Citibank Whistleblower Wins $31 Million

Sherry Hunt began working in the mortgage business in 1975 at the age of 18.  Almost 30 years later, she joined Citigroup as a vice president in the mortgage division in 2004.  Hunt was responsible for evaluating loans that Citibank was interested in purchasing from other lenders to see whether the risks met the bank’s standards.  This includes reviewing and ensuring all paperwork is properly signed and completed, verifying the income of the borrower, and determining whether the appraisal of the property is realistic. 

By 2006, Citibank was buying loans that had fake tax forms, appraisals, and missing signatures.  Hunt did her job, and repeatedly reported these defects to her supervisors.  Yet Citigroup’s only response was to demand that Hunt decrease the number of loans she was classifying as defective.  Finally, in 2011 Hunt decided that Citi was clearly never going to fix the problem on its own, so she decided to file a whistleblower suit.

The U.S. Justice Department made the decision to join Hunt’s suit, raising claims under the False Claims Act.  That is a federal law which exists to allow the government to recover money taken from it through fraud.  The statute also allows whistleblowers to recover up to 25 percent of the amount the government receives in the case.

Specifically, the Justice Department claimed that Citi made false statements to the Federal Housing Agency which tricked the agency into insuring thousands of home loans that were far riskier than the agency would normally insure.  This ended up costing the agency, and thereby the U.S. Government, roughly $200 million in insurance payouts.  This included almost 50 percent defaults on loans certified by Citibank in 2006 and 2007.
Citigroup elected not to defend the case and admitted it approved loans for Federal Housing Agency insurance which didn’t qualify.  The Justice Department and Citi settled the claims for $158.3 million.  Hunt’s share came out to $31 million.

All too often, people in this kind of situation take the easy road and just keep their head down, not wanting to risk their job despite the clearly wrong things going on.  Hunt is a great example of an individual doing what needed to be done for the good of their community and being properly compensated for making that hard choice.  If you believe that your employer is engaging in illegal behavior, or you believe you were retaliated against for notifying a regulator about your employer, contact the attorneys at Shepherd Smith Edwards and Kantas LLP for a free consultation about your legal rights and responsibilities.

 

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