MEDIA CONTACTS: James E. Butler, Jr. (jim@butlerwooten.com, Tel: 800-233-4086; Leigh May (leigh@butlerwooten.com), Tel: (404) 579-5166; Brandon Peak (brandon@butlerwooten.com), Tel: (404) 550-8190; or Marlan Wilbanks (mbw@wilbanks-bridges.com), Tel. (404) 842-1075.
ATLANTA, November 19, 2012
Today United States District Judge Amy Totenberg allowed a whistleblower lawsuit to proceed against Wells Fargo and Mortgage Investors Corporation (“MIC”) that alleges the banks had illegally charged veteran borrowers hidden fees on refinanced home loans backed by the Veterans Administration. Wells Fargo and MIC had filed motions seeking dismissal of the lawsuit. According to the lawsuit, the banks’ misconduct has cost taxpayers hundreds of millions of dollars.
Prior to the federal court ruling, six other banks which had also filed motions to dismiss elected to settle the claims against them in the case. Those six banks agreed to pay a total of $161.7 million, leaving Wells Fargo and MIC as the only remaining defendants.
"We look forward to trying the case against Wells Fargo and Mortgage Investors," said James E. Butler, Jr. of Butler Wooten & Fryhofer, LLP, lead counsel for the whistleblowers. "Those two are by far the biggest defendants – they have 70 percent of the damages exposure of the eight defendants."
The five banks which have agreed to settle recently are Countrywide Home Loans, Inc. ($45 million), PNC Bank ($38 million), First Tennessee Bank ($16 million), SunTrust Mortgage ($10.2 million), and CitiMortgage ($7.5 million). In March, JP Morgan Chase agreed to pay $45 million to settle claims against it.
“Although the majority of the banks have settled the claims against them, the two largest defendants remain,” said Marlan Wilbanks of Wilbanks & Bridges, LLP in Atlanta, which also represents the whistleblowers. “Our clients have strong evidence against Wells Fargo and Mortgage Investors. This case will be simple for a jury to understand. The banks have misled veterans and cheated the taxpayers out of hundreds of millions of dollars over the last decade.”
Judge Totenberg entered a 34 page Order denying in part and granting in part the motion to dismiss filed by defendant Wells Fargo, and a 31 page Order denying the motion for summary judgment filed by defendant MIC. Under the Court’s Orders the case will proceed with regard to Relators’ claims that the defendant lenders committed fraud by making false certifications to the Veterans Administration for the purpose of getting fraudulent claims paid by the Government in violation of 31 U.S.C. § 3279(a)(2) of the False Claims Act.
The whistleblower lawsuit alleges that the eight banks cheated military veterans and taxpayers out of millions of dollars by hiding illegal fees in veterans’ home mortgage refinancing transactions and then sought to collect on government loan guarantees procured through the fraud when such loans went into default. Any VA guarantees for those loans are void because unallowable fees were charged.
The “qui tam” (whistleblower) lawsuit was filed in 2006 in federal district court in Atlanta, Georgia, by whistleblowers Victor Bibby and Brian Donnelly. The lawsuit is brought on behalf of United States taxpayers, and seeks to recover damages which will be payable to the Government. The lawsuit was brought under the federal False Claims Act, which allows whistleblowers to sue companies that are defrauding the Government and collect recoveries on the Government’s behalf. The statute was adopted at the behest of President Abraham Lincoln in 1863 during the Civil War to fight fraud by government contractors providing supplies to the Union Army. In False Claims Act cases, the whistleblowers are called the “Relators”.
Relators Bibby and Donnelly were initially represented by the Atlanta, Georgia firm Wilbanks & Bridges. The lawsuit remained under seal by Court Order for years while the Government considered whether to take over the case. In 2011, Wilbanks & Bridges brought in additional law firms -- Butler, Wooten & Fryhofer of Atlanta and Phillips & Cohen LLP of Washington, DC. In September 2011 the Government decided not to intervene “at this time” and the lawsuit was unsealed.
"The False Claims Act is a powerfully effective weapon to protect taxpayers from getting ripped off and to recover for taxpayers when fraud has been committed,” said Butler.
For more information about the case and examples of fraudulent refinancing transactions, visit www.vamortgagefraud.com.
CASE CITATION : United States of America ex rel. Victor E. Bibby and Brian J. Donnelly, Relators/Plaintiffs vs. Wells Fargo Bank, N.A. and Mortgage Investors Corporation, Defendants, United States District Court, Northern District of Georgia, Atlanta Division, Civil Action No. 1:06-CV-0547-AT. (See PACER documents 317 and 318 for Orders entered November 19, 2012.)
MEDIA CONTACT: Leigh May (leigh@butlerwooten.com), Tel: (404) 579-5166 or Brandon Peak (brandon@butlerwooten.com), Tel: (404) 550-8190
ATLANTA – March 12, 2012 – JPMorgan Chase Bank has finalized a settlement that will pay the federal government $45 million to settle a lawsuit alleging that it cheated military veterans and taxpayers out of millions of dollars by hiding illegal fees in veterans’ home mortgage refinancing transactions and then seeking to collect on void government loan guarantees.
This “qui tam” (whistleblower) lawsuit, brought under the False Claims Act by two whistleblowers, seeks to recover this money on behalf of the government from eight banks and mortgage companies. JPMorgan Chase Bank is the first to settle these claims.
The case is still pending against Wells Fargo Bank, Bank of America, CitiMortgage, Suntrust Mortgage, Washington Mutual Bank, PNC Bank (which acquired National City Mortgage Co.), Countrywide Home Loans, Mortgage Investors Corp., and First Tennessee Bank (which acquired First Horizon Home Loan Corp.).
