A federal lawsuit out of Atlanta claims that several big banks and mortgage companies ripped off military veterans and taxpayers out of hundreds of millions of dollars in order to hide what they call illegal fees, the Associated Press reports.
Whistleblower lawsuits mean that workers or people with inside knowledge of a scam bring forward the information in the form of a lawsuit in order to stop the company from committing the illegal acts. Under the Federal False Claims Act, a qui tam action can result in the whistleblowers collecting a portion of the penalty, if successful at trial.
But this isn’t an endeavor someone should attempt on their own. An experienced whistleblower attorney must be consulted. A whistleblower often faces job loss at a minimum and in some cases may even be in physical danger. Poorly handled cases can result in ruined careers and financial devastation.
On the flip side, a business often finds itself in need of legal advice. Business litigation on a contingency fee basis can provide management and board members with experienced legal counsel without upfront legal costs.
In this case, two mortgage brokers claim 13 banks and mortgage firms over-charged veterans who were applying for special home loans guaranteed by the Department of Veterans Affairs.
Rules set by the federal government allow lenders to charge “reasonable and customary” fees and taxes, but they can’t charge veterans attorneys’ fees and settlement closing costs on the loans. The lawsuit claims the banks changed attorneys’ fees and called them “title examination” or “title search” fees to hide them.
Banks including JPMorgan Chase & Co., Wells Fargo and Bank of America are all listed as defendants. In court documents, they have denied wrongdoing.
The lawsuit was initially filed in 2006, but it was sealed for five years while the case was being investigated. It was unsealed recently. The lawsuit seeks to recover damages and penalties on behalf of the federal government, which has said it won’t intervene.
The Associated Press reports that more than 1.2 million refinanced loans have been made to veterans and their families in the last decade and up to 90 percent were handled with these excess fees. In each case, between $300 and $1,000 may have been collected.
This has the makings of a major lawsuit on behalf of military veterans everywhere.
In a situation where military veterans are allowed some perks — to get a home loan free of excess fees — banks are accused of tricking them by changing the name of the fee and charging them more than they should be charged under federal laws.
Whistleblowers are increasingly important as big corporations are willing to break rules to make money and hope they don’t get caught. They consider the possible penalties they will have to pay later an after-thought and the price of doing business. Conversely, firms making legitimate business decisions must protect themselves against such allegations.
This is why our country needs whistleblowers — people willing to stand up to what is good and right and willing to risk their reputation and friends to do it. And these people require solid legal representation at every step of the way in order to ensure justice is done.
The Ferraro Law Firm provides comprehensive legal services, including business litigation on a contingency-fee basis. Call 1-800-275-3332 for a free and confidential consultation. Offices in Miami, Washington, D.C., and New York City.
More Blog Entries:
Possible AT&T Overcharges Show Need for New York Consumer Protection: May 26, 2011
Qui Tam Rewards can be Substantial for Whistleblowers under the False Claims Act: March 24, 2011
Lawsuit claims banks cheated veterans with fees, by Greg Bluestein, Associated Press