Another Court Affirms DOJ Financial Fraud Strategy


On Sept. 24, 2013, Judge Jesse Furman in the Southern District of New York released his widely anticipated decision allowing the U.S. Department of Justice’s False Claims Act and Financial Institutions Reform, Recovery and Enforcement Act case against a major financial institution to proceed. The opinion is significant, not just because it is a victory for the government — the same week the DOJ began trial in another major case — but because, for the first time, it deals with multiple developing issues in one opinion.

The DOJ’s suit alleges that Wells Fargo Bank — the largest participant in the government insurance program at issue — submitted for insurance risky loans that did not comply with U.S. Department of Housing and Urban Development (“HUD”) Federal Housing Administration’s (“FHA”) origination and quality control requirements, resulting in hundreds of millions of dollars in losses to the FHA fund.

Originally Published in Law360, New York - October 10, 2013.

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