Financial and Bank Cases


United Shore Shoddy Underwriting, QC Practices Cost $48M in FHA Lending Violations Case

United Shore Shoddy Underwriting, QC Practices Cost $48M in FHA Lending Violations Case

Troy, Michigan-based United Shore Financial Services LLC (USFS) has agreed to pay the U.S. $48 million to resolve allegations it violated the False Claims Act by underwriting Federal Housing Administration (FHA)-insured mortgage loans that did not meet FHA requirements.

As part of the settlement agreement, United Shore admitted to pressuring underwriters to approve FHA mortgages, using a compensation plan formula tying underwriter compensation to percentage of loans approved and closed, and falsely certifying that direct endorsement underwriters reviewed appraisal reports before USFS approval and FHA-insured mortgage endorsement, the Justice Department announced Wednesday.

U.S. Investigation Finds USFS Approved Hundreds of Ineligible FHA-Insured Loans

Allegations stem from a January 10, 2014-initiated joint investigation into United Shore Financial Services’ underwriting and quality control practices by the U.S. Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the Civil Division’s Commercial Litigation Branch and the Western District of Wisconsin and Eastern District of Michigan U.S. Attorneys’ Offices....


JPMorgan: $264 Million Settles FCPA Bribery Charges on 200 China Friends & Family Hires

JPMorgan: $264 Million Settles FCPA Bribery Charges on 200 China Friends & Family Hires

A U.S. government investigation into a JPMorgan hiring program in Asia concluded with a multi-$264 million settlement. The SEC found substantial evidence that J.P. Morgan offered prestigious jobs to the children of Chinese government officials in exchange for the officials' influence to secure lucrative investment-banking assignments - a violation of the Foreign Corrupt Practices Act (FCPA).

In 2006, JPMorgan APAC created a referral program known internally as the “Sons & Daughters Program.” According to the SEC order, the initial goal of the program was to accommodate frequent requests “to hire the relatives and friends of senior executives or officials with its clients, prospective clients, and contacts within foreign government ministries” by offering targeted entry-level and short-term employment opportunities.

Compliance Officer Chris Charnock’s Concerns Dismissed by JPMorgan Management

While the program may have been created in good faith in the beginning, by 2011, JPMorgan employees in Asia were already trying to raise concerns with compliance executives in New York that the bank might be charged with bribery....


Whistleblower Didn’t Live to See Landmark Allied Mortgage Verdict, Taxpayers Recover $92 Million

Whistleblower Didn’t Live to See Landmark Allied Mortgage Verdict, Taxpayers Recover $92 Million

In May, 2011, Peter Belli filed a complaint in Boston. With guidance from whistleblower experts at Mahany Law, he accused Allied Home Mortgage Capital Corporation of massive mortgage fraud in a False Claims Act “qui tam” whistleblower lawsuit.

Over five years later, and after a trial that lasted five weeks, a jury found both the corporation and its CEO, Jim Hodge, guilty of knowingly representing to Housing and Urban Development (HUD) that certain loans were properly prepared and eligible for Federal Housing Administration (FHA) insurance, when in fact they were not.

Belli had managed several Allied branches in Massachusetts, Rhode Island, Arizona, and other states. He was thus in an ideal position to observe Allied Capital’s fraudulent practices, and he was determined to bring the scheme to light. Unfortunately, he passed away before the verdict came out only days ago in Texas. The move to a Texas court had been a choice of the defendants....


Breaking: $100 Million Verdict in Allied Capital False Claims Case

Breaking: $100 Million Verdict in Allied Capital False Claims Case

A Southern District of Texas federal court jury returned today a nearly $100 million verdict against Allied Capital and bank principal Jim Hodge for violating the U.S. False Claims Act and under FIRREA statutes.

The case has special significance as it is one of only 2 False Claims Act cases against a lender related to the mortgage meltdown that went to trial and verdict. The other was the well-chronicled HUSL - Bank of America case. All others were settled in some of the largest settlement amounts in U.S. history.

The False Claims aspects of the case relate to Allied’s “shadow branches”. HUD requires banks, mortgage companies, lenders…to have licensed offices, in effect something at risk themselves in the form of salaries, offices rents and other overhead as a government approved loan originator and therefore a motivator for good business practices....


Failure to Report Bank Cybersecurity Breaches or Cyber Inadequacies Next Whistleblower Op

Failure to Report Bank Cybersecurity Breaches or Cyber Inadequacies Next Whistleblower Op

Financial institutions who fail to secure computer networks and sensitive customer information from cyber attacks are presenting huge whistleblower opportunities for IT professionals and other bank and investment firm employees. Failure to report weak cybersecurity systems and cyberhacks continue to pose a problem for U.S. banks, and whistleblowers are in prime position to collect big cash awards for their inside knowledge.

