N.Y., N.Y. — A whistleblower who was instrumental in recovering $614 million for federal mortgage loan programs from JP Morgan Chase & Co. will receive $63.9 million as his share, according to a Reuters report.
Louisiana resident Keith Edwards sued JP Morgan on behalf of the U.S. government in January 2013 under the qui tam or “whistleblower” provisions of the U.S. False Claims Act. Mr. Edwards worked for the banking giant from 2003 to 2008 as an assistant vice president. His responsibilities involved supervising a government insuring unit of the company.
Mr. Edwards alleged that JP Morgan defrauded the government by submitting thousands of flawed mortgages to federal insurance programs under the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).
JP Morgan settled the case with the U.S. on Feb. 4, admitting that it had submitted bad loans to the U.S. insurance programs for more than a decade and withheld its knowledge that the loans did not qualify for government guarantees from U.S. authorities.
When many of the flawed mortgages failed, the federal government had to cover millions of dollars in losses as evictions and foreclosures occurred across the country, igniting a giant mortgage crisis and fueling a deepening recession.
The U.S. has settled several other whistleblower lawsuits in recent years with banks that also contributed to the mortgage crisis through fraudulent mortgage programs, including Bank of America / Countrywide, Citigroup, Deutsche Bank, and Flagstar Bancorp.
According to Reuters, about $56.5 million of Mr. Edwards’ award stems from the FHA portion of the case, and $7.4 million comes from the VA share.