Trump’s Treasury Secretary Mnuchin’s Pasadena-based OneWest Embroiled in False Claims Act Allegations Owing Government Approx. $100 Million Dollars

An interesting case surfaced last week against Trump’s Treasury Secretary Steven Mnuchin and the bank he ran called OneWest, headquartered in Pasadena, California. Mr. Mnuchin led a group that ran OneWest before selling it for $3.4 Billion. In the interim, a former employee of OneWest, Andrew Mitchell, alleged that he notified Mnuchin and other top executives about the mishandling of thousands of loan modifications. However, many of his complaints allegedly went unheard and unresolved. Since the case was brought under seal, the Justice Department has been reviewing it as it does for all cases filed under the False Claims Act (“FCA”). Then, once the whistleblower case is assessed, the government decides whether it will step in and prosecute or step back and allow the whistleblower to bring the complaint on the government’s behalf. Since the Department of Justice decided not to step in, the case was unsealed.

Ironically, Mr. Mnuchin will be the government’s leader in supervising the help for struggling borrowers and making efforts to keep them in their homes. Suprime lending and predatory lending practices, although not as widespread anymore due to new laws, have now been replaced by unscrupulous banks and lenders who pick and choose how to interpret the laws. At the end, it is the consumer who suffers. Specifically, of the 178,000 homes that were in foreclosure about 101,000 loan modifications were offered.

OneWest, similar to many other lenders, are accused of wrongfully foreclosing on homeowners. These lenders would use faulty formulas for evaluating whether loan modification applications should be processed or denied and the homes foreclosed upon. The whistleblower alleges that at least 1,000 homeowners were affected including many members of the military and low income borrowers which had their loans insured by the Federal Housing Authority. A similar lawsuit was settled last year for $30 Million dollars. It is estimated that the current lawsuit against OneWest may result in the bank owing the federal government more than $100 Million dollars.

The FCA is used to stem out fraud related to billing, staffing, and kickbacks. Examples of these are when financial companies are supposed to abide by state and federal laws and chose to ignore them. They also bills for services that were not provided or the bill was submitted at an improperly higher rate of reimbursement for the services. In addition, financial companies are often fount to illegally bill the government for substandard services by fraudulently certifying otherwise. Alternatively, these companies may realize that they have credit from their services that they have to repay to the government, but the companies do not reimburse the government within the 60 day time frame. See these blogs for more examples of the FCA.

If you witness any potential false claims in California (i.e. requests for reimbursement to the government, not actually rendering work when reimbursement is received, or receiving and knowingly retaining an overpayment) by your company, or you are retaliated against for voicing your concern about potential wrongdoing, immediate action is vital. Contact the experienced employment law attorneys at Stephen Danz & Associates for a free consultation to discuss your circumstances and legal options.