Cybercrime Estimated To Cost Global Economy over $500 Billion Annually

McAfee estimates the annual cost of cybercrime to the global economy could be as much as $575 billion per year and banks remain the top cybercrime targets. Not only do weak cybersecurity systems continue to expose sensitive personal information, but careless employee mishandling of sensitive data poses an equally dire threat. Attaching the wrong file to an email or downloading sensitive information to a personal device is becoming a major security issue....


Regions Bank Pays $52.4 Million on Dodging FHA Mortgage Lending Rules Allegations

Regions Bank Pays $52.4 Million on Dodging FHA Mortgage Lending Rules Allegations

Birmingham, Alabama-based Regions Bank has agreed to pay the U.S. government $52.4 million to resolve allegations that it violated the False Claims Act by knowingly underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Department of Justice announced Tuesday.

Due to Regions’ omissions and compliance failures, HUD insured hundreds of loans that were not eligible for FHA mortgage insurance under the DEL program and that HUD would not otherwise have insured. HUD suffered substantial losses as a result of paying the ineligible mortgage insurance claims....


M&T Bank Pays $64M after Feds Probe Risky Home Loans

M&T Bank has agreed to a $64 million settlement with the U.S. government over a whistleblower’s allegations they originated loans that did not meet underwriting standards of the Federal Housing Administration (FHA). Whistleblower, Keisha Kelschenbach, stands to receive a cash award of between $6.4 million and $19.2 million for filing the initial False Claims Act (FCA) lawsuit that prompted the investigation.

Whistleblower M&T Employee Lawsuit Spurred Investigation

Filed in 2013, Kelschenbach’s whistleblower lawsuit against M&T Bank stems from allegations that the Buffalo, New York-headquartered bank certified mortgage loans in violation of FHA and Department of Housing and Urban Development (HUD) requirements, resulting in the submission of false claims for payment....


Former Walter Investment Management Exec Matthew McDonald Earns $5.15M Reward in False Claims Act Case

Former Walter Investment Management Exec Matthew McDonald Earns $5.15M Reward in False Claims Act Case

Walter Investment Management Corporation (WIMC) has agreed to pay the U.S. government more than $29 million to resolve claims that they violated the False Claims Act by submitting fraudulent reverse mortgage claims to the Department of Housing and Urban Development (HUD). The initial allegations against Walter Investment Management were brought forth in a qui tam, or whistleblower, lawsuit by a former executive of the company, Matthew McDonald. McDonald will receive $5.15 million as his share in the settlement for uncovering the large-scale fraudulent activity.

The allegations against Walter Investment Management highlighted in Matthew McDonald’s whistleblower lawsuit are related to WIMC’s participation in HUD’s Home Equity Conversion Mortgages program. This program insures reverse mortgages, which are a mortgage product that allows elderly people to stay in their homes and draw on their equity.

Reverse Mortgage Solutions, REO Management & RMS Asset Management Subs

According to the accusations, between August 2009 and March 2015,WIMC, through its subsidiaries Reverse Mortgage Solution Inc., REO Management Solutions and RMS Asset Management Solutions, routinely submitted false claims in order to receive interest from HUD it was not actually entitled to....


Iceberg’s Tip? U.S. Bank False Claims Act Lawsuit Has Mortgage Servicers on Edge

Iceberg’s Tip? U.S. Bank False Claims Act Lawsuit Has Mortgage Servicers on Edge

A False Claims Act lawsuit against U.S. Bank could signal a cavalcade of similar actions against loan servicers that allegedly circumvented a key pre-foreclosure HUD requirement - steamrolling helpless homeowners to reap fast profits. Sources say Ocwen, Bank of America, Wells Fargo and other loan servicers are girding for new False Claims Act lawsuits filed by employees and ex-employees exposing yet more mortgage foreclosure misconduct to reap million dollar whistleblower rewards.

U.S. Bank Steamroller Foreclosure Process Skipped Legalities says ABLE

Advocates for Basic Legal Equality (ABLE), an Ohio based legal aid group, filed a False Claims Act lawsuit against U.S. Bank alleging this division of one of the nation’s largest banks cheated the U.S. government....


Revealed: Wells Fargo – Ocwen False Claims Fraud Suit Unsealed

Revealed: Wells Fargo – Ocwen False Claims Fraud Suit Unsealed

The mortgage chicanery spotlight is once again focused on Wells Fargo & Co. and Ocwen Financial Corp. A federal False Claims Act whistleblower complaint unsealed yesterday claims that Ocwen, the nation's largest mortgage servicer, was double dipping and keeping monies that should have been paid to Fannie Mae.

Ocwen Financial Corp. Facing Mortgage Servicer Fraud Case

Ocwen Financial Corp. is a leading mortgage servicer that services an estimated 1 million mortgages, collecting payments of behalf of banks and other entities. Mortgage servicers have taken over this function for many of the major banks and litigation asserting misconduct within the mortgage servicer industry abounds....