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September 27, 2021

Wells Fargo Bank, N.A. will pay $72.6 million to resolve claims that it violated the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”) by overcharging commercial customers from 2010 to 2017 for foreign exchange (“FX”) service. The government alleged that the bank fraudulently marked up the prices on currency it was selling and marked down the prices on currency it was buying, and concealed those markups from customers through various misrepresentations and deceptive practices. The total settlement includes a $37.3 million civil penalty and forfeiture, as well as $35.3 million in restitution to customers.  USAO SDNY

August 9, 2021

Ralph Hackett, a fruit broker in California’s Central Valley, will pay $1.255 million to resolve criminal charges and civil claims arising from his role in a crop insurance fraud scheme.  In a guilty plea, Hackett acknowledged that he authorized alterations to business records and misstatements to underreport the table grapes sold by another individual, so that the individual could submit fraudulent crop insurance claims between 2012 and 2015.  Hackett agreed to pay criminal restitution of $650,000 and a civil penalty of $605,000; his prison sentence is yet to be determined.  USAO ED Cal

January 6, 2021

Utah-based smart home monitoring service provider Vivint Smart Home Inc. has agreed to pay $3.2 million to resolve allegations of making false and misleading statements to federally funded institutions, in violation of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).  In order to sell Vivant products, certain door-to-door sales representatives allegedly used their own funds to cover initial payments for customers who needed financing from federally funded institutions, while representing to those institutions that the borrowers themselves had made the payments.  The fraudulent conduct, which occurred between 2017 and 2020, was eventually revealed by a declarant, who will be eligible for an award under the Financial Institutions Anti-Fraud Enforcement Act.  DOJ; USAO UT

April 29, 2020

Lender Guaranteed Rate, Inc. will pay $15.1 million to resolve allegations that it knowingly failed to adhere to material program requirements in originating and underwriting mortgages insured by FHA or guaranteed by the VA, resulting in mortgages that did not meet credit and underwriting requirements for the government-sponsored guarantees and insurance.  The case was initiated by a whistleblower complaint filed under the False Claims Act by an unnamed former Guaranteed Rate employee, who will receive $2.4 million of the settlement proceeds.  The settlement also resolved claims under FIRREA.  DOJ; USAO NDNY

February 21, 2020

Wells Fargo & Co. will pay a total of $3 billion in a federal settlement resolving criminal, civil, and administrative liability with respect to its “cross-selling” sales practices between 2002 and 2016 that led to the opening of millions of checking, savings, credit card, and other accounts on behalf of individual customers under false pretenses or without the customers’ consent.  As part of the settlement, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed customer credit ratings, and unlawfully misused customers’ personal information.  Wells Fargo entered into a three-year deferred prosecution agreement requiring the bank to take certain compliance steps and cooperate with ongoing investigations.  Of the $3 billion settlement, $500 million resolves SEC claims that the bank, knowing about the underlying violations, mislead investors about the success of its business; the SEC settlement will be distributed to harmed investors.  The federal settlement is in addition to a $575 million 2018 settlement Wells Fargo entered into with 50 states and the District of Columbia and a $100 million 2016 fine from the CFPB arising from the same conduct.  DOJ; SEC; WD NC; CD Cal

November 8, 2018

The United States has brought charges against UBS AG and several of its affiliates, alleging that UBS defrauded investors in connection with its sale of residential mortgage-backed securities (RMBS) in 2006 and 2007.  The complaint accuses UBS of affirmatively misleading investors and withholding crucial information from them about the quality of billions of dollars in subprime and Alt-A mortgage loans backing 40 RMBS deals. USAO EDNY; DOJ

October 9, 2018

HSBC will pay a $765 million civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to settle claims that it misrepresented the quality of assets in residential mortgage-backed securities (RMBS) that HSBC packaged and sold to investors between 2005 and 2007.  HSBC was also alleged to have misrepresented the due diligence procedures it followed in reviewing loans for securitization, claiming to follow more stringent procedures than it actually did follow.  USAO Colorado.

August 14, 2018

In the largest civil penalty imposed by the Justice Department for FIRREA violations leading up to the 2008 financial crisis, the Royal Bank of Scotland Group plc (RBS) will pay $4.9 billion to resolve claims that it knowingly misled investors of its residential mortgage-backed securities (RMBS), including Fannie Mae and Freddie Mac. According to a statement of facts included with settlement details, RBS knew from its own reviews that its loans carried a high risk of default but failed to disclose that to investors. Furthermore, it allowed its due diligence process to become a total sham by not requiring that loan originators correct errors, instructing due diligence vendors to waive defects, and self-imposing caps on the number of faulty loans it removed from a RMBS. DOJ; USAO MA

August 2, 2018

Aurora Loan Services, LLC, a subsidiary of Lehman Brothers Holdings, Inc., has agreed to pay a civil penalty of $41 million to settle allegations of FIRREA violations in the loans it sold between 2004 and 2008. The mortgage originator gave preferential treatment to five "Platinum" lenders by allowing them to underwrite their own loans and freeing them from quality control standards that were imposed on other lenders. The resulting decline in loan quality was linked to a higher rate of default, hurting investors who bought residential-based mortgage securities from Lehman Brothers. USAO CO

August 1, 2018

Wells Fargo Bank has agreed to pay a civil penalty of $2.09 billion to settle allegations that it knowingly misrepresented the quality of its mortgage loans to investors, in violation of FIRREA, in order to double its production of subprime and Alt-A loans. Nearly half of those loans subsequently defaulted, leading to billions of dollars in losses for investors, including federally insured financial institutions. DOJ; USAO NDCA
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