On Tuesday, Oct. 6, 2015, the United States Department of Justice (DOJ) announced that Fifth Third Bank (FTB or the “Bank”) has agreed to pay $85 million to settle claims under the Federal False Claims Act (FCA). The suit was brought by a whistleblower under the qui tam provisions of the FCA. This provision permits private parties to sue on behalf of the government when they believe an individual or company has been committing fraud against the government.

FTB was required to self-report any serious deficiencies, patterns of noncompliance, or fraud to the U.S. Department of Housing and Urban Development (HUD) within 60 days of learning of the incidents. FTB violated that requirement.

The Bank had been unlawfully certifying loans as being eligible to be insured by the Federal Housing Administration (FHA). The bank’s false representations cost HUD millions of dollars as those loans defaulted. From 2003 to 2013, FTB had certified 1,439 materially defected loans, 36 percent of which defaulted forcing HUB to pay the insurance claims.

Federal insurers rely on banks when determining when to provide insurance. When a bank fraudulently assures the government a loan is eligible for the FHA insurance, the government is forced to pay the insurance claims when the loan inevitably defaults, which results in taxpayer money being spent as a result of the fraud.

FTB voluntarily disclosed the information without knowledge of the whistleblower compliant. The Bank admitted the wrongdoing and accepts responsibility for its violations. As a result, the bank has revamped its business practices, including terminating the employees responsible for the false mortgage violations and fraudulent appraisal practices. The government intervened in this whistleblower lawsuit and entered into this settlement with FTB.

This $85 million dollar settlement (1) restores taxpayer dollars, and (2) deters other banks from profiteering on non-compliance with the law. George Mann, former FTB employee and the whistleblower, stated, “The culture of the Bank at that time emphasized profits over compliance with federal regulations. This type of behavior is exactly what led to the financial crisis and, no matter what the outcome, I felt it was my responsibility to speak up and do the right thing.”

The qui tam provision of the FCA provides incentives for whistleblowers to do the right thing and speak up. These incentives include 15 to 30 percent of the funds the government recovers. For example, Mann could receive up to $25.5 million for his part in the case.

If you are aware of fraud being committed against the federal or state governments, you could be rewarded for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower then please feel free to contact an attorney at Beasley Allen for a free and confidential evaluation of your claim.

Anyone considering blowing the whistle is strongly urged to seek legal advice before doing so. Attorneys at Beasley Allen are very familiar with the federal False Claims Act and its state counterparts and can guide whistleblowers along the process. If you have any information and would like to speak with an attorney, please contact Andrew Brashier at Andrew.Brashier@BeasleyAllen.com; Archie Grubb at Archie.Grubb@BeasleyAllen.com; Lance Gould at Lance.Gould@BeasleyAllen.com; and Larry Golston at Larry.Golston@BeasleyAllen.com or at 1-800-898-2034 or 334-269-2343.

Sources:

U.S. Department of Justice
PR Newswire



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