Whistleblower Earns $57M Payout in Second Lawsuit Against Bank of America

Edward O’Donnell, an ex-Countrywide Financial executive, will receive $57 million for a second whistleblower lawsuit accusing parent company Bank of America Corp. (BAC) of fraud. In this case, O’Donnell accused a Countrywide unit of bilking Freddie Mac (FMCC) and Fannie Mae (FNMA) through the sale of home loans. Bank of America consented to settle the case for $350 million as part of a wider $17 billion deal to settle mortgage fraud claims.

For filing his whistleblower lawsuit, O’Donnell’s share is 16% of the recovery plus another $1.6 million. His award comes from the part of the settlement that the bank reached with federal prosecutors and the states of Illinois, New York, California, Maryland, Delaware, and Kentucky.

He has yet to collect money from the other case, in which a jury found Bank of America liable for shoddy mortgage sales. That lawsuit revolved around the “hustle,” which was a program that rewarded employees for producing loans even if their quality was poor.

Derived from the initials HSSL, which stands for high-speed swim lane, the program tied bonuses to the speed in which bankers were able to originate loans. The borrower’s credit quality became a lower priority. When mortgage giants such as Freddie Mac and Fannie Mae sold the loans, the instruments failed, leading to over $1 billion in losses.

In July, a judge ordered the bank to pay a penalty of $1.27 billion. Rebecca Mairone, an ex-Countrywide executive facing a civil action related to the case, was ordered to pay $1 million for directing the hustle program.

O’Donnell’s role whistleblower and his reward amount in that matter have yet to be determined. According to the United States settlement, there were three other false claims lawsuits filed, which means other whistleblowers may be entitled to awards.

Under the False Claims Act, whistleblowers may be able to collect 15-25% of what is recovered.

Contact our securities law firm today.

Whistle-Blower on Countrywide Mortgage Misdeeds to Get $57 Million, The New York Times, December 17, 2014

BofA Whistleblower to Get Nearly $58 Million–Filing, The Wall Street Journal, December 17, 2014

False Claims Act

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