A jury in a suit that began in a Texas federal court back in 2011 as a whistleblower action recently entered a massive judgement against a mortgage originator for financial crisis conduct. The jury assessed the treble damages and penalties and increased the already large jury verdict in the amount of $93 Million into a $298 Million penalty. The court also issued one of the first judicial opinions regarding how to assess penalties under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”).
This new ruling helps set precedent for arguing claims using FIRREA and violations of the False Claims Act “(FCA”). It also helps set the stage for litigation against CEO’s of a corporation. The suit held against Americus Mortgage Corporation, formerly known as Allied Home Mortgage Capital Corporation, one of its affiliates, and its CEO between 2001 and 2011. The suit found that there was over a thousand false Federal Housing Administration (“FHA”) documents submitted for insurance claims by the Defendants. The matter eventually led to a proceeding involving a five week lone jury trial, to which Allied was found to be liable for nearly 1200 loans that they collected FHA insurance claims to loans that had been wrongfully underwritten and were ineligible for FHA insurance, also 103 FHA insurance claims for loans originated in branches without the proper HUD registration and using registration numbers of other registered branches. There also included 9 false annual certifications to compliance with HUD quality control requirements. In addition, there were 18 falsified quality reports that were emailed from Allied to a HUD employee in 2009.
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