOJ, HUD to Argue Cases”
Andrew W. Schilling was quoted on December 21, 2017 in an Inside Mortgage Finance article, “FHA Lenders Win Big in Seventh Circuit FCA Ruling That Makes It Harder for DOJ, HUD to Argue Cases,” which discussed the significant ruling for FHA lenders in United States v. Luce. The article stated, “ In...
In The NewsDOJ Announces Settlement With Mortgage Lender to Resolve Alleged False Claims Act Violations
The DOJ announced a $11.6 million settlement on December 8 with a Louisiana-based direct endorsement mortgage lender and certain affiliates to resolve allegations that the lender violated the False Claims Act by falsely certifying compliance with federal requirements in order to obtain insurance on...
InfoBytesJury Verdict Clears Student Loan Servicer in FCA Suit
On December 5, after a five-day trial, a jury in the U.S. District Court for the Eastern District of Virginia entered a unanimous verdict clearing a Pennsylvania-based student loan servicing agency (defendant) accused of improper billing practices under the False Claims Act (FCA) and bilking the...
InfoBytes"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...
ArticlesHUD Secretary Carson Testifies at House Financial Services Committee Hearing, Discusses Use of FCA Against FHA Lenders
On October 12, Secretary of HUD, Ben Carson, testified at a hearing before the House Financial Services Committee. The hearing entitled “The Future of Housing in America: Oversight of the Department of Housing and Urban Development,” provided an update on HUD’s vision for federal housing policy and...
InfoBytesDistrict Court Fines Mortgage Brokers More Than $298 Million for Alleged FCA/FIRREA Violations
On September 14, a federal judge in the U.S. District Court for the Southern District of Texas ruled after a five-week jury trial that defendants, who allegedly submitted fraudulent insurance claims after acquiring risky loans, were liable for treble damages and the maximum civil penalties allowed...
InfoBytesSecond Circuit Cites Escobar, Vacates and Remands FCA Suit
On September 7, the Second Circuit Court of Appeals issued an order concerning a False Claims Act (FCA) case on remand from the United States Supreme Court. In its order, the three-judge panel determined that the FCA complaint should be reviewed under the higher court’s Escobar standard, which “set...
InfoBytesDOJ Announces Settlements with Non-Bank Mortgage Lender to Resolve Alleged False Claims Act Violations
On August 8, the DOJ announced a $74.5 million settlement with a non-bank mortgage lender and certain affiliates to resolve potential claims that they violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban...
InfoBytesD.C. Circuit Court Affirms Dismissal of Suit, FCA First-to-File Bar Applies
In an opinion handed down on July 25, the Court of Appeals for the D.C. Circuit affirmed a district court’s dismissal of a False Claims Act (FCA) suit because it violated the first-to-file bar, ruling that a relator must re-file a qui tam action and cannot merely amend a complaint where the relator...
InfoBytesDOJ Intervenes in False Claims Act Litigation Against City of Los Angeles for Alleged Misuse of HUD Funds
On June 7, the Department of Justice (DOJ) announced that the United States has intervened (see proposed order here ) in a lawsuit against the city of Los Angeles (City) alleging that the City misused Department of Housing and Urban Development (HUD) funds intended for affordable housing that is...
InfoBytesGovernment Settles False Claims Act Suit for $23 Million
On May 26, the DOJ ended a False Claims Act case with a $23 million settlement . The case, brought by whistleblowers against a pharmacy goods provider (company), involved alleged fraudulent Medicaid claims and kickbacks to pharmacies that prescribed one of the company’s drugs. The qui tam action,...
InfoBytesDOJ Enters $89 Million Settlement with Texas-Based Bank in False Claims Act Matter
On May 16, the U.S. Department of Justice (DOJ) announced that a Texas-based bank (Bank) agreed to settle the DOJ’s allegations that it violated the False Claims Act and FIRREA by wrongfully seeking payments from a federally insured reverse mortgage program. To protect lenders, HUD provides...
InfoBytesDOJ Enters $18 Million Settlement with Healthcare Providers Following False Claims Act Whistleblower Action
On April 27, the Department of Justice announced that two Indiana-based healthcare providers agreed to settle allegations that financial arrangements between the two entities violated the federal and state False Claims Act and the federal Anti-Kickback Statute. DOJ alleged that one of the providers...
