Whistleblower Who Uncovered Improper Mortgage Underwriting Practices To Win Over $11,000,000 in FCA Settlement

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Gwen Thrower, a former underwriter for Utah-based Academy Mortgage Corporation, blew the whistle on the mortgage company and alleged it was engaging in improper underwriting and originating procedures. The U.S. Department of Justice (DOJ) announced on December 14 that Academy will pay $38.5 million “to resolve allegations it violated the False Claims Act by improperly originating and underwriting mortgages insured by the Federal Housing Administration (FHA)” and that Thrower will receive an $11,511,500 qui tam whistleblower award.

The qui tam provisions of the False Claims Act enable private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery, if one occurs.

According to the DOJ, Thrower alleged in a lawsuit filed in the Northern District of California “that from January 2008 through April 2017, Academy had an underwriting process that led employees to disregard FHA rules and falsely certify compliance with underwriting requirements.” She also alleged that “as a result of Academy’s knowingly deficient mortgage underwriting practices, the government paid insurance claims on loans improperly underwritten by Academy.”

“Lenders that knowingly cause the government to guarantee loans that are materially deficient put both homeowners and the public fisc at risk,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, in the press release. “The settlement announced today is a result of the relator’s efforts to develop this case in litigation and complements the department’s actions to prevent abuse of government programs designed to foster home ownership.”

This settlement — and plenty of other qui tam whistleblower cases — show how whistleblowers are critical to uncovering waste, fraud, and abuse. Fraudulent schemes can be particularly harmful to patients and erode trust in the medical system. In Fiscal Year 2021, qui tam whistleblowers helped the DOJ recover $1.6 billion in settlements.

Senator Chuck Grassley (R-IA), who has been consistently championed as the “patron saint” of whistleblowers, proposed amendments to the False Claims Act in 2021 that would strengthen protections for whistleblowers and clarify existing law. The amendment was widely supported by whistleblower organizations and advocates. However, WNN sources discovered that the pharmaceutical lobby intervened with the amendment’s passage. The National Whistleblower Center (NWC) is urging Congress to protect the False Claims Act: learn more here.

Read the DOJ press release here. 

Read more False Claims Act/qui tam news on WNN here.

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