By Jonathan Stempel
March 7 (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 Feb. 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.