InfoBytesFourth Circuit Permits DOJ to Reject FCA Settlement After Government Declined to Intervene; Declines to Reach Issue of Statistical Sampling
In an opinion handed down on February 22, the Court of Appeals for the Fourth Circuit decided that the DOJ retains an unreviewable right to object to a proposed settlement agreement between a relator and a defendant even after the Government has declined to intervene in the case. See United States...
InfoBytesMisleading Mortgage Investors Costs Germany's Largest Bank $7.2 Billion
On January 17, the Department of Justice (DOJ) announced a $7.2 billion settlement with Germany’s largest lender, resolving federal civil claims that a German global bank misled investors in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS...
InfoBytesJury Finds Mortgage Company and CEO Liable for Fraud; Awards $92 Million in Damages
A federal jury has ordered two Texas-based home mortgage entities and their chief executive to pay nearly $93 million for defrauding the U.S. government into insuring thousands of risky loans, the Department of Justice announced on November 30. The mortgage companies and their former CEO were found...
InfoBytesDOJ Settles False Claims Act Lawsuit Over HUD and FHA Mortgages
On September 29, the DOJ announced a settlement with a large regional bank, whereby the bank agreed to pay $83 million to resolve allegations that it violated the False Claims Act by originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD)...
InfoBytesSpecial Alert: Second Circuit Reverses SDNY Judgment; Rules Fraud Claim Based on Contractual Promise Cannot Support FIRREA Violation Without Proof of Fraudulent Intent at the 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...
InfoBytesA 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...
ArticlesDOJ Settles with New Jersey Mortgage Lender Over False Claims Act Violations
On April 15, the DOJ announced a $113 million settlement with a New Jersey-based mortgage company to resolve allegations that the mortgage lender violated the False Claims Act. According to the DOJ, the mortgage company – acting as a direct endorsement lender in HUD’s Federal Housing Administration...
InfoBytesNinth Circuit: Fannie and Freddie Are Not Government Agents for FCA Purposes
Recently, the U.S. Court of Appeals for the Ninth Circuit affirmed the District Court of Nevada’s ruling that, for the purposes of the False Claims Act (FCA), 31 U.S.C § 3729(b)(2)(A)(i), Fannie Mae and Freddie Mac are not instrumentalities or officers, employees, or agents of the federal...
InfoBytesFannie 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...
ArticlesDOJ Settles with For-Profit Education Company Over Alleged FCA Violations
On November 16, the DOJ announced a $95.5 million settlement with the country’s second-largest for-profit education company to resolve alleged federal and state violations of the False Claims Act (FCA). According to the DOJ’s complaint , the company’s admissions personnel received payment based on...
InfoBytesHUD, FDIC, and U.S. Attorney File Suit Against Mortgage Lending Companies
On September 28, HUD, the FDIC, and the U.S. Attorney for the Eastern District of New York filed suit against a non-profit housing counseling corporation and certain mortgage lenders for allegedly running a scheme to defraud the United States and various banks out of over $5,000,000 in false claims...
InfoBytesNinth Circuit Bars Qui Tam Relator's Whistleblower Recovery in False Claims Act Suit Over Conviction
On July 16, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s dismissal of a qui tam relator from a False Claims Act suit, holding that the False Claims Act requires dismissal of a relator convicted of any conduct giving rise to the fraud at issue, however minor, and...
InfoBytesWhy 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...
ArticlesRegional Bank Agrees to Pay Over $200 Million for Alleged Violations of the False Claims Act
On June 1, a regional bank agreed to pay the United States $212.5 million to resolve allegations that it knowingly violated the False Claims Act by originating and underwriting FHA-insured mortgage loans that did not meet applicable requirements. The bank – through its subsidiary and as a Direct...
InfoBytesDOJ and International Investment Bank Enter Into Plea Agreement to Resolve LIBOR Manipulation Claims, Bank Agrees to Pay $2.5 Billion Penalty
On April 23, the DOJ announced that an international investment bank and its subsidiary agreed to plead guilty to wire fraud for its alleged conduct, spanning from 2003 through 2011, in manipulating the London Interbank Offered Rate (LIBOR), which is used to set interest rates on various financial...
