* Whistleblower cases part of broader mortgage settlement
* Mortgage brokers get $11.7 million in JPMorgan case
* "It puts a lot of stress on you"
By Rick Rothacker
March 14 Troubled homeowners are not the
only ones set to get a financial lift from the U.S. government's
$25 billion landmark mortgage settlement.
Whistleblowers who were instrumental in revealing epidemic
mortgage abuses, some of whom risked their careers to do so, are
getting multi-million-dollar payouts, court documents show.
Victor Bibby and Brian Donnelly, two Georgia mortgage
brokers, are among the handful of whistleblowers whose stories
are coming into focus.
Bibby and Donnelly said they started noticing in 2005 that
lenders were charging veterans hidden fees on mortgage
refinancing - a violation of the government's Interest Rate
Reduction Refinancing Loans program.
The pair, who worked for U.S. Financial Services Inc, a
mortgage brokerage firm in Alpharetta, Georgia, said they became
suspicious when lenders told them not to show an amount charged
for attorneys fees on loan documents, but instead add the sum to
the charge shown for "title examination fee."
After lenders ignored their concerns, Bibby and Donnelly
hired an attorney and filed a whistleblower suit.
The suit remained under seal to give the government time to
investigate. Bibby and Donnelly had to keep mum for more than
five years and try to find ways to avoid charging the hidden
"For both our families being hushed for such a long time and
holding this inside was unbearable," Donnelly said in an
interview. "It puts a lot of stress on you."
The wait paid off in the form of a $45 million government
settlement with JPMorgan Chase & Co that became public
this week. Bibby and Donnelly and their attorneys will receive
26 percent, or $11.7 million.
The case is one of five whistleblower suits settled for a
total of $227 million as part of the broader $25 billion deal
with five lenders over foreclosure abuses, according to court
documents filed this week.
Details of the cases are emerging slowly as suits are
unsealed and prosecutors disclose settlements.
The complaints were brought under a whistleblower provision
in the U.S. False Claims Act, which allows private individuals
with knowledge of wrongdoing to bring suits on behalf of the
government and share in the proceeds of any settlement.
GOOD RETURN FOR TAXPAYERS TOO
Of the five settlements outlined in court documents this
week, the largest was for $95 million.
U.S. Attorneys in North Carolina and South Carolina said on
Monday that five banks - Bank of America Corp, JPMorgan
Chase, Wells Fargo & Co, Citigroup Inc and Ally
Financial - agreed to pay the amount to address allegations they
participated in a nationwide practice of failing to obtain the
required mortgage assignments, documents used to transfer
ownership of loans.
The lenders also used false assignments to submit Federal
Housing Administration insurance claims, prosecutors said.
The whistleblower in the case, Florida homeowner Lynn
Szymoniak, will receive $18 million.
She gained national attention last year when CBS' "60
Minutes" profiled her role in uncovering the robo-signing of
foreclosure documents by large lenders.
While trying to save her own home from foreclosure,
according to the "60 Minutes" report, Szymoniak used her legal
training to research other mortgages and discovered that a
"Linda Green" had signed thousands of mortgage documents, in
varying signature styles.
Multiple employees in a mortgage document "sweat shop" in
Georgia were using the name Linda Green to recreate missing
mortgage assignment documents for the banks, the report said.
Szymoniak declined to comment.
Bill Nettles, the U.S. Attorney in South Carolina,
said the $95 million settlement sparked by Green's discovery
also provided a strong return for taxpayers, considering the
annual budget for his office is $10 million.
Prosecutors said the $95 million payment is only a partial
settlement, indicating other banks could be under scrutiny.
Nettles would neither confirm nor deny the existence of an
Two of the other settlements outlined this week - for $75
million and $6.5 million - appear to be related to an
investigation into whether Bank of America and its Countrywide
Financial unit knowingly made FHA-insured loans to unqualified
Prosecutors in New York said in February they had reached a
$1 billion settlement with the bank over these practices, but
have not yet filed court documents.
Court documents have not been filed in the fifth case, which
resulted in a $6.2 million settlement.
Legal releases in the $25 billion mortgage settlement
indicated other whistleblower cases are still in the works.
"DEAD IN THIS INDUSTRY"
Bibby, one of the Georgia mortgage brokers, said it was
difficult not knowing if the government would take up their case
and watching the fraud continue.
A spokesman for JPMorgan declined to comment. In the
mortgage settlement documents filed this week, the bank said it
did not admit liability. Bibby and Donnelly are continuing to
press their case against the other lenders, including Bank of
America, Citigroup and Wells Fargo.
Bibby, who is 46 and married with three children, and
Donnelly, who is 56 and married, said they don't have plans for
their portion of the settlement. They will have to pay taxes and
attorney fees out of the $11.7 million sum.
U.S. Financial Services at one time had about 50 employees,
but is now basically out of business. They are not sure what
they will do next.
"I think we're kind of dead in this industry, to say the
least," Bibby added.