Bank Fraud Whistleblowers Earn Multi-Million Dollar Rewards

The U.S. Government has recovered more than $1.6 billion from banks that have settled whistleblower or qui tam lawsuits brought by individuals under the False Claims Act.  And the individual whistleblowers in those cases have gone home with multi-million dollar rewards for their efforts.

One of the most moving cases involved Lynn Szymoniak, a woman who was facing foreclosure of her home.  After discovering that her bank was relying on false documents to prove that it owned the mortgage, Ms. Szymoniak commenced a whistleblower or qui tam lawsuit under the False Claims Act.  She alleged that banks were using false documents to prove ownership of defaulted mortgages and then submitting insurance claims to the Federal Housing Administration (FHA). 

Her complaint was filed “under seal,” which means that no one knew about the lawsuit other than her lawyers, the Judge, and officials from the U.S. Department of Justice (DOJ).  The local U.S. Attorney then reviewed her allegations and evidence.  After concluding that her case had merit, the Government “intervened” – in other words, the Government decided to take over prosecution of her case against the banks.

Faced with a lawsuit by the U.S. Department of Justice, the banks settled the case for $95 million.  Under the False Claims Act, Ms. Szymoniak was entitled to a reward of between 15% and 25% of the amount of money actually collected by the Government.  In this case, Ms. Szymoniak earned an $18 million reward or approximately 19% of what the Government recovered.

Other recent mortgage fraud whistleblower rewards include:

Kyle Lagow, a former home appraiser, earned a $14.5 million reward for bringing a whistleblower lawsuit that accused sub-prime lender Countrywide Financial of inflating appraisals on government-insured loans.  The U.S. Department of Justice intervened in the lawsuit and ultimately negotiated a $1 billion settlement with Bank of America, which bought Countrywide in 2008.

Sherry Hunt, an executive with CitiMortgage, took home a $31 million reward plus attorneys’ fees for commencing a lawsuit alleging that CitiMortgage had submitted false appraisals for FHA loans and mortgages.  After the government intervened in her lawsuit, CitiMortgage agreed to settle the lawsuit for $158 million.

If you have information that a mortgage company, bank, or other financial institution is making false claims tot he government, then you should consult with an experienced lawyer immediately.  To schedule a free and confidential consultation by telephone or in person, call my office today at (917) 652-6504 or click here to communicate with me via email.

John Howley
New York, New York

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