InfoBytesU.S. Files Complaint Against Leading Non-Bank Mortgage Lender For Alleged Improper Underwriting Practices on FHA-Insured Loans After Lender Files Suit Against U.S. Alleging Arbitrary and Capricious Investigation Practices
On April 17, Quicken Loans filed a preemptive lawsuit against the DOJ and HUD in the Eastern District of Michigan against HUD, the HUD-IG, and DOJ, asserting that it “appears to be one of the targets (due to its large size) of a political agenda under which the DOJ is “investigating” and pressuring...
InfoBytesTenth Circuit Court of Appeals Dismisses Failed Bank Shareholder Derivative Suit under FIRREA
On April 21, the United States Court of Appeals for the Tenth Circuit upheld the dismissal of a bank shareholders’ suit against a bank holding company – and its officers and directors – for breach of fiduciary duty. Barnes v. Harris , No. 14-4002 WL 1786861 (10 th Cir. Apr. 24, 2015) The...
InfoBytesDOJ'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...
ArticlesD.C. Federal District Court Dismisses Lawsuit Seeking to Block $13 Billion DOJ Settlement
On March 18, the U.S. District Court for the District of Columbia dismissed a lawsuit brought by a non-profit organization challenging the $13 billion global settlement agreement entered by the U.S. Department of Justice (DOJ) and a national financial services firm and banking institution arising...
InfoBytesFederal and State Agencies Announce $714 Million FX Settlement
On March 19, four federal and state agencies –DOJ, the Department of Labor (DOL), the SEC, and New York Attorney General – entered into a proposed $714 million settlement agreement against a large bank to resolve allegations of fraudulent conduct involving the pricing and misleading representation...
InfoBytesDOJ Announces Settlement with California Bank Over BSA & FIRREA Violations
On March 10, the DOJ announced a $4.9 million civil and criminal settlement with a California-based bank. The bank admitted to the DOJ’s allegations that, from December 2011 through July 2013, it ignored warning signs indicating that its third party processor was defrauding hundreds of thousands of...
InfoBytesDOJ Settles False Claims Act Allegations Against Pharmaceutical Manufacturer
On February 11, the DOJ announced a $7.9 million settlement with a Delaware-based pharmaceutical manufacturer for allegedly violating the False Claims Act by engaging in a kickback scheme with a pharmacy benefits manager corporation. The pharmaceutical manufacturer denies the DOJ’s allegations that...
InfoBytesShould 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...
ArticlesAttorney General Holder Comments on Financial Fraud and the DOJ's Concern for Action
On September 17, Attorney General Holder commented on the DOJ’s efforts to pursue criminal activity against corporate financial fraud. Specifically, Holder argued for Congress to modify the FIRREA whistleblower provision by increasing the $1.6 million cap on awards, possibly to False Claims Act...
InfoBytesFederal, State Mortgage-Related Investigations Yield Largest Ever Civil Settlement
On August 21, the DOJ announced that a large financial institution agreed to resolve federal and state mortgage-related claims through what the DOJ characterized as the largest ever civil settlement with a single entity. The agreement actually resolves numerous federal and state investigations...
InfoBytesTexas Federal Court Upholds HUD's Suspension of Mortgagee
On August 5, the U.S. District Court for the Southern District of Texas held that HUD's decisions to immediately suspend a HUD mortgagee and its CEO were not “arbitrary and capricious” and did not violate due process. Allied Home Mortg. Corp. v. Donovan , No. H-11-3864, 2014 WL 3843561 (S.D. Tex...
InfoBytesSDNY Orders Bank To Pay $1.3 Billion Following Verdict In GSE Civil Fraud Case
On July 30, the U.S. District Court for the Southern District of New York ordered a bank to pay a nearly $1.3 billion civil penalty after a jury found the bank liable in October 2013 on one civil mortgage fraud charge arising out of a program operated by a mortgage lender the bank had acquired. The...
InfoBytesFederal, State Authorities Obtain Another Major RMBS Settlement
On July 14, the DOJ, the FDIC, and state authorities in California, Delaware, Illinois, Massachusetts, and New York, announced a $7 billion settlement of federal and state RMBS civil claims against a large financial institution, which was obtained by the RMBS Working Group, a division of the Obama...
