by Joseph Bird
It has been a while since we updated you on Allied Mortgage*, especially the US v Allied and Americus 2.5 billion dollar False Claims Act civil lawsuit. Since our last update, the case was transferred to a Houston, Texas Federal District Court. Many or the other peripheral cases have gone into hibernation awaiting the outcome of this case, and for good reason. Whether owner / kingpin Jim Hodge and Allied can ever attempt a comeback depends on the outcome of this case.
Once again, Allied Mortgage and Hodge have chosen to attempt to have the case dismissed on technical legal grounds rather than answer the complaint and defend on the merits. Not surprising. These motions and the responses have been filed and a hearing is set for February 24, 2013 in Houston. If the case is dismissed, the government will have to rethink it position.
It is highly unlikely that Hodge would ever be granted a license to broker or originate government insured loans, but he likely would try to return to the mortgage business in some fashion. If the motions are denied, then Mr. Hodge will have to testify in a deposition about the allegations against him, something he is spending millions in legal fees (the millions he took from his own employees) in order to avoid doing. The truth as to what he did to the public, the government and his own employees should then be revealed and confirmed in the course of discovery. While he claims he did nothing wrong he has avoided any explanation despite being served with subpoenas in other cases. He prefers to spend money on lawyers to avoid testifying than simply appearing and answering the questions.
Why do this if he is telling the truth? We suspect you know the answer.
In my opinion, he continues to waste hundreds of thousands of dollars – dollars taken from the accounts of his former employees – on legal fees, pursuing lawsuits for sport, not because he will ever recover anything than to satiate his own bizarre needs for a moment. His bizarre needs seem to include the need to feel like God and to crush his former employees.
Recently, Mr. Hodge ordered his lawyers to file a separate motion to “strike” or remove about a dozen paragraphs in the complaint detailing his mistreatment of his employees, claiming they were not relevant to his fraud against the government. The real reason for wasting even more money is likely that he simply can’t stand facing the reality of what he has done and can’t explain it away. Reading the words in the complaint bothered him such that he tried to lawyer them away. He failed. The court denied the motion, but that he would spend so much money to try to eliminate words that pained him is telling.
We will issue an update once the Federal Court rules on the motions to dismiss next month. We hope that the ultimate resolution in Allied will bring a sense of justice to the many who have been wronged.
About the Author. Joseph Bird is our former resident partner in Detroit. The case we filed against Allied has been adopted by HUD. The government is pursuing both Allied and Hodge for $2.4 billion dollars. We believe our Allied case is the largest pending false claims case in the United States against a bank or lender.
Not all cases are the size of Allied. If you have inside information about corruption or fraud resulting in harm to the government or taxpayers, you may have a false claims act case. Those laws allow whistleblowers to receive up to 30% of whatever the government collects.
Whistleblowers fill an important role in reducing taxes and fighting fraud. If you believe you qualify for a cash award or simply want more information, contact attorney Brian Mahany at or by phone at 414-704-6731 (direct). All inquiries are kept in strict confidence.
Our Due Diligence blog also has many informative articles and stories. To search it, use the fraud tab or the search engine in the upper right hand corner. We have extensive coverage of the Allied matter and dozens of general articles under the key word “false claims” or “whistleblower.” We also have coverage of the Allied Mortgage verdict and subsequent imposition of punitive damages.
*We use Allied Mortgage to refer to Allied Home Mortgage, Allied Corporation and Allied Capital.