Whistleblowers can play an important role in uncovering mortgage fraud. Many of the mortgage fraud cases filed in the wake of the 2008 financial crisis were based on whistleblower allegations. A number of these cases were brought by individuals working within these financial institutions.
In one example, JP Morgan Chase & Co. paid $614 million to resolve charges that it defrauded the Federal Housing Administration and the Department of Veterans Affairs by insuring thousands of home mortgages that did not meet government qualifications. The federal government incurred hundreds of millions of dollars in losses when homeowners defaulted on their federally insured loans. The whistleblower who filed the qui tam lawsuit that led to the settlement received an award of $63.9 million.
Another example of a successful mortgage fraud whistleblower: A former appraiser at Countrywide Financial filed a whistleblower lawsuit in 2009, accusing Countrywide of fraudulent appraisal and lending practices. As is often the case, the whistleblower tried unsuccessfully to get company executives to correct the improper lending practices before seeking help from a whistleblower attorney. Bank of America, which purchased Countrywide in 2008, paid $1 billion to settle the charges. The whistleblower received an award of $14.5 million for bringing the appraisal and lending fraud allegations to the government’s attention.
Lenders, borrowers and loan underwriters rely on accurate financial information to fund, purchase or insure loans. Mortgage fraud, also known as loan fraud or real estate fraud, can be an omission, misrepresentation or misstatement relating to the property, the loan, or insurance for the loan.
Mortgage fraud can be perpetrated by anyone involved in the mortgage acquisition process, including home buyers, sellers, investors, developers, real estate agents, appraisers, lenders, brokers, insurers or creditors. Some people who engage in this type of fraud falsely represent their qualifications or the value of their collateral when applying for a loan. After they have obtained the money, they steal the proceeds with no intent of paying back the borrowed sum.
In most cases, however, the participation of corrupt bankers, insurers or appraisers is required for the scheme to succeed.
While mortgage fraud was especially prevalent leading up to the 2008 financial crisis, it continues to be an issue throughout the country. Some estimates have pegged the total cost of real estate fraud to be around $10 billion per year. New York, Illinois, California and Florida are states with the highest amount of mortgage fraud each year.
Mortgage fraud involves:
Mortgage fraud can be prevented by obtaining the advice of experienced attorneys before entering into a property transfer and by reporting any fraud to the Securities and Exchange Commission, the Federal Trade Commission or the Federal Bureau of Investigation. Consulting with an experienced attorney before taking any action is always advisable.
Fraud schemes are often diverse and complex. The following are common types of mortgage, real estate, or loan fraud:
A report prepared by the National White Collar Crime center lists several other types of mortgage fraud.
In one scenario, the broker invents the property and the buyer, obtaining multiple loans on the same property (made possible by the time gap between the submission of the Deed of Trust to the Recorder of Deeds and the appearance of the new deed of trust in available records).
In another foreclosure scheme, a con artist tells homeowners in distress that they can save their homes in exchange for a fee and transfer of the deed. The criminal takes the fee and re-mortgages the home, leaving the former homeowner with nothing.
Filing a whistleblower lawsuit can be a long, complicated process. If you have any information about a mortgage fraud scheme, it is imperative that you contact a respected and experienced attorney. For more information about filing a claim, contact the whistleblower attorneys at Wisner Baum today for a free case evaluation.
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In May of 2019, the jury in the case of Pilliod et al. v, Monsanto Company ordered the agrochemical giant to pay $2.055 billion in damages to the plaintiffs, Alva and Alberta Pilliod, a Bay Area couple in their 70s. R. Brent Wisner served as co-lead trial attorney for the Pilliods, delivering the opening and closing statements and cross-examining several of Monsanto’s experts. Wisner Baum managing shareholder, Michael Baum and attorney Pedram Esfandiary also served on the trial team in the Pilliod case.
The judge later reduced their award to $87M. Monsanto appealed the Pilliod’s verdict which the California Court of Appeal for the First Appellate District denied on August 9, 2021. Monsanto then requested the California Supreme Court review the appeal’s court decision, which the court denied on Nov. 17, 2021. Monsanto (Bayer) then submitted a petition for a writ of certiorari with the U.S. Supreme Court which SCOTUS denied on June 27, 2022, allowing the final judgment of $87M to remain intact.
$289.2 million jury verdict in Monsanto Roundup trial
Wisner Baum co-represented Dewayne “Lee” Johnson in the first Roundup cancer lawsuit to proceed to trial. On Aug. 10, 2018, a San Francisco jury ordered Monsanto to pay $39.25 million in compensatory damages and $250 million in punitive damages to Mr. Johnson, a former groundskeeper who alleged exposure to Monsanto’s herbicides caused him to develop terminal non-Hodgkin lymphoma.
Months after the jury verdict, the judge overseeing the trial reduced the punitive damages to $39.25 million. Mr. Johnson decided to accept the remittitur, bringing the adjusted amount awarded to Mr. Johnson $78.5 million.
Monsanto (Bayer) appealed the verdict and Johnson cross appealed. On July 20, 2020, the First Circuit Court of Appeals upheld the verdict against Monsanto but reduced Mr. Johnson’s award to $20.5 million. The company chose not to take the case to the U.S. Supreme Court, ending the litigation.
In 2016, Wisner Baum attorney Timothy A. Loranger and six other attorneys in the Plaintiffs’ Management Committee were able to secure a $265 million settlement for victims of the 2015 Amtrak 188 derailment in Philadelphia, one of the largest in the U.S. for 2016.