InfoBytesC.D. Cal. Dismisses False Claims Act Qui Tam Suit Against Group of Lenders
On July 15, the U.S. District Court for the Central District of California dismissed a relator real estate agent’s suit against a group of lenders the relator alleged submitted claims for FHA insurance benefits to HUD based on false certifications of compliance with the National Housing Act. U.S...
InfoBytesS.D.N.Y. U.S. Attorney Obtains FHA, GSE False Claims Settlement
On July 1, the U.S. Attorney for the Southern District of New York announced that a large bank agreed to pay $10 million to resolve allegations that prior to 2011 it violated the False Claims Act and FIRREA by failing to oversee the reasonableness of foreclosure-related charges it submitted to the...
InfoBytesFederal, State Authorities Announce Substantial Mortgage Settlement
On June 17 the DOJ, the CFPB, HUD, and 49 state attorneys general and the District of Columbia’s attorney general announced a $968 million consent judgment with a large mortgage company to resolve numerous federal and state investigations regarding alleged improper mortgage origination, servicing,...
InfoBytesD.C. Circuit Holds Government False Claims Case Not Precluded By National Mortgage Settlement
On June 10, the U.S. Court of Appeals for the District of Columbia affirmed the district court’s decision not to enjoin the federal government from pursuing alleged False Claims Act violations against a bank that argued such claims were precluded by the terms of the National Mortgage Settlement...
InfoBytesLook 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...
ArticlesCongressional Democrats Want Meeting With Attorney General On Mortgage Fraud Enforcement
On March 17, Senator Elizabeth Warren (D-MA) and Representatives Elijah Cummings (D-MD) and Maxine Waters (D-CA) sent a letter requesting a meeting with Attorney General Eric Holder to review the findings of a recent report on the DOJ’s mortgage fraud enforcement efforts. The lawmakers state that...
InfoBytesDOJ OIG Report Critical Of Mortgage Fraud Enforcement Programs
On March 13, the DOJ Office of Inspector General (OIG) issued a report on its audit of the DOJ’s efforts between 2009 and 2011 to pursue alleged mortgage fraud. Of particular note, the report reveals for the first time publicly that as part of a joint effort between HUD and the DOJ related to so-...
InfoBytesMortgage Fraud Whistleblower Receives $64 Million Award
On March 7, the U.S. District Court for the Southern District of New York approved a stipulation and order awarding nearly $64 million to the relator in a mortgage fraud case recently settled by the federal government. Pursuant to that settlement , a mortgage lender agreed to pay a total of $614...
InfoBytesDOJ Obtains Settlement In FHA False Claims Act Case
On February 4, the DOJ announced the filing and simultaneous settlement of a complaint by the U.S. Attorney for the Southern District of New York (SDNY) against a mortgage lender alleged to have violated the False Claims Act (FCA) by submitting false loan-level certifications to HUD that...
InfoBytesFederal Government Seeks Higher Penalties In GSE Fraud Case
On January 29, the DOJ filed a supplemental brief in support of its claim for civil penalties following a jury verdict it obtained last October in the first case alleging violations of FIRREA in connection with loans sold to Fannie Mae and Freddie Mac. U.S. v. Countrywide Fin. Corp. , No. 12-CV-...
InfoBytesFederal Court Dismisses FCA Claims Against Bank's Outside Directors
On January 3, the U.S. District Court for the Northern District of Illinois held that a relator failed to support allegations that the outside directors of a failed bank misrepresented to the FDIC the quality of the bank’s collateral on real estate loans, and dismissed those claims. U.S. v...
InfoBytesFHFA 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...
ArticlesSDNY Grants DOJ's Request To Add Bank Executive To Pending FCA/FIRREA Litigation
On December 12, the U.S. District Court for the Southern District of New York granted the DOJ’s motion to add a bank executive to a civil fraud suit it filed over a year earlier against a mortgage lender alleged to have falsely certified loans under the FHA’s Direct Endorsement Lender Program. U.S...
InfoBytesChallenging 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...
