2017 Is Trump’s First Yer in Office. Banks Expected Him to Turn a Blind Eye towards Fraud. They Were Wrong
[Post updated] There was an interesting article in today’s New York Post. Titled “Banks Pump Up,” the article contained a cleverly photoshopped graphic of the faces JPMorgan CEO Jamie Dimon and Bank of America CEO Brian Moynihan superimposed over the torsos of body builders. Moynihan’s left bicep has an “I love Trump” tattoo.
Some big businesses are happy to have Trump in office. That includes big banks. After years of billion dollar fines and bad press, the “too big to fail” Wall Street crowd is finally making money. (Wells Fargo still is reeling from its phony account fiasco.)
So are big banks out of the woods? Probably not.
Banks aren’t celebrating because they suddenly cleaned up their act. Instead their happiness comes from a perception that regulators will leave them alone for the next 4 years.
We aren’t sure that is true. And even if it is, whistleblowers still have the ability to prosecute bad their behavior.
Update: This post was written in January 2017. So what happened during Trump’s first year in office. Total whistleblower rewards were off slightly however the government still managed to recover over 3 billion through the False Claims Act. No matter what your opinion of President Trump, it appears DOJ is still pursuing those that defraud taxpayers.
We didn’t see any big banks cases this year, although there were two cases against financial services companies.
First, the court entered a judgment following trial against Allied Home Mortgage. $268 million (with interest, Allied owes more than $300 million). We are excited because that case was brought by our whistleblower.
Also, one month earlier in August prosecutors settled with PHH Mortgage for $74 million. PHH merged with Ocwen, a company that we believe fights Wells Fargo for last place dishonors in the financial services market.
PHH is considered a non-bank lender authorized to write mortgages backed by FHA insurance. The government accused the company of “[f]ailing to document the borrowers’ creditworthiness, including paystubs, verification of employment, proper credit reports, and verification of the borrowers’ earnest money deposit and funds to close.”
In other words, if you had a pulse, you could probably qualify for a loan.
Like most banking fraud cases, the PHH Mortgage case was filed by a whistleblower. Former PHH Mary Bozelli received a $9,067,377.33 reward for stepping forward and reporting the fraud.
False Claims Act and Whistleblower Awards
2016 was the year of the whistleblower. The Justice Department paid out $519 million in awards. The SEC also had a record year in awards. Who are behind these awards? Whistleblowers.
Under the SEC Whistleblower program and False Claim Act, insiders with information about fraud are eligible for awards. Whistleblower awards under both program are as high as 30% of whatever is collected from the wrongdoers. With fines often in the millions of dollars, million dollar whistleblower awards are quite common too. This is especially true in the financial services sector.
A separate whistleblower award is available under the Financial Institutions Reform Recovery and Enforcement Act (FIRREA). Those awards are available for information about wrongdoing by federally insured banks. Presently, those awards are capped at $1.6 million. (There is no cap for False Claims Act and SEC awards.)
Have the banks turned the corner? Maybe in terms of profitability but they get no rewards for good corporate citizenship. Bank of America is telling investors to expect “responsible growth” this year. Unfortunately, we don’t believe the bank has earned the moniker “responsible.”
In our opinion, the senior management of many of the world’s top banks are motivated solely by money. There is nothing wrong with earning a profit. We don’t advocate profits over people, however. Ripping off the public, taxpayers and customers is never acceptable.
We are only just finishing the first year of Trump’s presidency. Whether a Trump administration means easier sledding for Wall Street remains in the next 3 years to be seen. Whistleblowers in the United States, however, are entitled to bring their own actions directly in the name of the government. Our False Claims Act is unique in the world. Even if the government refuses to prosecute, whistleblower actions can usually be prosecuted privately.
If you have inside information about fraud involving federal funds or programs, contact us. All inquiries are always kept confidential. In the last few years, our clients have collected over $100 million in whistleblower awards.
Whistleblowers do make a difference. There is hope for real change. If not by the government then by the people.
MahanyLaw – America’s Whistleblower Lawyers
For more information, contact attorney Brian Mahany at or by phone at 202-800-9791. Please visit our FIRREA and financial fraud whistleblower information pages too.
All inquiries are protected by the attorney – client privilege and kept confidential. We accept cases anywhere in the United States.