Bank of America ‘Hustle’ whistleblower earns $57 million payout
A former executive of Countrywide Financial, who led a jury to find parent company Bank of America Corp liable for fraud over shoddy mortgages the company sold, will receive a $57 million award for another whistleblower case against his former employer, according to federal court documents.
Edward O’Donnell had filed a whistleblower lawsuit that accused Countrywide of defrauding government-backed mortgage finance companies Fannie Mae and Freddie Mac by selling them loans that were not as good as the company represented them to be. The case became known as the “Hustle” case due to the Countrywide process through which the loans were sold, which was technically referred to as HSSL.
Bank of America (BAC) acquired Countrywide for $4 billion in 2008, but has spent tens of billions of dollars in litigation, loan buybacks and writedowns related to the purchase.
In July, a federal judge in New York ordered Bank of America to pay a $1.27 billion penalty in connection with that case, but the bank is appealing that verdict, and O’Donnell has yet to collect any money from it.
According to the newly released documents, O’Donnell had filed a second case in June accusing a separate Countrywide unit of defrauding Fannie and Freddie through home loans it sold them, for which Bank of America agreed to pay $350 million to settle.
That deal was include as part of a broader, $17 billion accord the bank reached in August to resolve claims about mortgages it bundled and sold in the run-up to the financial crisis.
Those settlement documents only identified the case anonymously, and did not provide any details about any potential whistleblowers involved.
The new documents said O’Donnell will receive 16 percent of the settlement and an additional $1.6 million.
Under the law the case was filed, the False Claims Act, whistleblowers can collect between 15 percent and 25 percent of any recoveries.
A federal judge had dismissed the False Claims Act portion of the Hustle case before trial, so O’Donnell had only expected to collect $1.6 million at most from that case.
A lawyer for O’Donnell, David Wasinger, said O’Donnell “had done a lot to hold Wall Street accountable.”
A Bank of America spokesman said the matter had been fully resolved, and declined further comment on what he described as “unfounded assertions” in the lawsuit.
A spokeswoman for the U.S. Attorney’s office declined comment.