ArticlesFederal, State Authorities Announce Largest RMBS Settlement To Date
On November 19, the DOJ, other federal authorities, and state authorities in California, Delaware, Illinois, and Massachusetts, announced a $13 billion settlement of federal and state RMBS civil claims, which were being pursued as part of the state-federal RMBS Working Group, part of the Obama...
InfoBytesDOJ Secures Jury Verdict In First GSE Civil Fraud Suit
On October 23, a jury found a bank liable on one civil mortgage fraud charge arising out of a program operated by a lender the bank had acquired. The jury also found against a former executive of the acquired lender. The verdict followed a four week trial in the first DOJ case alleging violations...
InfoBytesAnother 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...
ArticlesSouthern District of New York Again Endorses DOJ Mortgage Fraud Theory
On September 24, U.S. District Court Judge Jesse Furman largely denied a bank’s motion to dismiss a complaint filed by the U.S. Attorney’s Office for the Southern District of New York (SDNY) in which the government alleges that the bank falsely certified loans under the FHA’s Direct Endorsement...
InfoBytesTexas Federal District Court Allows Government's FCA / FIRREA Mortgage Suit To Proceed
On September 10, the U.S. District Court for the Southern District of Texas denied a mortgage lender’s motion to dismiss the federal government’s claims that the lender and two of its executives knowingly made false statements in loan applications to HUD regarding the company’s compliance with FHA...
InfoBytesAvoiding 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...
ArticlesAugust Beach Read Series: Understanding FIRREA
FIRREA is a financial fraud statute that has been on the books for decades, and is fast-becoming a valuable weapon in the Department of Justice’s efforts to combat alleged financial fraud. FIRREA’s reach is broader than other civil fraud statutes available to the government, making it an especially...
InfoBytesSouthern District of New York Endorses Use of FIRREA in Mortgage Fraud Cases
On August 16, the U.S. District Court for the Southern District of New York issued a written opinion in support of its May 8, 2013 dismissal of claims for damages and civil penalties under the False Claims Act (FCA) brought by the federal government against a mortgage lender alleged to have sold...
InfoBytesRMBS Task Force Announces New Suits Over Sale of Jumbo Prime RMBS
On August 6, the DOJ and the SEC announced parallel civil fraud actions filed in the U.S. District Court for the Western District of North Carolina. The DOJ alleged that a national bank and related entities misled investors about the residential jumbo prime mortgage loans backing an $850 million...
InfoBytesCalifornia Federal District Court Allows Government's FIRREA-Based RMBS Suit to Proceed
On July 16, the U.S. District Court for the Central District of California denied a major credit rating agency’s motion to dismiss a DOJ complaint alleging that the firm defrauded investors in residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) by issuing...
InfoBytesHAMP Risk on the Rise: A Complicated Regulatory Scheme Under the Spotlight
The Home Affordable Modification Program (“HAMP”) has had a rocky history in the three short years since its inception. Although participation in the Treasury Department’s HAMP program is voluntary, loan investors, including Fannie Mae and Freddie Mac, require their mortgage servicers to...
ArticlesSouthern District of New York Judge Dismisses False Claims Counts, Allows FIRREA Claims to Proceed in Major Mortgage Fraud Case
On May 8, the U.S. District Court for the Southern District of New York dismissed claims for damages and civil penalties under the False Claims Act (FCA) brought by the federal government against a mortgage lender alleged to have sold defective loans to Freddie Mac and Fannie Mae while representing...
InfoBytesGovernment Drops One Claim in Mortgage False Claims Act Case
On April 29, the U.S. Attorney for the Southern District of New York dropped its reverse false claims count in a pending False Claims Act case against a mortgage lender. U.S. v. Wells Fargo Bank, N.A. , No. 12-7527. Although the government’s letter does not provide the reasoning behind its decision...
InfoBytesSpotlight on the False Claims Act: Wartime Suspension of Limitations Act Suspends Statute of Limitations in False Claims 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...
InfoBytesA Financial Institution's Fraud on Itself Triggers FIRREA
The U.S. Department of Justice scored a significant victory on April 24, when the U.S. District Court for the Southern District of New York ruled that a federally insured financial institution may be prosecuted under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)...
ArticlesFederal District Court Holds Financial Institution's Fraud On Itself Triggers Potential FIRREA Liability
On April 24, the U.S. District Court for the Southern District of New York held that a federally insured financial institution may be prosecuted under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) for allegedly engaging in fraud that “affects” the same institution...
