Lynn Szymoniak, a Florida lawyer and insurance-fraud investigator, helped the U.S recover $95 million from Bank of America Corp. and other lenders from mortgage-fraud associated with the housing bubble only two years ago. Szymoniak now believes that the federal government is ignoring its right to collect more money from other banks, based on the very same type of mortgage fraud. Other banks accused of the same fraudulent activity include Deutsche Bank AG, Bank of New York Mellon Corp., US Bancorp, as well as HSBC Holdings Plc.
These banks now say Szymoniak is not a true whistleblower, and are fighting the lawsuit. Even though the U.S is still prosecuting banks who signed fraudulent loans, they are not joining Szymoniak’s fight against theses specifically accused banks.
Her original claim began in 2008 when a lender sought to seize her home and she contended that forged documents were used in her case. She discovered the lender has used a practice known as robo-signing: forged documents and records signed in bulk by people without knowledge of the facts. Szymoniak also alleged lenders who could not produce loan-ownership documents used forged records.
This led to the $95 million settlement from the U.S Department of Justice.
Confusing turn of events
Szymoniak received $18 million from the aforementioned settlement, because the U.S. Justice Department intervened in her foreclosure-fraud lawsuit. She had filed suit under law that allows a private citizen to fight on behalf of taxpayers. She accuses these banks of mishandling mortgage documents.
It is unclear why the government has decided not to assist Szymoniak. Her attorney, Reuben Guttman states, “the government is missing an opportunity here to hold banks responsible for engaging in conduct so egregious and pervasive it is passed off as a mere statistic.” Especially given the specific allegations are identical to the ones who previously settled.