The safety and soundness of the U.S. banking system is essential for maintaining financial stability, which makes bank fraud a threat to all of us. This is why Congress enacted the Financial Institutions, Reform, Recovery and Enforcement Act of 1989 (FIRREA) in response to the savings and loan crisis. FIRREA was enhanced in 1990 with the passage of the Financial Institutions Anti-Fraud Enforcement Act (FIAFEA), which allows whistleblowers to provide inside information about bank fraud in exchange for financial reward.
Newman & Shapiro, located in Massachusetts, provides first-rate representation to bank fraud whistleblowers throughout the nation. If you have knowledge of bank fraud, we can help you navigate the legal system and file a whistleblower claim. Backed by the efforts of brave whistleblowers, we are dedicated to protecting financial institutions from a wide range of fraudulent activity. Well-versed in FIRREA as well as the whistleblower provisions of the FIAFEA, we have a proven history of helping whistleblowers obtain the reward they have earned.
How Does FIRREA Protect the Banking System?
FIRREA allows the Department of Justice (DOJ) to pursue civil claims against individuals who commit specified crimes against federally insured institutions, including:
- False entries in banks’ books or records
- False statements
- Illegal gifts or commissions for procuring loans
- Theft or embezzlement by a bank officer or employee
- Use of false statements with respect to loan applications
- Defrauding or attempting to defraud a bank
- False statements and overvaluing of securities
- Presenting a false claim to the government
- Concealment of assets
- Mail fraud
- Wire fraud
Because FIRREA allows the government to pursue civil claims for conduct that is also a criminal offense, these crimes can also be pursued civilly. This matters because the burden of proof is lower than in a civil claim than the criminal standard of “beyond a reasonable doubt.” Instead, the government need only meet the “preponderance of evidence” standard, which means it is only necessary to prove that it is more likely than not that the defendant engaged in bank fraud. This makes FIRREA a powerful tool in the fight against bank fraud, and one that the government has used to collect millions in penalties and fines.
Although FIRREA was originally used to prosecute bank officers and outsiders whose misconduct caused the banks to fail in the wake of the savings and loan scandal, subsequent court rulings have vastly expanded the law so that the bank itself can also be prosecuted since misconduct threatens its financial stability. While FIRREA, as it was originally conceived, did not contain any whistleblower provisions, that changed with the passage of FIAFEA.
How Does FIAFEA work with FIRREA?
FIAFEA provides significant cash rewards to whistleblowers who report information about bank fraud to the DOJ. Rewards are based on a percentage of the penalties the government collects in a civil action as follows:
- 20 to 30 percent of the first $1 million recovered
- 10 percent to 20 percent of the next $4 million recovered
- 5 percent to 10 percent of the next $5 million recovered
If the government recovers $10 million or more, for example then the whistleblower award could be as much as $1.6 million.
To file a FIRREA/FIAFEA whistleblower claim, it is necessary to file a sealed declaration under oath with the DOJ. Moreover, the case must remain confidential while it is being investigated by the DOJ, which means that the whistleblower cannot speak about the case with anyone other than his or her attorney and officials at the Justice Department. Similarly, the DOJ must maintain the confidentiality of the whistleblower’s identity. Once the DOJ completes its investigation, it may take the case or decline to prosecute. If the government decides not to prosecute, the whistleblower can file a civil action independently, provided that he or she is represented by an attorney.
Contact Our Experienced FIRREA/FIAFEA Whistleblower Lawyers
If you have knowledge of fraudulent activity in a financial institution, contact Newman & Shapiro. From our offices in Boston and Marblehead Massachusetts, we provide powerful representation to whistleblowers throughout the Nation. When you work with our legal team, we will take the time to explain how the process works, thoroughly assess the validity of your claim and help you recover the reward you have earned.
It is important to note that bank fraud violations often overlap with other statutes, including the False Claims Act and federal securities laws. Therefore, the whistleblower protections provided under those may also work to protect you from employment retaliation. In the end, the best way to protect your rights and help combat bank fraud is to work with an experienced whistleblower attorney. Please contact our office today to set up a free consultation.