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article imageJPMorgan whistleblower gets $63.9 million in mortgage fraud deal

Jonathan Stempel (Reuters).
article:375047:2::0
    Mar 7, 2014 in Business

By Jonathan Stempel

(Reuters) - A whistleblower will be paid $63.9 million for providing tips that led to JPMorgan Chase & Co's agreement to pay $614 million and tighten oversight to resolve charges that it defrauded the government into insuring flawed home loans.

The payment to the whistleblower, Keith Edwards, was disclosed in a filing on Friday with the U.S. district court in Manhattan that formally ended the case.

In the February 4 settlement, JPMorgan admitted that for more than a decade it submitted thousands of mortgages for insurance by the Federal Housing Administration or the Department of Veterans Affairs that did not qualify for government guarantees.

JPMorgan also admitted that it had failed to tell the agencies that its own internal reviews had turned up problems.

The government said it ultimately had to cover millions of dollars of losses after some of the bank's loans went sour, resulting in evictions and foreclosures nationwide.

David Wasinger, a lawyer for Edwards, did not immediately respond on Friday to requests for comment.

About $56.5 million of Edwards' award concerns the FHA portion of the case, and $7.4 million concerns the VA portion. It is unclear how much of the award will go to his lawyer.

Edwards, a Louisiana resident, had worked for JPMorgan or its predecessors from 2003 to 2008, and had been an assistant vice president supervising a government insuring unit.

He originally sued in January 2013 under the federal False Claims Act, which lets individuals sue government contractors and suppliers for allegedly defrauding taxpayers. The U.S. Department of Justice later joined as a plaintiff.

Whistleblowers can recover portions of False Claims Act settlements, which often grow if the government gets involved.

Wasinger also represented Edward O'Donnell, whose tips led to an October 2013 jury finding that Bank of America Corp was liable for fraud over defective mortgages sold by its Countrywide unit. The government is seeking $2.1 billion of penalties in that case.

Citigroup Inc, Deutsche Bank AG and Flagstar Bancorp Inc are among lenders in recent years that settled False Claims Act mortgage cases.

The Justice Department in December said it had paid out roughly $1.98 billion of whistleblower awards from 2009 to 2013.

The case is U.S. ex rel. Edwards v. JPMorgan Chase Bank NA et al, U.S. District Court, Southern District of New York, No. 13-00220.

(Reporting by Jonathan Stempel in New York; Editing by Phil Berlowitz)

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