Being a whistleblower isn’t easy. Of course many make huge sums of money and are successful in stamping out fraud. Unfortunately along their journey some face retaliation, poverty and the inability to discuss their case. (False Claims Act cases are “sealed” by the court during investigation.) Although the public reads about the successful cases, not every whistleblower walks away with a $50 million check. A recent False Claims Act case against Home America and Taylor Bean, both mortgage companies, demonstrates this point.
We rarely editorialize when writing about whistleblower cases. Sometimes, however, we simply must chime in. Keep reading… the case has a sad and unusual ending.
Stephanie Kennedy and Comfort Friddle, former Home America Mortgage employees, filed a whistleblower case against their former employer, former boss and Taylor Bean Whitaker Mortgage. The pair claimed Home America tricked the government into insuring bad loans. They claim the company did so by deliberately falsifying mortgage application data such as income verifications.
Ultimately, both mortgage companies went under leaving just $100,000 in settlement monies. What should have been a case worth $320 million settled for a fraction of a penny on the dollar.
This alone makes for an interesting story but there is more.
Attorney Mike Bothwell of Bothwell Bracker PC originally represented Kennedy and Friddle. While the case was pending, the firm dissolved and became Bracker & Marcus.
According to court records, Bothwell filed a $1.1 million attorney’s lien, allegedly because he was upset that the clients chose to stay with the old firm instead of following him.
We are not sure what happened but lawyers should never drag clients into internal disputes. According to Law360, the Justice Department won’t pay anyone until the fee dispute is resolved. That means the clients are forced to suffer because the lawyers can’t agree on what happens to the apparent $45,000 legal fee.
Equally bad is chasing clients for alleged legal fees that are 11 times the entire settlement. What whistleblower would ever hire a lawyer if she or he thought they would have to pay the lawyers more money than the lawyers obtained!
Bothwell claims that a termination provision in the agreement allows him to charge an hourly fee if the clients unreasonably terminate the Bothwell Bracker firm but that firm ceased to exist when the partners went their separate ways. If the allegations are true, Bothwell is punishing the very clients he once pledged to help.
While we genuinely feel sorry for the clients, they may not have clean hands either. In reviewing the docket, it appears that the two whistleblowers sought sanctions from one of the lawyers representing the defendants. In denying their application, the judge suggested that the two might be more interested in getting sanction money than resolving the dispute.
What should have been a great whistleblower case against a mortgage company fell apart when the company went under. We have no doubt that all the parties and their lawyers worked very hard for an award that only turned out to be $100,000. Instead of moving on, however, it appears that the whistleblowers are making frivolous claims against opposing counsel and that the whistleblowers’ lawyers are dragging the clients into their own messy partnership dispute.
Unfortunately, there are no winners here and the case isn’t even over. Because of the lien issue, no one gets paid. By our quick count there are now 6 lawyers spending hours of time fighting over $45,000. One of the motions we reviewed was 120 pages!
Our advice is simple, move on.
Obviously, most whistleblower cases don’t have an ending like this story. Under the False Claims Act, successful whistleblowers are entitled to an award of up to 30% of whatever the government collects. Unfortunately, in a few cases the wrongdoers simply have no money.
If you believe you have inside information about fraud involving the government or a government program (e.g. residential mortgage guarantees), give us a call. We have brought several, billion dollar cases and have helped clients collect tens of millions of dollars. Not every case is that large but every whistleblower client is equally important to us.
Need more information? Give one of our whistleblower lawyers a call today. For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries kept strictly confidential.
MahanyLaw – America’s Whistleblower Lawyers.