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Posts Tagged ‘mortgage fraud’

Justice Department Expands Efforts to Uncover Mortgage Fraud

Wednesday, May 30th, 2012

On Thursday, May 24, 2012, the Justice Department’s Residential Mortgage-Backed Securities (RMBS) Working Group announced new resources in the ongoing efforts to investigate and uncover mortgage fraud and abuse that helped precipitate the 2008 financial crisis. These efforts include the launch of a new whistleblower website to report fraudulent activities in the mortgage-backed securities market. The Working Group wants to hear from people “who worked in the RMBS market who acted responsibly but who also may have witnessed greed and misconduct that crossed the legal line and created havoc for investors, homeowners and our economy.” These market participants include loan originators, sponsors, underwriters, trustees, and others.

The RMBS working group was established by Attorney General Eric Holder in January and has been dedicated to initiating, organizing and advancing new and existing investigations by federal and state authorities into fraud and abuse in the RMBS market. The RMBS Working Group is a collaborative effort focused on investigating potential false or misleading statements, deception or other misconduct by market participants in the creation, packaging and sale of mortgage-backed securities.

While the Justice Department said the group’s efforts are law enforcement sensitive and, as a result, must remain confidential, generally it continues to: identify specific RMBS offerings for priority investigation through the use of various forensic tools including risk-based analytics; analyze pending private RMBS litigation throughout the country for evidentiary connections to existing law enforcement investigations; and convene operational meetings among investigators, attorneys, analysts and RMBS market experts and insiders.

Associate Attorney General Tony West said that “although the working group … [has] done a tremendous amount of investigative work already – including having issued more than 25 civil subpoenas – we know that hearing from insiders is particularly valuable.” Substantial financial rewards may be available to whistleblowers who provide specific information if that information leads to a monetary recovery by the government.

If you have knowledge of mortgage fraud and would like to discuss the possibility of a whistleblower award, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, including your ability to remain anonymous in filing for an award, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.

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Posted in Bank Fraud, bank whistleblower, False Claims Act, government fraud, mortgage fraud, Recent News, SEC Whistleblower Program | Comments Off

Mortgage Fraud And Whistleblowers

Wednesday, May 23rd, 2012

Last week the Manhattan U.S. Attorney’s Office announced a $202.3 million settlement with Deutsche Bank’s AG mortgage unit for reckless mortgage lending practices. This is the third major bank settlement related to mortgage fraud by the Manhattan U.S. Attorney’s office in 2012, having announced a $158.3 million settlement with Citibank in February and a $132.8 million settlement with Flagstar Bank FSB in March.

Both the Citibank and Flagstar settlements were the result of whistleblower claims filed under the False Claims Act.

In February, the Brooklyn U. S. Attorney’s Office announced a $1 billion settlement with Bank of America related to improper mortgage practices. Part of that settlement included a settlement of two whistleblower actions that had been filed against Bank of America for mortgage fraud.

These cases highlight the importance of whistleblowers and the False Claims Act in continuing to combat financial improprieties at the banking institutions. It also suggests that more mortgage fraud cases brought by whistleblowers will be forthcoming given the success that both the Manhattan and Brooklyn U.S. Attorney’s Offices have experienced working with whistleblowers in this arena.

If you have knowledge of Securities Fraud and would like to discuss the possibility of a whistleblower award under the SEC whistleblower program, please contact our whistleblower attorneys today.  Kenney & McCafferty will consult with you about your case, including your ability to remain anonymous in filing for an award, without obligation.  All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.

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Posted in Bank Fraud, bank whistleblower, corporate fraud, False Claims Act, FHA fraud, HUD fraud, mortgage fraud, Uncategorized | Comments Off

DOJ and SEC Mortgage Investigations Overlap

Tuesday, March 6th, 2012

Reuters has reported that the eleven bank subpoenas issued in January by DOJ expand upon previous document requests by the SEC in its ongoing investigations into improprieties relating to the packaging of residential mortgage securities.

According to the Reuters report, people who have reviewed the subpoenas state that the civil subpoenas ask for documents related to every residential securities offering between 2006 and 2008, including Fannie Mae and Freddie Mac bonds.

The SEC investigation that has been ongoing appears to have been limited to private offerings and did not include Fannie Mae or Freddie Mac bonds. The DOJ subpoenas have also apparently broadened the time period beyond the initial period being investigated by the SEC.

The investigations by the DOJ and the SEC appear to be a part of an inter-agency task force the government has organized to coordinate parallel efforts on current and future investigations.  In January,  SEC enforcement director Robert Khuzami said that his agency had already reviewed 25 million pages of documents as part of ongoing investigations into residential mortgage-backed securities.

Three firms, JPMorgan Chase & Co, Goldman Sachs Group Inc, and Wells Fargo & Co, have now disclosed that they have already received Wells notices from the SEC related to the SEC residential mortgage backed securities investigations. A Wells notice alerts putative defendants that the SEC is considering bringing charges and gives them a chance to rebut the allegations.

The Wells notice indicate that the SEC’s investigation against these three banks has matured to point that SEC  charges should be forthcoming. However, the new round of broader DOJ subpoenas indicates that the government  investigations will continue and possibly expand.

