In what is being considered a record, landmark case, a former bank executive at Countrywide Financial (now owned by Bank of America Corporation) was awarded $57 million for exposing the presence of fraud in the company’s mortgage practices.
Edward O’Donnell initially filed a whistleblower lawsuit against Countrywide, accusing the company of defrauding mortgage finance companies backed by the government (Fannie Mae and Freddie Mac). According to O’Donnell, the company was selling loans that were not nearly as good as being portrayed by the company. The case became nationally known as the “Hustle” case because of the HSSL acronym used to refer to the process by which Countrywide sold the loans.
It’s the latest issue for Bank of America related to Countrywide since its 2008 acquisition of the company. Since purchasing Countrywide for $4 billion, it has spent tens of billions more on loan buybacks and litigation. This summer, a federal judge ordered it to pay a $1.27 billion penalty related to O’Donnell’s case as well, in which O’Donnell has yet to collect any money.
O’Donnell’s award for this decision represents 16 percent of the total settlement in the case, plus an additional $1.6 million. The case was filed under the False Claims Act, which states that whistleblowers in FCA violation cases are eligible to collect anywhere between 15 percent and 25 percent of the total settlement value recovered in the case. Initially the FCA violation portion of the claim was expected to be denied, but prosecuting attorneys did enough to sway the court in their favor.
When you become aware of fraud within your organization, you may be able to earn an award for reporting it. Speak with the skilled Dallas attorneys at Whistleblower Law for Managers to learn more.