The front page of today’s Wall Street Journal reports that “Profits Show Biggest Banks Are Back form the Brink.” We never doubted for one second that any of the big banks were really in trouble; they are called “Too Big To Fail” for a reason. Still, the renewed profitably is good news for whistleblowers.
During the last several years, Bank of America, Morgan Stanley, Citi and Goldman Sachs have been hammered pretty hard. False claims act suits, fallout from Bernie Madoff, new regulations and for many big banks, fallout from the residential mortgage crisis and the European debt crisis all too their toll on profitability. But bank executives and Wall Street analysts are now saying the crisis is behind them.
Just one week ago, the feds confirmed that new investigations are being launched into the pricing of certain mortgage bonds during the housing crisis. Some of the big banks that analysts say are now doing well are also the same banks facing potential RMBS fraud (residential backed mortgage securities) probes: Barclays, Citigroup, Deutsche Bank, Goldman Sachs, Morgan Stanley, Royal Bank of Scotland and UBS.
If that isn’t enough, earlier this month we also learned that the feds are now looking at a new round of money laundering investigations. The target? Once again, banks.
While America’s “too big to fail” banks are once again making profits, those profits often came on the backs of millions of Americans who lost their homes and jobs. Until Wall Street and the banking industry (mostly the big banks) pay for their sins, we won’t rest. Nor will the whistleblowers; men and women tired of the fraud or cover ups that still take place today.
Money for Whistleblowers – False Claims Act and FIRREA
Whistleblowers are primarily motivated by the desire to correct a wrong. Most grow weary of fraud and decide to take a stand. Others are motivated by money – whistleblowers with original source information about fraud involving a government program (FDIC, TARP, Fannie Mae, FHA loans, Freddie Mac) can receive an award of up to 30% of whatever the government collects from those committing the fraud. With triple damages available under the federal False Claims Act, those whistleblower awards can be huge. (In August, we reported that one whistleblower received a staggering $597,000,000.00.)
The Financial Institutions Reform Recovery and Enforcement Act (FIRREA) can also pay whistleblowers up to $1.6 million in cases involving banks and mortgage lenders.
Sometimes whistleblowers want to get in front of an impending investigation or criminal probe. We often see whistleblowers who express remorse at prior mistakes and desire to make amends. While that may sometimes mean a lower cash award, folks that come forward early in the game usually avoid prosecution. That makes sense. We all make mistakes and those that come forward first should be treated better.
Finally, some whistleblowers seek justice for a prior wrong act by their employer. Although bank executives and HR staff don’t like to discuss this phenomena, unhappy workers are more prone to become whistleblowers. It’s not surprising, however, that banks that don’t treat the public well often don’t treat their employees well either.
Are the big banks out of the crisis like the Wall Street Journal reports? No! There are plenty more frauds to be uncovered and new ones yet to be invented. While most bankers are good people, greed often motivates those at the top of the ladder meaning many more whistleblower cases in the future.
Whistleblowers send a message to banks and Wall Street that crime does not pay. Big banks received billions in bailout money and government guaranties. While some lenders and mortgage companies acted responsibly and used bailout funds to help homeowners, create jobs and strengthen the economy, others simply continued with business as usual.
As noted above, both the federal False Claims Act and FIRREA allow whistleblowers who come forward and report fraud to receive a percentage of whatever the government collects. If you wish to become a whistleblower and think you have inside, non-public information, give us a call. We represent whistleblowers and help them stop fraud and collect the largest award possible.
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
(Whistleblower photo courtesy of Dave Winer – scriptingnews)