Citigroup Whistleblower Hits Jackpot


Congratulations to whistleblower Sherry Hunt of Silex, Missouri, a vice president of quality assurance at CitiMortgage, who will receive approximately $31.7 million or 20 percent of the $158.3 million that Citigroup agreed to pay to settle a False Claims Act suit involving mortgage fraud filed by the U.S. Department of Justice. It is the second-largest settlement ever in a mortgage-fraud case.

The settlement came one week after Bank of America agreed to pay $1 billion to settle similar suit. A similar suit is pending against Deutsche Bank AG. The settlement was characterized as part of a larger $25 billion settlement with five banks involving wrongful foreclosures; Citi will pay $2.2 billion into the foreclosure settlement pool (“DOJ Wields False Claims Act Again in $158M Deal Over Citi Mortgage Loans,” Corporate Counsel).

At the outset, Ms. Hunt said she had no idea that she might receive a monetary award, much less one many times greater than what she could hope to earn in her lifetime. She explained: “All a dishonest person had to do was change the reports to make things look better than they were. I wouldn’t play along. I had to do something to stop them. I felt that if I were brave enough to come forward and take a stand, then maybe others would, too.”

The suit against Citigroup involved fraud that occurred from 2004 to the present. Internal emails showed that Citigroup applied “brute force” to intimidate and humiliate its quality control managers to eliminate or downplay evidence of fraud they had uncovered. In one instance, Citigroup employees erased records of 1,000 loans that Ms. Hunt’s quality control team had identified as possibly fraudulent and ineligible for FHA insurance, meaning Citigroup should never have approved them.

Citigroup has approved 30,000 loans in the amount of $4.8 billion since 2004; over 30 percent of the borrowers have stopped paying; HUD has paid out almost $200 million in insurance claims on those mortgages (“Citigroup Whistle-Blower Says Bank’s ‘Brute Force’ Hid Bad Loans From U.S.,” Bloomberg).

Citigroup received $45 billion in taxpayer bailout money during the credit crisis (the most of any financial institution), plus taxpayer-backed guarantees on more $300 billion of its risky assets.

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.