As published in the Milwaukee Journal Sentinel
Federal prosecutors have brought a huge civil fraud case against one of the nation’s largest privately held mortgage brokerages, on the heels of a whistleblower suit with a Milwaukee connection.
The feds have targeted Allied Home Mortgage, claiming its reckless lending practices led to more than $830 million in losses covered by the department of Housing and Urban Development.
Prosecutors in New York City were actually taking over a False Claims act a former Allied manager in Massachussetts, Peter Belli, filed under seal in May.
That manager is represented by Mahany & Ertl, a tiny asset recovery, fraud, tax, and white collar defense law firm in Milwaukee.
Brian Mahany (Tulane, ’83) and Joe Bird, a Michigan-based attorney with the firm, are handling Belli’s qui tamclaims. Under the False Claims act, Belli would be entitled to a 15 to 25 percent of any funds recovered from Allied by the government.
Mahany said Belli first sued Allied on his own for unpaid commissions back in 2007. The case was dismissed, and he hired Mahany & Ertl to handle the appeal. Mahany said while researching Allied, they discovered it had the highest mortgage default rate in the nation, more than 50 percent. That became a False Claims Act case, he said, because it was the federal government, and ultimately taxpayers, left holding the bag for all those defaults.
It didn’t hurt that President Barack Obama had established a Financial Fraud Enforcement task force in 2009.
“Our timing was just right,” Mahany said.