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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

December 16, 2019

Steven (Kaveh) Shayan and Kevin (Kaveh) Shayan, who operated the website WeTakeSection8.com, have been permanently banned from offering rental listing services and ordered to pay more than $6 million following a complaint filed by the FTC.  The Shayans and their website falsely claimed that their subscription websites provided accurate, up-to-date rental listings that were approved for Section 8 housing vouchers, including properties with which they had exclusive listing agreements,  when, in fact, most of the listed properties were either unavailable or did not accept Section 8 housing vouchers. FTC

June 12, 2019

In connection with the development of the Lakeway Regional Medical Center in Texas, a number of individuals and entities have agreed to pay $1.1 million to resolve claims that they made false claims in obtaining a loan insured by the Federal Housing Administration under a HUD program that insures loans to build hospitals in underserved areas.  Pacific Medical Buildings LLC, PMB Lakeway LLC, RD Development Partners LLC, Lakeway Management LLC, J&L Rush Family Partnership LP, Jeff Rush, and Brad Daniel, were alleged to have delayed refunds to investors who had cancelled their investments in order to make it appear as if the project satisfied mortgage covenants regarding the cash on hand required to close the loan. The settlement also resolves allegations that the settling parties received impermissible distributions of project funds. DOJ

April 25, 2019

Morgan Stanley will pay $150 million to the State of California to resolve allegations under the California False Claims Act, Corporate Security Law and False Advertising Law, that the bank concealed the risk of residential mortgage-backed securities sold to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) between 2003 to 2007. CA

April 12, 2019

General Electric has agreed to pay $1.5 billion to resolve alleged FIRREA violations committed by its subsidiary, WMC Mortgage, in subprime residential mortgage-backed securities originated between 2005 and 2007. WMC had allegedly encouraged lax quality and fraud controls by compensating loan analysts based on the number of mortgages they approved, resulting in profits of $65 billion in the two-year period. An estimated 78% percent of WMC’s loans contained at least one piece of false information. DOJ

March 7, 2019

A landlord participating in a federally funded rent subsidy program for low-income tenants has agreed to settle allegations of violating the False Claims Act. In order to receive housing assistance funds from the Department of Housing and Urban Development (HUD), Harold Joseph Tyler of Tyler Realty Group had certified that he would not charge more rent than was agreed upon. According to a tenant who filed the qui tam complaint that launched the investigation, however, Tyler effectively charged additional rent in the form of a recurring "non-refundable deposit" of nearly $200 per month. USAO EDVA

December 21, 2018

Mortgage servicing company Compu-Link Corporation, also known as Celink, will pay $4.25 million to settle a False Claims Act case alleging that it improperly obtained FHA insurance payments on reverse mortgages under the Home Equity Conversion Mortgages program despite knowing that the mortgagees in question were not eligible to receive the FHA payments.  USAO MD Fla

December 12, 2018

Finance of America Mortgage LLC has agreed to pay $14.5 million to the United States to resolve its liability under the False Claims Act in connection with deficient mortgage loans originated by a company it acquired. The acquired company, Gateway Funding Diversified Mortgage Services, L.P. (Gateway), had participated in the Federal Housing Administration's insurance program as a direct endorsement lender (DEL), which gave it the authority to originate, underwrite, and endorse mortgages with minimal oversight from the FHA. However, as reported by a former Gateway employee in a qui tam complaint, the company failed to comply with the stricter procedures required of DELs, including failing to conduct audits on early-payment default loans, repeatedly failing to correct high rates of default, and failing to self-report deficient loans to the FHA. For exposing the fraud, the unnamed relator will receive a share of $2,392,500. USAO NDNY

December 4, 2018

The New York law firm of Rosicki, Rosicki & Associates, P.C., and two firms affiliated with it, have agreed to settle a False Claims Act action alleging that in performing legal work including foreclosure and eviction services for the Federal National Mortgage Association (Fannie Mae) and the Veterans Administration, the entities submitted bills for costs that were not actual, reasonable, and necessary.  Instead, the false claims for payment included improper mark-ups and other unauthorized charges.  Defendants will pay a total of $6.1 million to the United States, and have agreed to implement a compliance program.  The case was originally brought by whistleblower Peter D. Grubea.  USAO SDNY

November 20, 2018

Peter Cash Doye and Raquel Reid were convicted for defrauding lenders into providing over $50 million in loans purportedly secured by four multi-million dollar mansions in La Jolla and Del Mar, California.  Doye, an executive at several real estate investment firms, and Reid, a broker, created forged real estate lien “releases” and recorded fraudulent records at the San Diego County Recorder’s Office to make it appear that the loans had been paid off so they could obtain additional loans from new lenders. Reid notarized the forged documents, helping to make the fraudulent paperwork appear authentic.  USAO S.D. Cal.
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