Another Financial Fraud False Claims Act Case Nets Millions from Lender

February 13, 2012

Financial fraud cases under the False Claims Act continue. A Pennsylvania lender has agreed to pay $3.9 million in a False Claims Act case over alleged false statements in mortgage loan applications for loans insured by the U.S. Department of Housing and Urban Development (HUD). The loans were made to two nursing homes.

The government contended that Capmark Finance LLC misrepresented the borrowers' creditworthiness in these two applications for mortgage loans. When the loans defaulted, the FHA sustained losses.

The Financial Fraud Enforcement Task Force takes credit for this recovery. It was created to investigate and prosecute financial crimes.

It is fitting that false statements to obtain federally insured mortgage loans which result in losses to taxpayers are receiving scrutiny under the False Claims Act. The False Claims Act is the nation's major whistleblower law. Private citizen whistleblowers (known as "relators") who report fraud can share 15-25% of the government's recovery of damages.