What’s a billion dollars? To a big bank, not much! Bank of America, Wells Fargo, JPMorgan Chase and Citi reported a combined total of $5.3 billion in litigation expenses last year. That’s how accountants record the huge fines and penalties on corporate books. The year before the total was $28.3 billion. (We are happy to say that we were a large part of the 2014 figure, the year Bank of America paid $10 billion in fines.)
The above sums are actually smaller than what the banks really must pay. Often the fines are bifurcated – for Bank of America that meant roughly $10 billion in cash and an additional $6.6 billion in “soft money”; funding for remedial programs.
These sums also don’t include the billions of dollars paid by foreign banks who chose to play in our sandbox and got caught misbehaving.
The numbers are so huge that they become impossible to grasp for the average American. The typical mortgage underwriter, bank teller or customer service rep would be thrilled to get a $50,000 lump sum check… but millions or tens of millions or billions?
Actually, many of those huge fines are courtesy of whistleblowers. Concerned employees who woke up one day and said, “enough!” There were three whistleblower awards in our 2014 Bank of America case totaling $160,000,000.00. Two of those awards went to managers and one to an appraiser.
David vs. Goliath. You don’t have to be the fat cat in the boardroom in order to earn a whistleblower award. You need only have original source (inside) information of wrongdoing and a willingness to step forward.
It is the willingness to come forward that holds back many people. Why would someone become a whistleblower? Good question!
We have represented many folks who have made the big first step and have helped put over a $100 million dollars in their pockets. So we have some experience on what motivates people.
Often, the process starts when an employee becomes aware of wrongdoing at their workplace. Statistics show that 82% of whistleblowers try to fix the problem internally first. That means reporting the problem to higher ups. Incredibly, many companies are so shortsighted that they retaliate against the whistleblower. Others companies simply ignore the problem. Many employees do nothing, even after they have suffered retaliation. The good news, however, is that an increasing number are fed up and stepping forward.
Most of our whistleblower clients simply want to do the right thing. There original motivation wasn’t money. It was to correct a wrong.
FIRREA, False Claims Act and Whistleblower Awards
It is easy to ask you to join our clients that have already earned tens of millions of dollars in whistleblower awards. Many readers, however, are probably wondering how that happens. It isn’t like the tooth fairy where money magically appears under your pillow.
There are two primary whistleblower award programs applicable to banking and financial services.
The first is the federal False Claims Act. Dating back to 1863, this law allows people with inside information about fraud involving federal funds or programs to file a lawsuit in the name of the government. If the suit is successful, the whistleblower receives between 15% and 30% of the recovery.
Since most residential mortgages are backed by Fannie Mae, Freddie Mac, FHA or VA, wrongdoing involving the underwriting or servicing of home loans can be a False Claims Act violation. Misuse of TARP funds is also actionable.
Some are thinking, “Wait, how am I going to file a lawsuit against Bank of America on behalf of the government? I am just a bank teller barely feeding my family. Bank of America has trillions of dollars…”
We hear that question a lot. Don’t worry. This is what we do for a living and there is no cost to you unless you get paid by the government. We file the suit, the government does the investigation and ultimately we or they prosecute the case. In other words, we fund the filing of the suit and prosecution if necessary, not you.
The other whistleblower award program is FIRREA. Short for the Financial Institutions Reform, Recovery and Enforcement Act, FIRREA is a law that allows the government to prosecute a wide array of bank misconduct.
On the plus side, one need not show a loss to the government. Virtually any bank fraud may qualify.
On the negative side, awards are capped at $1.6 million. (There is no cap on False Claims Act whistleblower awards).
When reading about these never ending huge banking fines, think of this; despite these huge multi-billion dollar fines, most of the CEO’s of these “too big to fail, too big to jail” monster banks keep getting raises. Brian Moynihan, CEO of Bank of America just received a 23% increase in compensation ($16 million) and this is after his bank paid the largest civil fine in U.S. history.
Everyone is tired of the rich getting richer. If you have inside information of wrongdoing within the financial services industry, contact us. All inquiries are protected by the attorney – client privilege and kept strictly confidential.
There is no reason why you can’t claim your fair share of the pie and help clean up greed and corruption at the same time.
MahanyLaw – America’s Whistleblower Lawyers