market selloff headline

market selloff headline

Sunday, March 9, 2014

False Claims Act Whistleblower to Receive $64M of JPM Fraud Settlement

Former J.P. Morgan employee Keith Edwards alleged the mega-bank falsely certified FHA and Veterans Affairs-backed mortgages dating back to at least 2002, resulting in "substantial losses" for the federal agencies.  Edwards worked for J.P. Morgan (and/or predecessors) from 2003-08 and sued the bank under the False Claims Act in January 2013 for the suspected malfeasance; the U.S. government later joined him in the litigation.  The U.S. Dept. of Justice obtained roughly $3.8B in False Claims Act settlements and judgments in 2013 alone.

As part of the negotiated resolution, the bank promised to enhance mortgage underwriting quality control when involving a loan with the FHA direct endorsement lender program. The bank maintained that expected financial consequences for future False Claims liability in connection with the FHA and VA loan programs are expected to be insignificant.

More Reuters coverage is available here.