Bank Fraud

In addition to the False Claims Act, there are a number of laws which can be used to achieve successful whistleblower cases involving Bank Fraud. These include: 12 U.S.C. § 1831k (reward up to $100,000, for information leading to recoveries of FDIC funds) ; 12 U.S.C. § 1833a (FIRREA civil penalties); 12 U.S.C. § 4201 (Bank Fraud whistleblower law with limited qui tam provisions) and 18 U.S.C. § 1831j (banking agency employee whistleblower protection).

bank fraud

1. What areas of banking activity give rise to Bank Fraud whistleblower cases?

Currently, the most common activity underlying Bank Fraud whistleblower cases involves improper loan origination practices in Government insured loan programs where the Government ends up footing the bill on a large number of defaulted loans. This typically occurs where the lending bank has systemically failed to properly assess the borrower’s credit risk and/or accurately report the risk of default to the Government agency which will guarantee the loan’s repayment. Often the lending bank fails to follow its own loan origination guidelines as well as those of the applicable Government loan insurance program. Undisclosed or improper loan origination fees and brokerage commissions are also areas of concern in Bank Fraud cases.

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