Mortgage Whistleblower Stands Alone as U.S. Won’t Join Lawsuit..Surprise!
Go get em, Lynn! Government folded as usual…
Two years after Lynn Szymoniak helped the U.S. recover $95 million from Bank of America Corp. and other lenders for mortgage-fraud tied to the housing bubble, the whistle-blower said the government is ignoring a chance to collect more money for identical claims against other banks.
Szymoniak got $18 million when the U.S. Justice Department intervened in her foreclosure-fraud lawsuit. The government negotiated a settlement with five lenders including Bank of America andJPMorgan Chase & Co. (JPM)
The other banks accused of the same behavior, including Deutsche Bank AG (DBK) and HSBC Holdings Plc (HSBA), are still fighting Szymoniak’s suit, saying she isn’t a true whistle-blower. And the U.S., while continuing its crackdown on banks that packaged risky loans for sale as securities, hasn’t joined with her this time, leaving her to fight the banks alone. U.S. District Judge Joseph Anderson in Columbia, South Carolina, today is set to consider their bid to throw the case out.
“This is a case the government should take a stand on,” Reuben Guttman, one of Szymoniak’s lawyers, said in an interview. “It is curious as to why the government is not vigorously pursuing this along with us. They are leaving money on the table.”
If the Justice Department decides to join the suit, it shares the work and brings the government’s resources to the case. On her own, Szymoniak is at a greater disadvantage, given the resources available to the banks.
But if she wins, she will get a bigger payout. Government intervention means a whistle-blower like Szymoniak can receive a maximum of 25 percent of any recovery under the law, known as theFalse Claims Act. If the Justice Department declines to join the case, a whistle-blower may get as much as 30 percent of any jury award or settlement.
The remainder would go into the government’s coffers, said Joan Krause, a University of North Carolina law professor who teaches about the anti-fraud statute.
“There could be a variety of reasons why the government would choose not to intervene in the remaining claims,” Krause said in an interview. “Given the limitations on resources, they may not have the manpower to devote to this case. The Justice Department may also be of the view that the evidence against the other defendants may not be as strong as it was against the banks that settled earlier.”