21 February 2012

CitiMortgage Reaches $158 Million Settlement of FCA Claims

Posted by Robert J. Conlan and Scott D. Stein

On February 15, 2012, the U.S. Attorney’s Office for the Southern District of New York announced that CitiMortgage, Inc., a subsidiary of Citibank N.A., settled a suit asserting violations of the FCA and Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) arising out of allegations that CitiMortgage failed to comply with certain HUD-FHA requirements with respect to certain loans and submitted certifications to HUD-FHA stating that certain loans were eligible for FHA mortgage insurance when in fact they were not. As part of the settlement, CitiMortgage has agreed to pay $158.3 million in damages to the United States and a relator under the FCA.

The settlement has generated significant press coverage. An article in the American Lawyer notes that the settlement reflects the third case in less than a year in which DOJ has asserted FCA claims against a major financial institution for conduct relating to mortgage loans. Business Week reports on the settlement in an article titled “More Financial Whistleblowing Is On The Way.” And Reuters has an interesting article on the genesis of the suit, including an interview with the whistleblower, who remains an employee of CitiGroup.

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