Blog & News
Yesterday it was announced that JPMorgan Chase & Co. reached a $614 million settlement with the U.S. government, as the government continues to seek damages and penalties for fraudulent mortgage lending practices that generated losses in the recent financial crisis. The government has already recovered billions of dollars from U.S. lenders to cover mortgage-related claims and this most recent case serves as an example of the powerful role of whistleblowers and the False Claims Act (FCA).
Keith Edwards, a whistleblower, filed suit against JPMorgan under the FCA in January 2013. The settlement stemmed from the bank’s involvement in mortgage programs run by the Federal Housing Authority and the Department of Veterans Affairs. The programs authorized lenders to approve mortgages for insurance or refinancing by the government, but JPMorgan acknowledged it defrauded the agencies by approving thousands of loans that were sub-standard and failed to meet program requirements. Mr. Edwards’s recovery has yet to be revealed, but he may receive up to 25% of the settlement under the FCA for his work exposing the fraud and reclaiming government losses from the loans.
The U.S. government continues to pursue matters relating to fraudulent lending practices. The U.S. Attorney’s Office in Manhattan has brought eight civil suits since May 2011, while the Department of Justice has reportedly filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. And, earlier this week, Morgan Stanley reached a $1.25 billion settlement with the United States (through the conservator of Fannie Mae and Freddie Mac) and a number of states to resolve claims that the bank sold faulty bonds.