OSHA Orders Alaska-Based Youth Treatment Provider to Reinstate Whistleblower Who Was Fired After Reporting Safety Concerns at the Facility

In a press release issued last week, the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) announced that Anchorage, Alaska- based North Star Behavioral Health System has been ordered to reinstate and pay over $250,000 to an employee who was terminated in retaliation for reporting safety concerns regarding the facility’s water supply.

An investigation conducted by OSHA’s Whistleblower Protection Program found that the company violated the whistleblower provision of the Safe Drinking Water Act (SDWA) when it terminated an employee after he reported concerns about safe drinking water and a lack of appropriate licensing by a North Star manager who held certain regulatory responsibilities regarding the facility’s drinking water system. Following the employee’s complaint to state agencies, North Star not only ordered him to refrain from future contact with regulatory agencies but terminated him for allegedly sabotaging the facility’s water supply, allegations which OSHA determined by to be unsubstantiated.

In addition to reinstating the whistleblower, OSHA ordered that North Star must pay him nearly $60,000 in back wages, $75,000 in emotional distress damages, $100,000 in punitive damages, $2,018 in compensatory damages, and approximately $35,600 in attorney fees. Finally, North Star must post OSHA’s whistleblower protection fact sheet at its Anchorage facility.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Citigroup Whistleblower Receives $31 Million Award as Part of False Claims Act Settlement

Sherry Hunt, a whistleblower who helped the U.S. government recover $158.3 million, will receive a $31 million portion of the False Claims Act settlement paid by Citigroup Inc. (Citi). Hunt filed a complaint against Citi on August 5, 2011 in the U.S. District Court for the Southern District of New York, alleging that Citi knowingly and wrongfully approved loans for government insurance that did not qualify under Federal Housing Administration (FHA) rules.  The settlement was reached out of court one month after U.S. Attorney Preet Bharara in Manhattan agreed to join Hunt’s suit on behalf of the government.

In November 2004, Hunt started working for Citi as a vice president in the mortgage unit.  She supervised sixty-five mortgage underwriters responsible for protecting the company from fraud and bad investments. Citi vouched for the quality of loans sold by investors or approved investors for government mortgage insurance products.  For investors, this stamp of approval meant that if borrowers stopped paying, Citi stood behind the defaulted mortgages. But, according to Hunt, she began to notice a series of discrepancies by 2006.  Hunt claimed Citi was buying mortgages from outside lenders with doctored tax forms, phony appraisals and missing signatures.  Hunt identified and reported those defects in regular reports to her bosses.

Hunt believed that Citi incentivized employees to push faulty mortgages because their salaries depended upon a high percentage of approved loans. By late 2007, Hunt noticed that about sixty percent of the mortgages bought by Citi were missing some form of documentation. Hunt reported this to her boss, Richard Bowen III, and he sent an alert email to Citi executives in November 2007. However, his effort resulted in no noticeable changes, except that by April 1, 2008, after Hunt went public with her information, she had been transferred to the quality-control group where she went from overseeing sixty-five people to overseeing none.

While working at the quality control group, Hunt noticed further abusive practices.  In November 2009, Hunt found a list of about 1,000 possibly fraudulent loans, some that had been in the queue for more than two years without any action by the quality control group.  This group was supposed to investigate mortgages for fraud and within a month notify the FHA of any fraud found; no reports were sent to FHA until July 2011 when the U.S. Attorney’s Office in Manhattan issued a subpoena. Hunt also recalled an event in November 2010, when Ross Leckie, a senior director of CitiMortgage’s retail bank mortgage unit, sent an email ordering the quality control teams to drive down the defect rate on home loans by “brute force.”

Hunt reached her breaking point on March 29, 2011, when she officially filed a complaint with Citi’s human resources department and told them about the illegal activity she had uncovered.  Subsequently, on August 5, 2011, Hunt filed a false claims complaint in the U.S. district court, which ultimately resulted in Citi agreeing to settle out of court.

The Employment Law Group© law firm focuses in the areas of employment law and whistleblower protection law, has helped many clients file suit against employers that fraudulently billed the U.S. government, and has established favorable precedents under the retaliation provision of the False Claims Act.

Bank of America Whistleblower Awarded $14.5 Million False Claims Act Settlement for Challenging Bank’s Practice of Inflating Home Appraisals to Obtain Federal Loans

Kyle Lagow, a former employee of Countrywide Financial Corp., which was acquired by Bank of America in 2008, will receive a $14.5 million whistleblower award as part of the $1 billion False Claims Act settlement Bank of America (BoA) reached with the U.S. Department of Justice. The $1billion settlement that BoA reached with the federal government was part of a $25 billion national mortgage settlement reached between five mortgage lenders in February 2012.

Lagow filed his lawsuit in 2009 alleging that Countrywide terminated his employment because he raised concerns about Countrywide’s appraisal practices.  Law 360 writes that according to Lagow, “Countrywide [inflated] property appraisals for federal loans, [and as a result] FHA ended up insuring home mortgages under false pretexts, and the government ended up repaying lenders at falsely inflated amounts if borrowers defaulted.” Countrywide would pressure home appraisers to inflate home values so they could gain larger federal loans and gain a larger profit. They would pay these appraisers above-market fees and would reward appraisers that produce as many as 400 appraisals and reviews a month, a number that could not be achieved legally.

The Employment Law Group® law firm has an extensive nationwide whistleblower practice  representing employees who have been victims of retaliation.

Federal Court in New York Orders Chicago Resident and Former Floor Broker, Kent R.E. Whitney, to Pay $600,000 for Margin Call Avoidance Scheme

On May 22, 2012 the U.S. Commodity Futures Trading Commission (CFTC) announced that Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York issued a consent order and permanent trading and registration ban on former Chicago, Illinois floor broker Kent R.E. Whitney.  As part of an elaborate scheme to trade stock options without posting the required margin, Whitney was accused of making false and misleading statements to Chicago Mercantile Exchange (CME) representatives, futures commission merchants (FCMs), and others.

The consent order found that between May 2008 and April 2010, Whitney fraudulently avoided substantial margin calls when placing orders for commodity options traded on the New York Mercantile Exchange (NYMEX) and the CME by utilizing a margin avoidance scheme with out-of-the-money options that had no intrinsic value.  He did this by waiting until the day or two before the front month options expired to sell a large volume of front month out-of-the-money options on the NYMEX and CME trading floors.  In order to show that the accounts he sold were open and held sufficient funds, Whitney would provide clearing firms with invalid account numbers for the trading allocations he submitted, however, the accounts he traded were closed and held no funds for margin.

When the clearing firms that received the initial allocations realized that the account numbers Whitney provided were invalid or the accounts were closed, they would return the trades to the clearing firms of the executing floor brokers.  Whitney would then provide valid account numbers in order to clear the trade, which ultimately helped him avoid posting margins by shifting the overnight margin risk to the clearing firms of the executing floor broker.  This practice allowed Whitney to avoid posting over $96 million in margin calls and made it possible for Whitney to collect the premiums for the accounts he traded.

The Employment Law Group® law firm is a leader in the field of whistleblower law and has an extensive nationwide whistleblower practice representing employees who have exposed illegal activity by their employer, including securities fraud and commodities trading fraud.