Millions Awarded to Bank of America Whistleblowers

Sometimes, it pays to do the right thing.
money1.jpg
The former Countrywide Financial Corp. executive who blew the whistle on Bank of America’s widespread mortgage fraud, resulting in an almost $17 billion settlement, was recently awarded $57 million in his qui tam lawsuit.

Edwin O’Donnell reportedly contacted the U.S. Attorney’s Office in Manhattan in advance of foreshadowed settlement deal with the banking giant to give the government greater leverage in its case. He alleged the company issued a series of toxic mortgages under a program known as the “High Speed Swim Lane,” also referred to as “HSSL” or “hustle.” Knowing the mortgages were likely to be defaulted on, the company then quickly sold them to the government-backed Fannie Mae and Freddie Mac.

O’Donnell filed a whistleblower lawsuit, which the federal government later joined.

Per the False Claims Act, whistleblowers can claim between 15- and 25-percent of what the government recovers in a case wherein taxpayers were defrauded. The ensuing settlement in this case, U.S. v. Countrywide Financial Corp. before the U.S. District Court in Manhattan, involved nearly $10 billion in cash plus another $7 billion in consumer relief measures, such as loan modifications, short sales, principal loan reductions, etc.

Our Miami foreclosure defense attorneys understand there are also three other whistleblower claimants in line for a cut of that settlement money as well, totaling about $160 million.

In addition to O’Donnell, another is president of Mortgage Now, who is slated to receive $8.5 million. The company made claims to the U.S. Attorneys’ Office in Western North Carolina asserting the Charlotte-based Bank of America and Countrywide were submitting claims for reimbursement to the Federal Housing Administration, despite already collecting those funds from third-party lenders.

Another claimant, Robert Madsen, is expected to receive $56 million. He previously worked at Bank of America’s appraisal unit. Also in line for collection is Shareef Abdou, a worker on leave from the bank who expects to collect $48 million.

These individuals are said to have turned over thousands of pages of documents and sat for many hours of interviews with the Federal Bureau of Investigation. Certainly, risking their jobs and the future of their careers must have been a trying ordeal.

Whistleblowers involved insist they “did not go into this with the mindset of collecting money.” And that truly, this was a matter of doing the right thing.

While of course we recognize the need for whistleblower incentives, it’s worth noting they will enjoy a secure financial future, and great enrichment. Meanwhile, those who have lost their homes, their livelihoods, their credit score and their good name recover a pittance of what they lost.

Madsen, who reportedly blew the whistle on systemic issues of misrepresentation by the bank’s property appraisal division, insisted the bank had not committed any criminal acts. Rather, it was “endemic to the entire appraisal industry.” Of course, just because a lot of people do it doesn’t make it legal.

Madsen says he intends to use the settlement money to fund his new appraisal firm. Let’s hope he holds a better foundation of ethics than his forced benefactor.

If you’re battling debt collection in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Check out the full Bank of America whistleblower details (affidavits), June 13, 2014, By David Dayen, Salon.com

Ex-Countrywide exec to get $57 million from BofA whistle-blower suit, Dec. 17, 2014, Bloomberg News
More Blog Entries:
OCC: Banks Need Better Risk Culture, Nov. 24, 2014, Miami Foreclosure Defense Attorney Blog