Just like qui tam relators can report fraud against the government under the False Claims Act and be eligible to receive a financial reward, whistleblowers with evidence of banking fraud can bring a lawsuit under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). Bank fraud whistleblowers could be entitled to a significant financial reward if the information they bring forward leads to a successful financial recovery.
At Tycko & Zavareei LLP, our team of bank fraud whistleblower lawyers are knowledgeable in all types of qui tam lawsuits and highly experienced in handling claims brought under FIRREA. If you have knowledge of a bank or another financial institution engaging in illegal activities like banking fraud, contact our bank fraud whistleblower lawyers today for a free legal consultation.
What is the Financial Institutions Reform, Recovery, and Enforcement Act?
FIRREA was enacted in 1989 as a response to the loan and savings crisis that allows prosecutors to bring civil actions against banks, banking officials, and third parties seeking damages for the violation of various banking laws and regulations. The law allows the Department of Justice to seek civil monetary penalties against individuals and organizations that commit bank fraud.
The year after the passage of FIRREA, Congress passed the Financial Institutions Anti-Fraud Enforcement Act of 1990 (FIAFEA) as a way to reward whistleblowers who come forward and report bank fraud. Under the FIAFEA, a whistleblower may receive between 20 and 30 percent of any recovery up to the first $1,000,000 recovered, 10 to 20 percent of the next $4,000,000 recovered, and five to 10 percent of the next $5,000,000 recovered.
How Does FIRREA Compare to the False Claims Act?
Unlike the False Claims Act, FIRREA allows whistleblowers to report fraud that does not involve taxpayer or government money. FIRREA also has a longer statute of limitations of 10 years as opposed to the False Claim Act’s six-year statute of limitations. However, FIRREA’s whistleblower rewards are capped at $1.6 million, whereas the False Claims Act has no cap on whistleblower rewards. FIRREA is a strong government anti-fraud tool, as it imposes a low burden of proof compared to the False Claim Act’s.
Examples of Bank Fraud
To qualify for a FIAFEA financial reward, a whistleblower must bring forward information and evidence regarding FIRREA violations. Some of the most common violations seen in bank fraud qui tam lawsuits include:
- Making false statements or entries in books or records
- Embezzlement or misapplication of funds by an employee or bank officer
- The concealment of assets from a government conservator, receiver, or liquidator
- Receiving commission of gifts in exchange for procuring loans
- The use of false statements regarding loan applications
- Anti-money laundering violations
- Bad loan underwriting or servicing evaluations
- Defrauding or attempting to defraud a bank
- Presenting a false claim to the government
- False statements and the overvaluing of securities
- Mail fraud
- Wire fraud
In order to pursue a bank fraud whistleblower claim, the whistleblower must file a declaration under oath with the Attorney General that includes the original information regarding the fraud that took place. The Department of Justice will then conduct an investigation to determine whether or not to take the case. The whistleblower’s identity may remain confidential during this time. If you are considering bringing a whistleblower lawsuit, contact the bank fraud attorneys of Tycko & Zavareei LLP.
How Are Bank Fraud Whistleblowers Rewarded?
Whistleblowers who provide factual and substantial information to the Department of Justice regarding bank fraud are eligible to receive between 20 and 30 percent of the first million recovered, 10 to 20 percent of the next $4 million recovered, and between 5 and 10 percent of the next $5 million recovered. Banking fraud whistleblower rewards can amount to up to $1.6 million
Significant FIRREA Settlements
While FIRREA cases are sometimes outshined by False Claims Act lawsuits, it still is one of the Justice Department’s top enforcement tools against fraud and other illegal activities. Some significant cases involving bank fraud include:
- In 2013, JP Morgan Chase agreed to pay a $13 billion settlement to resolve claims regarding residential mortgage-backed securities
- In 2014, Bank of America paid a $16.5 billion settlement for FIRREA violations regarding the packaging and sale of residential mortgage-backed securities
- In 2015, S&P agreed to pay $1.375 billion for allegations it defrauded investors leading up to the financial crisis
- In 2016, Goldman Sachs paid a $5 billion settlement over similar claims regarding residential mortgage-backed securities
- In 2018, Wells Fargo paid over $2 billion in penalties for FIRREA violations regarding claims it misrepresented the quality of the loans used in its residential mortgage-backed securities
- In 2021, Wells Fargo agreed to pay $72.6 million to settle claims regarding the manipulation of foreign financial transactions
How can a Bank Fraud Whistleblower Lawyer Help Me?
If you are considering reporting bank fraud under FIRREA, it may be in your best interest to consult with an experienced whistleblower attorney who can guide you through the complex legal process. An experienced bank fraud whistleblower lawyer can assist you by determining the validity of your FIRREA claim, helping you complete your declaration under the proper guidelines, fighting for the maximum reward for your contributions as a bank fraud whistleblower, and protecting you from retaliation from your employer.
Contact a Bank Fraud Whistleblower Attorney Today
The bank fraud whistleblower lawyers of Tycko & Zavareei LLP are highly experienced at handling a range of qui tam cases, including FIRREA lawsuits and False Claims Act lawsuits. Our qui tam law firm is made up of former Department of Justice prosecutors and private practice attorneys who are dedicated to shedding light on fraud and bad business practices. We have represented whistleblowers across the nation in exposing bank fraud and corporate fraud against the government and have obtained many significant whistleblower rewards on behalf of our clients. If you have original information regarding bank fraud or other FIRREA violations, contact the attorneys of Tycko & Zavareei LLP today for a free legal consultation about your best next steps.