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The Justice Department has released the
False Claims Act statistics for fiscal year 2012. In that year, DOJ recovered 4.9 billion dollars
in cases trying to recoup the money stolen from the Government by fraud.
By far the largest amount of the money was recovered from health care
companies who were cheating the Government, usually via Medicare or Medicaid.
I wrote about this health care fraud in a recent blog entry. Today I want
to focus on the area of financial fraud, and in particular the areas of
mortgage and housing fraud.

The DOJ pointed to successes the Financial Fraud Enforcement Task Force
has had over the past year. President Obama established the Task Force
as a mechanism for allowing the various groups involved in preventing
financial fraud to work together. The Task Force pulls together regulatory
agencies, law enforcement, investigative, and prosecution.

The Task Force’s big news for the year was a mammoth $25 billion
settlement with Bank of America Corporation, JP Morgan Chase & Co.,
Wells Fargo & Company, Citigroup Inc. and Ally Financial Inc. (formerly
GMAC). The settlement involved the federal government, and also the attorneys
general from 49 of the fifty states as well as from the District of Columbia.
The banks repaid $900 million that had been laid out by federal mortgage
insurance programs as a result of the fraud by the banks. The settlement
addressed fraud in the area of mortgage loan servicing and foreclosure.
The settlement also includes provisions aimed at helping homeowners who
were having difficulty making their mortgage payments, and provisions
designed to protect homeowners in the future, in order to prevent what
Attorney General Eric Holder called the
“abusive practices” by Bank of America, JP Morgan, Wells Fargo, Citigroup and Ally Financial.

Over the course of fiscal year 2012, the federal government also made several
other large settlements with other banks that had cheated the government.
Deutsche Bank AG and subsidiary MortgageIT, Inc., agreed to pay $202.3
million as a result of false claims they made in connection with federally
insured mortgages. As part of the settlement, MORTGAGEIT admitted that
it had not complied with all of HUD-FHA regulations, and that it had submitted
paperwork saying that loans were eligible for FHA mortgage insurance,
even though the loans actually were not eligible under the terms of the
insurance program. The case against Deutsche Bank and MortgageIT had been
filed in the Southern District of New York, where Preet Bharara is the
United States Attorney.

Citibank subsidiary CitiMortgage Inc., was required to pay the federal
government $158.3 million. Like MortgageIT, Citibank admitted that it
had told HUD that certain loans were eligible for FHA mortgage insurance,
despite the fact that the loans actually were not eligible for the insurance.
The Citibank case also was filed by U.S. Attorney Bharara’s office
in New York.

The government recovered another $132.8 million from Flagstar Bank for
its federally insured mortgage fraud. The case against Flagstar also had
been filed out of the office of the United States Attorney for the Southern
District of New York.

While, the Task Force had enormous success in the area of recovering for
mortgage insurance fraud, the recoveries barely scratched the surface
of the mortgage and banking fraud against the federal government.


Lee’s peers have named her a Georgia SuperLawyer every year for two decades.