A former Countrywide Financial vice president who filed a False Claims Act lawsuit alleging fraudulent mortgage and securities practices is collecting $57 million from Bank of America’s $16.65 billion federal penalty.
Edward O’Donnell, now a Pennsylvania resident, agreed with the government on the payout last week. That followed the August settlement of his FCA suit that the DOJ had joined, the New York Times Dealbook reported Wednesday.
O’Donnell worked at Countrywide from 2003 to 2009. Bank of America acquired it in early 2008.
He filed a qui tam lawsuit under the False Claims Act in June. The qui tam (or whistleblower) provisions of the False Claims Act allow individuals to file lawsuits alleging false claims on behalf of the government. If the government prevails in the action, the whistleblower, known as a relator, receives some of the recovery.
Preet Bharara, the United States attorney for the Southern District of New York, joined O’Donnell’s suit and used it to pressure Bank of America to reach the $16.65 billion deal, the New York Times said.
O’Donnell’s suit was recently unsealed. It claimed he provided “material information” to federal prosecutors before he filed his qui tam action, the New York Times said.
In July this year, federal district court judge Jed Rakoff ordered Bank of America to pay a $1.27 billion fine for fraud at Countrywide. A jury found that Bank of America was liable for bad loans Countrywide sold to Fannie Mae and Freddie Mac as part of its mortgage-lending program during the housing market collapse in 2007 and 2008.
Until a few weeks ago, O’Donnell had been a vice president at Fannie Mae since he left Countrywide in 2009, the New York Times said.
When he worked at Countrywide, the firm was the dominant mortgage lender in the United States.
“In my opinion, Edward O’Donnell is the person most responsible for bolstering the bank settlements and holding Wall Street accountable,” David G. Wasinger, the lawyer for O’Donnell, told the New York Times.
O’Donnell’s qui tam suit described a program at Countrywide nicknamed the hustle, which rewarded employees for producing more loans regardless of the quality, the New York Times said.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.