US Bancorp to Pay $200M for Underwriting Bad FHA Loans

Whistleblowers come in all shapes and sizes but, when proof of fraudulent activity hits the hallowed halls of giant banking institutions that seem almost untouchable, it really makes you shake your head. The rich, as they say, seem to always find a way to get richer.

Case in point: U.S. Bancorp violated the U.S. False Claims Act and now has to pay the US government to the tune of $200 million. (USB settled the matter rather than admitting liability and exposing itself to public litigation.) The “why” is quite obvious: greed. As frustrating as that knowledge may be to John Q. Public, consider that the “how” is even more maddening.

USB underwrote mortgage loans, secured by the FHA (Federal Housing Administration.” The problem is that those loans, according to the US Justice Department, didn’t meet FHA guidelines. Therefore, the government claimed and was able to prove, USB misused “government programs designed to maintain and expand homeownership,” according to Stuart Delery, assistant attorney general for the Justice Department’s Civil Division.

What’s worse is that unlike times when a private entity commits fraud against the government, USB wasted a considerable amount of taxpayer funds and duped the American Public. The bank’s actions have had, and continue to have, long-standing effects on both the real estate markets and the trust of hardworking homeowners.

Delery added that USB’s agreement to repay $200 million in damages is a testament to his department’s efforts to stamp out corporate fraud. “As this settlement shows, we will continue to hold accountable financial institutions that violate the law by pursuing their own financial interests at the expense of hardworking Americans.”

“It’s unbelievable that corporations like USB complain about the False Claims Act being too harsh. The bank essentially laundered money, settled its case without admission of guilt and no one went to jail,” commented seasoned qui tam attorney Ross Begelman of Begelman & Orlow. “The False Claims Act should be no only harsher but used more often to stop corporate thieves from taking advantage of hardworking taxpayers.”

If you or someone you know has information that could lead to fraudulent activity against the government being exposed, contact an experienced whistleblower lawyer about your case today.