“We are proud to be part of an effort to return tens of millions of dollars to the government for fraud that would have otherwise gone undetected,” said co-lead counsel in the case, James E. Butler, Jr., of the Atlanta law firm Butler, Wooten & Fryhofer, LLP. “JPMorgan Chase is but one lender that thought it could get away with charging illegal fees to veterans and hiding these illegal charges.”
Butler Wooten & Fryhofer, LLP teamed with Wilbanks & Bridges, LLP of Atlanta and Phillips & Cohen, LLP of Washington, D.C., to pursue the lawsuit on behalf of the whistleblowers and the government. The three law firms have won record verdicts and settlements and have extensive experience in whistleblower cases.
“Our lawsuit alleges that these lenders committed blatant fraud,” said co-lead counsel Marlan Wilbanks of Atlanta. “Although JPMorgan Chase has paid to settle its claims, we are looking forward to moving the case against the other defendant lenders. These banks should be held accountable for causing the government to pay millions of dollars on void loan guarantees.”
“This case involves illegal fees charged in millions of veterans’ home mortgage refinancing transactions and illegally obtained taxpayers funds used to back those mortgages,” said Mary Louise Cohen, a , attorney who is co-counsel on the case. “Banks shouldn’t be allowed to get away with cheating veterans and taxpayers.”
The whistleblower lawsuit was filed in 2006 in federal district court in Atlanta, Ga., by two mortgage brokers. For more information about the case and examples of fraudulent refinancing transactions, visit www.vamortgagefraud.com.
MEDIA CONTACT: Leigh May (leigh@butlerwooten.com), Tel: (404) 579-5166 or Brandon Peak (brandon@butlerwooten.com), Tel: (404) 550-8190
ATLANTA - October 4, 2011 - Many of the nation's largest banks and mortgage companies – including Wells Fargo, Bank of America Corp., JPMorgan Chase and GMAC Mortgage Corp. – have cheated military veterans and taxpayers out of hundreds of millions of dollars by hiding illegal fees in veterans' home mortgage refinancing transactions, according to a whistleblower lawsuit made public today.
The "qui tam" (whistleblower) lawsuit, brought under the False Claims Act by two whistleblowers, seeks to recover this money on behalf of the U.S. government from 13 banks and mortgage companies:
Wells Fargo Bank, Bank of America, JPMorgan Chase Bank, GMAC Mortgage, CitiMortgage, Suntrust Mortgage, Washington Mutual Bank, PNC Bank (which acquired National City Mortgage Co.), Countrywide Home Loans, Mortgage Investors Corp., First Tennessee Bank (which acquired First Horizon Home Loan Corp.), Irwin Mortgage Corp. and New Freedom Mortgage Corp.
"This is a massive fraud on the American taxpayers and American veterans," said co-lead counsel in the case, James E. Butler, Jr., of the Atlanta law firm Butler, Wooten & Fryhofer LLP. "Knowing they weren't allowed to charge the fees, the banks and mortgage companies inflated allowable charges to hide these illegal fees without telling the veterans who were the borrowers or the VA they were doing so."
Butler Wooten & Fryhofer is teaming with Wilbanks & Bridges LLP of Atlanta and Phillips & Cohen LLP of Washington, DC, to pursue the lawsuit on behalf of the whistleblowers and the government. The three law firms have won record verdicts and settlements and have extensive experience in whistleblower cases.
"The false statements and fraudulent conduct are blatant," said co-lead counsel Marlan Wilbanks of Atlanta. "The banks simply reduced the charges for unallowable fees to zero, and then added those fees in the spaces where allowable fees were to be shown. Veterans don't know what the usual and customary charges for those allowable fees are, and the VA understandably relied upon the banks to comply with VA regulations, rather than digging into every loan transaction. The banks took advantage of that reliance to cheat veterans and taxpayers."
As alleged in the lawsuit (posted at www.vamortgagefraud.com), this is how veterans and taxpayers were cheated for at least 10 years in refinancing transactions:
The Veterans Administration (VA) helps eligible veterans get cheaper home loan refinancing with fewer requirements. The government, on behalf of American taxpayers, guarantees up to 25 percent of each loan if a veteran defaults or forecloses.
VA rules state that lenders may charge veterans for recording fees and taxes, fees for a credit report and other "reasonable and customary amounts," but they cannot charge attorneys' fees or settlement closing fees in refinancing transactions involving VA loans.
In settlement statements they gave to veterans and the VA, the banks claimed they weren't charging the illegal fees. In actuality, banks charged attorney's fees by hiding them in "title examination fees."
In hundreds of thousands of refinancing transactions, the banks collected from unsuspecting veterans an additional $300 to $1000 per loan. In the last ten years, more than 1.2 million of these refinanced loans have been made to veterans and their families. Up to 90 percent of them may have been affected by the alleged fraud.
"By concealing the unallowable fees they charged, the banks benefited in two ways," said Mary Louise Cohen, a Washington, DC, attorney who is also representing the whistleblowers. "The banks collected the illegal fees from veterans, and they obtained hundreds of millions of dollars in loan guarantees they otherwise wouldn't have received."
Taxpayers also got cheated because the law is clear: When unallowable fees are charged, any VA guarantee of the loan is void. Federal rules specifically prohibit the VA from issuing a guarantee for any loan that violates its rules. Yet banks have billed the VA for reimbursement under the VA guarantee when the loans containing unallowable fees went into default and foreclosure, according to the lawsuit, costing taxpayers hundreds of millions of dollars.
The whistleblower lawsuit was filed in 2006 in federal district court in Atlanta, Ga., by two mortgage brokers. For more information about the case and examples of fraudulent refinancing transactions, visit www.vamortgagefraud.com.
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