by Brian Mahany
For those who remember the disco era, Van McCoy scored a number 1 hit on the Billboard charts back in 1975 with a song called “Do The Hustle.” Decades later, federal prosecutors announced a billion dollar civil prosecution against America’s largest bank, Bank of America. Prosecutors say that BOA engaged in a scheme nicknamed “the hustle” which disguised hundreds of millions dollars of toxic mortgage loans and cost taxpayers millions.
How did the case begin? Through a whistleblower, Edward O’Donnell.
O’Donnell was a former executive vice president of Countrywide. Shortly after the financial meltdown in 2007 and 2008, Bank of America acquired Countrywide.
O’Donnell says that the lender created a program named High Speed Swim Lane or “HSSL” (pronounced Hustle). On paper, the program was designed to speed up loans. The government, however, says HSSL was a “spectacularly brazen” fraud. Preet Bahara, the United States Attorney for Manhattan, did not mince his words, “Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill. As described, Countrywide and Bank of America systematically removed every check in favor of its own balance – they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects. These toxic products were then sold to the government sponsored enterprises as good loans. This lawsuit should send another clear message that reckless lending practices will not be tolerated.”
This marks the 6th time that Bahara has gone to battle against major lenders. Most of those claims were initiated by a whistleblower; someone inside the organization that was willing to come forward and report illegal behavior.
Bank of America calls the charges false, although it has already settled several other claims brought by the government.
The federal false claims act allows whistleblowers to receive a cash award for their inside information. To qualify, there must be a violation of federal law resulting in a loss to taxpayers. Because Freddie Mac and Fannie Mae guaranteed and ultimately paid off the bad loans, taxpayers were left footing the bill.
What makes this case even more disturbing is that Bank of America received about $45 billion in TARP money. At the same time it was asking Congress for bailout monies, the bank is accused of ripping off taxpayers and pushing through garbage loans.
According to the original complaint, O’Donnell complained several times to both Countrywide and Bank of America. As a senior bank officer, you think someone may have listened. They didn’t.
Whistleblowers typically face a tough time when they come forward with information about mismanagement, fraud and corruption. Assuming the allegations in the government’s case are true, Bank of America chose greed and profit over following the law. Thankfully, someone finally came forward.
Whistleblowers in false claims act cases often receive about 20% of what the government collects. That means O’Donnell could receive $200 million for his information.
Filing a whistleblower claim under the federal False Claims Act or Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) isn’t easy and requires filing a lawsuit. The payoff, however, can be huge. If you believe you have a case, consult with a knowledgeable whistleblower attorney.
The fraud lawyers at Mahany & Ertl represent the whistleblower in the largest claims act case pending in the United States, HUD’s $2.4 billion case against Allied Home Mortgage. We proudly represent whistleblowers and help them collect their share of federal award money. More importantly, we help whistleblowers combat fraud and waste in government.
If you want to become one of the new generation of American heroes and believe you have inside important about waste or fraud, give us a call. All inquiries are protected by the attorney – client privilege and kept in strict confidence. For more information, contact attorney Brian Mahany at or by telephone at (direct).
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine and Minneapolis, Minnesota. Services available in many jurisdictions.