InfoBytesLittle-known Statute May Breathe New Life into False Claims Act Cases Against Financial Institutions
The False Claims Act (FCA) is a powerful tool that allows both the government and whistleblowers to seek damages for claims of civil fraud on the United States. In the past two years, the government has aggressively used the FCA to target financial institutions for claims of reckless lending and...
ArticlesFederal Government Civil Fraud Suit Targets Mortgage Lender and Its President
On April 4, the U.S. Attorney for the Southern District of New York and HUD officials announced a civil fraud suit alleging FCA and FIRREA claims against a mortgage lender and its president for falsely certifying loans and other actions under the FHA’s Direct Endorsement Lender Program. Many of the...
InfoBytesFCA Allows Treble Damages - 'But Treble What?'
The False Claims Act authorizes the United States — and whistleblowers suing on its behalf — to seek civil penalties plus “treble damages” for a violation of the FCA. The ability to seek treble damages is a key feature of the law, and one that makes the statute particularly attractive to the...
ArticlesFinally, 8 Factors Governing FIRREA Civil Penalty Awards
In recent years, the U.S. Department of Justice has made increasingly aggressive use of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) to target allegations of financial fraud, most notably in its recent, multibillion dollar civil fraud case against Standard &...
ArticlesU.S. Using Subpoenas Under 1989 Act as New Tool to Probe Financial Firms
The U.S. Department of Justice has increased its use of the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) to prosecute wrong-doing by financial firms. Accordingly, more institutions may find themselves having to deal with a subpoena under the act, including those that are...
ArticlesHow the DOJ is Adapting in the War on Financial Fraud
In the wake of the financial crisis, the United States has continued to pursue major civil enforcement litigation with increasingly aggressive theories of liability against financial institutions. Now, with its sixth lawsuit against a major financial institution in less than two years, the U.S...
ArticlesDOJ Sues Mortgage Lender Over Alleged Fraudulent Certification of FHA Loans
On October 9, the U.S. Attorney for the Southern District of New York and the U.S. Department of Housing and Urban Development (HUD) announced a civil fraud suit against a mortgage lender alleged to have falsely certified loans under the FHA’s Direct Endorsement Lender Program. The suit, filed in...
InfoBytesWhistle-Blower Bounties May Encourage Residential Mortgage-Backed Securities Fraud Reporting
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...
ArticlesUnderstanding FIRREA's Reach: When Does Fraud "Affect" a Financial Institution?
Recently, the Justice Department has made increasing - and increasingly aggressive - use of FIRREA, a civil penalty statute that it had all but ignored for more than two decades. Enacted in response to the S&L crisis, the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)...
ArticlesHUD Announces Another Mortgage False Claims Act Settlement
On May 10, HUD and the U.S. Attorney for the Southern District of New York announced the settlement of a lawsuit alleging violation of the False Claims Act by a mortgage originator and affiliated entities. The government alleged that, for nearly a decade, MortgageIT, Inc. certified falsely that the...
InfoBytesHow to Respond to a Subpoena: 10 Things You Should Do Immediately
On July 28, NCR Corporation, a leading global provider of ATM machines, announced that the SEC had decided not to pursue an enforcement action following an investigation of the company’s FCPA compliance. In 2013, the company disclosed that an anonymous whistleblower had alleged various FCPA and...
InfoBytesSpecial Alert: Federal and State Officials File Settlement with Nation's Five Largest Mortgage Servicers
On March 12, 2012, Federal and state officials filed documents in the United States District Court for the District of Columbia formalizing a previously announced settlement (the Settlement) of various government probes into alleged mortgage-related violations by the five largest residential...
ArticlesFederal Government Obtains Settlement of False Claims Act Claims Against CitiMortgage
On February 15, HUD and the U.S. Attorney for the Southern District of New York announced that CitiMortgage, Inc. had agreed to settle the government’s claims that CitiMortgage violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act by failing to comply...
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Regulatory Resources
Key Financial Fraud Enforcement Statutes
- View the text of the False Claims Act
- View the text of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA)
- View the text of the Program Fraud Civil Remedies Act (PFCRA)