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Posted in Bank Fraud, bank whistleblower, corporate fraud, FHA fraud, government fraud, mortgage fraud, SEC Whistleblower Program, Uncategorized | Comments Off

Mortgage Fraud: The New FCA Arena

Friday, March 2nd, 2012

This week the United States Attorney’s Office for the Southern District of New York (Manhattan) announced that it had settled another major mortgage fraud case against a lending institution. Under the terms of the settlement agreement, Flagstar Bank FSB has agreed to pay $132.8 million in damages and penalties under the False Claims Act for improperly approving residential home mortgage loans for government insurance.

Manhattan U.S. Attorney Preet Bharara stated, “[This] is another stark example of how certain lenders put profit ahead of responsibility by recklessly churning out mortgage loans without regard to the risk that those loans would default or the significant consequences for the individual homeowners who would inevitably default on their loans, the housing market, and in the aggregate, our nation’s economy.”

On February 15, 2012, Bharra announced that Citicorp Inc.’s Citimortgage unit had agreed to pay $158.3 million to settle claims tied to mortgage fraud related to the federal home-loan insurance program. That false claims action filed by a whistleblower alleged more than six years of misconduct in connection with the Federal Housing Administration Direct Endorsement Program.

Both these cases come on the heels of a $1 billion settlement with the government announced by the Bank of America that relates at least in part to a False Claims Act case filed by a whistleblower alleging mortgage fraud. That case was unsealed last Friday in the Eastern District of New York (Brooklyn).

These cases are part of an overarching investigations by the United States Attorney’s Offices for the Southern (Manhattan) and Eastern (Brooklyn) Districts of New York into the fraudulent banking practices that occurred over the past decade.

Mortgage fraud will continue to be a focus of these investigations because of the billions of dollars in losses suffered by HUD, FHA, Fannie Mae and Freddie Mac as a result of the rampant mortgage fraud that was orchestrated by national banks during that time. This is a target rich environment for the government with many potential whistleblowers who will no doubt continue to come forward exposing the environment that led to these frauds over the last decade.

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Posted in Bank Fraud, bank whistleblower, False Claims Act, FHA fraud, government fraud, HUD fraud, mortgage fraud | Comments Off

Budget Requests Indicate Continued Commitment to Reducing Fraud

Monday, February 20th, 2012

Earlier this week, U.S. Attorney General Eric Holder announced that President Obama’s FY 2013 Budget proposal calls for $27.1 billion for the Department of Justice.  The request includes program increases for critical administration priorities, including $55 million to investigate and prosecute financial and mortgage crimes, which remains among the DOJ’s key priorities.

The budget request illustrates the DOJ’s continued commitment to investigating and prosecuting financial fraud, by seeking to strengthen the department’s ability to pursue large-scale fraud investigations.  The increased resources will support the DOJ’s investigation and prosecution of various forms of financial fraud, including securities and commodities fraud, investment scams, and mortgage foreclosure schemes.

The proposed program increase of $55 million for financial and mortgage fraud initiatives is designed to complement ongoing efforts to identify and eradicate various forms of fraud, including healthcare fraud.  The Department of Health and Human Service has requested, from the FY 2013 Budget, an additional $71.7 million to target healthcare fraud.  This increase will strengthen and expand the DOJ and Medicare Fraud Strike Forces, support the expansion of civil litigation efforts in areas such as pharmaceutical fraud and off-label marketing, and provide additional resources to eliminate abuse and substandard care in public health care facilities and long-term care facilities funded by Medicare and Medicaid.

For more information, view the Financial and Mortgage Fraud Fact Sheet and the Health Care Fraud Fact Sheet at http://www.justice.gov/jmd/2013factsheets/

If you have knowledge of Mortgage or Healthcare fraud and would like to discuss the possibility of a whistleblower award under the False Claims Act, please contact our whistleblower attorneys today. Kenney & McCafferty will consult with you about your case, without obligation. All communications with Kenney & McCafferty attorneys regarding your case are confidential and protected by attorney-client privilege.

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Posted in False Claims Act | Comments Off

SEC Delays Whistleblower Rules

Thursday, April 28th, 2011

SEC wants to "get it right."

The SEC has postponed adoption of rules for its whistleblower program. According to the Dodd-Frank Act, final regulations for the whistleblower program were to be adopted by the SEC no later than April 21, 2011. Earlier this week, the SEC announced on its website that it is planning to adopt new rules some time between May and end of July. SEC spokesperson John Nester did not provide any specifics about the delay, commenting only that the SEC was crafting all the new rules for Dodd-Frank with an emphasis on “getting it right.”

The financial industry needs an effective fast-track incentive program for whistleblowers. The Dodd-Frank program augments the SEC’s 40 year old insider trading reward program that never realized its potential as a decentralized fraud enforcement mechanism. The SEC, under the old insider trading program, only paid out awards to whistleblowers four times. SEC watchers generally discount the insider trading program and are skeptical about the SEC’s interest in working with whistleblowers in general.

The new Dodd-Frank whistleblower program has generated considerable interest among would be whistleblowers and large companies. Frustrated employees and fraud fighters are delighted to have another program that incentivizes whistleblowers; large companies criticize the program because it encourages whistleblowers to report fraud directly to the government, bypassing internal corporate compliance procedures.

Whistleblowers could file SEC claims for rewards under the Dodd-Frank Act as of last July but will be expected to comply with the new rules once the new rules are adopted. Kenney & McCafferty, P.C. is happy to assist you in assessing your potential SEC whistleblower claim. Call K&M for a free consultation today

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Posted in retaliation, SEC Whistleblower Program, Uncategorized, Whistleblower Protection | Comments Off

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