Friday, February 7, 2014

Banks, Mortgage Companies Defrauded HUD, Veteran Whistleblower Says

Banks, Mortgage Companies Defrauded HUD, Veteran Whistleblower Says


FEB 5, 2014 1:30pm ET

A whistleblower with a track record of wresting large settlements from banks is suing 22 companies for allegedly filing fraudulent mortgage documents with the Department of Housing and Urban Development.

Lynn E. Szymoniak, famous for her 2011 “60 Minutes” interview on the robo-signing scandal, filed a lawsuit late Monday against the companies, including Deutsche Bank, Wells Fargo, JPMorgan Chase and Bank of America. The Palm Beach, Fla., plaintiff’s lawyer alleges the 22 banks, mortgage servicers, trustees, custodians and default management companies created fraudulent mortgage assignments and submitted tens of thousands of false claims to HUD.
 
The lawsuit is a stark reminder that banks still face massive litigation and potential settlements for wrongdoing from the mortgage boom and financial crisis. On Wednesday, JPMorgan Chase acknowledged that it violated the False Claims Act and agreed to pay $614 million to settle claims that it improperly approved Federal Housing Administration and Veterans Affairs loans that did not meet underwriting standards.

HUD oversees the FHA, which reimburses servicers for losses and fees when government-guaranteed loans go into foreclosure.

Banks can be held liable for treble damages under the False Claims Act if they are found to have "falsely certified" that mortgages met all FHA requirements. The act also gives whistleblowers the right to file suit on behalf of the government.

“It’s been very difficult to uncover how fraudulent documents were created and spread through the system,” says Reuben Guttman, Szymoniak’s attorney at the firm of Grant & Eisenhofer. “Lynn Szymoniak did the original analysis, looked at documents and put the pieces together in a way that nobody else did.”

The new lawsuit was filed in the U.S. District Court in South Carolina. Several of the defendants, including Deutsche Bank and Wells Fargo, said they are reviewing the lawsuit and could not immediately comment.

In 2012, Szymoniak helped the government recover $95 million from the top five mortgage servicers, as part of the $25 billion national mortgage settlement. She personally received $18 million for providing information on the filing of false claims on FHA loans.

The suit also seeks to recover damages and penalties on behalf of the federal government, 16 states, the District of Columbia and the cities of Chicago and New York for the financial harm incurred in the purchase of private-label mortgage-backed securities that allegedly used fraudulent documents in foreclosure filings since 2008.

As investors in mortgage bonds, the government and others paid fees and expenses for services such as reviewing all mortgage documents put into trusts that were supposed to be performed by trustees. The federal government bought mortgage-backed securities with missing or forged documents through several avenues, including the Federal Reserve's direct purchases and Maiden Lane vehicles, and the Treasury Department's purchases through public-private partnership investment funds, the suit states.

The complaint does not specify damages but Szymoniak says she expects them to total around $10 billion.
 
The fraudulent mortgage documents were created because the original loans documents either were never delivered to the securitization trusts, or they were lost or destroyed, the lawsuit states. Many of the documents were created years after the trusts’ closing dates and showed the trusts acquired the loans only after they were in default.


Servicers “devised and operated a scheme to replace the missing documents,” the lawsuit states, and to conceal the fact that the trusts and servicers never actually held the mortgage notes and assignments, which are needed to initiate a foreclosure.

Szymoniak was also instrumental in uncovering fraud and forged documents at DocX, a now-defunct subsidiary of Lender Processing Services. She worked with the Federal Bureau of Investigations and U.S. Attorney's office in Jacksonville, Fla., that ultimately led to the conviction of an LPS executive, the closure of DocX, firm, and various settlements by LPS, which is now owned by Black Knight Financial Services.
______________________________


Inline image 2

Justia > Dockets & Filings > Fourth Circuit > South Carolina > South Carolina District Court > USA et al v. American Home Mortgage Servicing Inc et al

USA et al v. American Home Mortgage Servicing Inc et al


Plaintiff:USA, Lynn E Szymoniak, California, State of, Delaware, State of, Florida, State of, Hawaii, State of, Illinois, State of, Indiana, State of, Massachusetts, State of, Minnesota, State of, Montana, State of, Nevada, State of, New Hampshire, State of, New Jersey, State of, New Mexico, State of, New York, State of, North Carolina, State of, Oklahoma, State of, Rhode Island, State of, Virginia, State of, Columbia, District of, Chicago, City of and New York, City of
Defendant:American Home Mortgage Servicing Inc, Saxon Mortgage Services Inc, Lender Processing Services Inc, Docx LLC, CitiMortgage Inc, Wells Fargo Home Mortgage, Bank of America Corporation, Bank of New York Mellon Corporation, Citibank National Association, Deutsche Bank National Trust Company, Deutsche Bank Trust Company Americas, HSBC USA National Association, JP Morgan Chase Bank National Association, US Bank National Association and Wells Fargo Bank National Association
 
Case Number:0:2010cv01465
Filed: June 4, 2010
 
Court:South Carolina District Court
Office:Rock Hill Office
County:Richland
Presiding Judge: Joseph F Anderson
 
Nature of Suit:Other Contract
Cause of Action:31:3729
Jury Demanded By:Plaintiff

Available Case Documents

The following documents for this case are available for you to view or download.
Date Filed #Document Text
August 2, 2013149 Featured Case Order to Unseal Case directing the complaints be unsealed and served upon the defendant by the relator and the relators serve this Order and the Notice of The United States That It Is Not Intervening At This Time upon the defendants only after service of the complaint. Signed by Honorable Joseph F Anderson, Jr on 08/02/2013. (bshr, )
January 22, 2014 266 Featured Case ORDER denying 264 Motion to Bifurcate Motions to Dismiss, to Stay Non-Jurisdictional Portions of the Motions, and for Leave to File an Amended and Consolidated Complaint, denying the request to bifurcate the motions to dismiss, denying the request to stay the non-jurisdictional motions, and noting that the Relator is still within her 21-day grace period to amend her complaint once as a matter of course under Rule 15(a)(1)(B). Signed by Honorable Joseph F. Anderson, Jr. on 01/22/2014.(bshr, )

Access additional case information on PACER

Use the links below to access additional information about this case on the US Court's PACER system. A subscription to PACER is required.
Search for this case: USA et al v. American Home Mortgage Servicing Inc et al
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: USA
Represented By: Frances C Trapp
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Lynn E Szymoniak
Represented By: Stuart M Grant
Represented By: Richard A Harpootlian
Represented By: Kenneth M Suggs
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: California, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Delaware, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Florida, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Hawaii, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Illinois, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Indiana, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Massachusetts, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Minnesota, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Montana, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Nevada, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: New Hampshire, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: New Jersey, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: New Mexico, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: New York, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: North Carolina, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ Google Finance | Yahoo Finance | Hoovers | SEC Edgar Filings ]
Search Web[ Legal Web | Google | Bing | Yahoo | Ask ]
Plaintiff: Oklahoma, State of
Represented By: Richard A Harpootlian
Search Blogs[ Justia BlawgSearch | Google Blogsearch ]
Search News[ Google News | Marketwatch | Wall Street Journal | Financial Times |New York Times ]
Search Finance[ 

This message has been truncated

Show Full Message

No comments:

Post a Comment