• Mark Pugsley

How to Blow the Whistle on Bank Fraud

The Federal Government offers potentially significant rewards to whistleblowers who provide information to the government that helps protect financial institutions by “deterring would-be criminals from including financial institutions in their schemes.” United States v. Serpico, 320 F.3d 691, 694-95 (7th Cir. 2003).



The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) and the Financial Institutions Anti-Fraud Enforcement Act (FIAFEA) enable the Attorney General to investigate and bring a civil suit against a perpetrator for criminal conduct which “affect[s] a depository institution insured by the Federal Deposit Insurance Corporation or any other agency or entity of the United States.” 12 U.S.C. § 4202(2).


Whistleblowers who provide information to the government that leads to a successful investigation and prosecution could be eligible to receive an award of up to $1.6 million. FIRREA reports can involve any of the following types of conduct involving financial institutions:

  • Giving corrupt gifts, offers, or promises

  • Stealing, embezzling, or misapplying by bank officer or employee with the willful with intent to injure the bank

  • Making of false entries, reports, or transactions (including FDIC transactions)

  • Making false statements for loan and credit applications, renewals and discounts, or crop insurance

  • Fraudulently obtaining loans or credit through false pretenses, representations, or promises

  • Making false statements, entries, overvaluation of securities, embezzlement, concealment, or misrepresentations

  • Making false, fictitious, or fraudulent claims to the Government

  • Concealing assets from a conservator, receiver, or liquidating agent

  • Conducting mail or wire fraud

This includes conduct where the financial institution is either the victim or perpetrator of the fraud. See Paul Lawrence, Whistleblower Cases Involving Securities and Financial Fraud, American Association for Justice Annual 188, (2012).


The fraud is reportable if it happened in the last ten years.


To be eligible for a reward, your report must lead the government to recover money. Whistleblowers get 20-30% of the first million dollars recovered, 10-20% of the next four million dollars recovered, and 5-10% of the last five million. There is a maximum bounty of 16% of 10 million – or $1.6 million.


In addition, the Department of Justice may award money to a whistleblower when there is either a criminal conviction or where the government is able to acquire funds or assets that were based in whole or in part on the information you provide.


HOW TO SUBMIT YOUR CLAIM


To submit a whistleblower claim, you must file a “Declaration of Violation,” under oath, which explains the fraud in detail. This declaration must contain specific facts regarding the fraud, the basis for that knowledge, and at least one new fact that was unknown to the government. This declaration cannot be based on information that has been publicly disclosed, unless you are the original source of the public information. During the investigation, the declaration you submit will remain confidential.


Do you think you have information that might qualify for an award? Contact our legal team to help you navigate this complex process and ensure that your claims are handled correctly.


Copyright © 2020 by Mark W. Pugsley. All rights reserved.

INVESTOR UPDATES

This page describes cases we are researching and working on today, as well as our latest updates on fraudulent schemes and how to avoid them. If you are the victim of one of the schemes detailed here please contact us to discuss your case and how we can help.

Copyright © 2018 by Ray Quinney & Nebeker.  All rights reserved.

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