Citigroup whistleblower to get $31m
When Dodd-Frank passed, bank executives made clear their disregard for the new whistleblower provisions, which in their minds provided massive incentives for employees to turn in the company -- playing the lottery, so to speak.
The rewards for turning in your company were underscored by Sherry Hunt, now a vice president of quality assurance, who will receive $31 million for her role in turning in Citigroup for falsely declaring massive volumes of mortgages to be “fit for its federal insurance program,” reports Bloomberg.
Her quality assurance team was turning up lots of irregularities but had trouble pushing back against mortgage professionals who were hell bent on making sure deals were done, despite the rule. In some ways, it is shocking what other employees did to get around QA, such as destroying documents. At some point, Hunt became convinced that the company was essentially asking that she look the other way. She sued under the False Claims Act, and the U.S. Attorney’s Office in Manhattan joined her complaint.
Citigroup has agreed to pay $158.3 million to settle the charges (that includes the portion to be paid to Hunt). The bank will also admit that it certified loans for government backing that didn’t qualify.
Are we in for more Hunt-like whistle blowers? Especially now the rewards would appear to be even higher and now that the SEC’s whistleblower office is up and running? We can only hope that banks have cleaned up their act. All in all, massive payouts will be hard unless someone really has the goods, like Hunt.
- here’s the article