I chuckled when I read the lead story in Law 360 today, “Banks Face Increased Whistleblower Risk in 2014.” Although the story that follows is focused primarily on SEC whistleblower claims, the real storm is coming from FIRREA and federal False Claims Act cases. Throw in possible IRS whistleblower claims and it promises to be a very bad year for banks, brokerage firms and mutual fund companies.
Whistleblower laws have been on the books for over a century. The IRS whistleblower program was created in 1867. The federal False Claims Act is even older, dating back to 1863 and the Civil War. (FIRREA – short for the Financial Institutions Reform Recovery and Enforcement Act – and the SEC program are only a few years old.) Over time, the programs have ebbed and flowed in popularity. Congress meddled with the False Claims Act a few times along the way as well making the program difficult to access at times.
Today, all four programs are resurging in popularity. Once desuetude, these programs now help thousands of people file false claims act cases in federal court. More importantly, whistleblower lawyers figured out these laws could be used to stop some of the fraud and greed on Wall Street.
The largest – and oldest – of the whistleblower programs is the federal False Claims Act. That law requires a whistleblower to have original source information about a fraud to a government program. Recent court decisions and amendments by Congress have extended the reach of the Act to banks which have received TARP monies, losses incurred by the FDIC and loans insured by the FHA, Freddie Mac and Fannie Mae. A creative whistleblower lawyer can extend the False Claims Act to many types of fraud by banks, mortgage companies, Wall Street investment firms and brokerage firms.
For many whistleblowers, the real incentive is the huge cash awards available under the False Claims Act, up to 30% of whatever the government collects. Considering the law allows the court to triple the damages or award damages of up to $11,000 for each false statement made to the government, the damages (and therefore whistleblower awards) can rise quickly.
FIRREA has become the new favorite of the government. It has a huge statute of limitations allowing the government to go back 10 years in recovering damages for fraud. It also has a lower burden of proof and doesn’t require a loss to taxpayers making these cases easier to bring. The downside? Whistleblower awards are capped at $1.6 million.
We have seen a tremendous increase in the number of whistleblower claims filed against the banking industry. Since these claims are fled under seal in federal court, it will be a year or more before they become public. Some claims, like FIRREA, IRS and the SEC whistleblower programs may never become public. The banks will know about them, however. And they have much to fear.
We have seen the largest increase in claims filed against mortgage bankers and the Wall Street “too big to fail” crowd. Wells Fargo, Merrill Lynch, Bank of America, etc.
If you have original or inside information about fraud within the banking industry, give us a call. We have some of he largest pending false claims act cases pending in the United States, all within the banking industry. (Our whistleblower attorneys can also handle Medicare and healthcare fraud cases as well.)
Want more information? Our Due Diligence blog has a search engine located in the upper right hand corner. We have posted hundreds of informative articles on our site, including many on specific whistleblower cases and detailed descriptions of the false claims act and other whistleblower laws.
Tag as: FIRREA lawyer, whistleblower lawyer, whistleblower attorney, False Claims Act, too big to fail, banking