Whistleblower News & Articles
A U.S. District Court Judge has ordered that Bank of America, Countrywide and one individual pay a bank fraud penalty of $1.3 billion. In his opinion, Judge Rakoff adopted the United States’ interpretation (see brief 1 and brief 2) of the penalty provisions of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, 12 U.S.C. § 1833a (“FIRREA“), and rejected the argument by defendants. FIRREA is a powerful weapon passed by Congress in response to the savings and loan crisis of the 1980s. Using a tip from a whistleblower, prosecutors dusted off the law and used it to great success in this case. Under FIRREA, a successful whistleblower shall be entitled to a reward of “20 percent to 30 percent of any recovery up to the first $1,000,000 recovered, 10 percent to 20 percent of the next $4,000,000 recovered, and 5 percent to 10 percent of the next $5,000,000 recovered.” 12 U.S.C. § 4205. In calculating that award, the Attorney General may consider the size of the overall recovery and the usefulness of the information provided by the whistleblower. Id. This means that in this case, the whistleblower is entitled to an award of between $850,000 to $1.6 million of the government’s $1.3 billion recovery. Unlike the False Claims Act, FIRREA caps the whistleblower’s reward; in other words, he or she only shares in the first $10 million of any recovery. Presumably the defendants will appeal the jury verdict on liability and the judge’s order on penalty so this saga is not yet over.