The trial is over. On November 29th, a federal trial jury in Houston found in favor of the government on all counts. The jury awarded the government $7,370,132 against Allied CEO Jim Hodge and a whopping $92 million against Allied. Under the False Claims Act, the court must triple those sums.
Since we filed this case in early 2011, we constantly hear from many former Allied branch managers. One has become a close personal friend. The biggest questions now on peoples’ minds seem to be, “Will I get paid my back commissions and wages?” and “Is the case finally over?”
The unfortunate answer to both questions is no.
Allied has closed its doors and claims it has little cash. Just before the company was shut down by HUD, Allied lost much of its borrowing capacity. Like most banks and lenders today, Allied makes it money when it sells a loan. Their profit is the commission they earn when the loan is made and underwritten. Since they are not a bank, they borrow money to reloan it.
As Allied’s creditors stopped the flow of capital to the company, employees say that Jim Hodge robbed the commission accounts and used the money set aside for employees and instead used it to fund more loans.
As to the case being over, since this case was filed in early 2011, the docket has grown to over 448 entries. This was no easy case, no easy trial and we probably still hear a lot more from Allied.
We anticipate an appeal but anything is possible. Earlier today, the lawyers for all sides of the case submitted a proposed hearing schedule for the remainder of this case.
Under that proposal, the U.S. government has until December 22nd to file its motion to reduce the jury verdict to a judgment, triple the damage awards and set the penalties. Although many people think that Allied can walk away for just $92 million, the court must still still triple the damages, calculate the FIRREA penalty and set the penalties for the False Claims Act. (The jury determined the damages, the court must triple the verdict and also determine penalties and fines.)
That motion won’t be decided until well after the beginning of the New Year.
Next, Jim Hodge and Allied (also known as “Americus”) plan on filing a notice of appeal. That motion doesn’t even have to be filed until February 17th. Only after the court considers all the outstanding motions will the appeals clock start.
Given the current schedule, no appeal is even due until mid February
Whistleblower Awards and Jim Hodge / Allied Home Mortgage
Under the federal False Claims Act, whistleblowers can earn up to 30% of whatever the government collects from the wrongdoers. Allied may have closed its doors but Jim Hodge still owes millions and the government could seek to pierce the corporate veil and go after Mr. Hodge for the amount owned by the corporation.
Most cases settle before trial. Allied and the Countrywide HSSL (pronounced “hustle”) case were the only two big lender cases to go trial since the 2008 financial crisis. When a case settles, the whistleblower awards are usually paid right away. Appeals and collection efforts in this case could slow things down.
In recent years, the Justice Department has paid over $1 billion in whistleblower awards. $435 million was paid in 2014 alone.
To earn an award, one must have original source (“inside”) information about wrongdoing involving government programs or funds. In residential mortgages, that means loans guaranteed by the FHA, VA, Fannie Mae or Freddie Mac.
If you think you qualify, call us for a no obligation assessment of your case. Worried about paying for a lawyer? We take cases on a contingent fee basis meaning you owe us nothing unless we collect money for you. Worried about retaliation? Whistleblower retaliation is against the law. We have an employment lawyer on our team in case retaliation occurs. Concerned about remaining anonymous? We have several strategies to keep your name out of the public eye. Worried that your information may be stale? The law allows claims to go back up to 6 years.
MahanyLaw – Proudly Representing the Allied / Jim Hodge Whistleblower