Former Countrywide exec collects $57.6 million for whistleblowing

Edward O’Donnell, a former Exec. for Countrywide financial is about to collect $57.6 million from Bank of America, for his role in exposing fraudulent activity at the firm. O’Donnell filed false-claims lawsuit that accused Countrywide Financial, which is now owned by Bank of America, of defrauding government-backed mortgage finance companies Fannie Mae and Freddie Mac by selling them defective mortgages.

The lawsuit centered on a program at Countrywide nicknamed “the hustle,” which rewarded employees for producing more loans regardless of the quality.  The fraudulent activity greatly contributed to the real estate bubble and mortgage crisis of 2008, which led to the widespread economic fallout known as the “Great Recession.”

In July, a federal judge presiding over the case ordered Bank of America to pay a $1.27 billion penalty.  That ruling is currently being appealed by the bank, and O’Donnell has yet to collect money from it.

Recently filed documents in the Southern District of New York indicate that O’Donnell filed a second, separate, suit against Countrywide this past June, with similar accusations.

Bank of America reached a $350 million settlement in the June suit, just a portion of a broader $16.65 billion settlement that the bank agreed to in August to resolve claims concerning mortgages it bundled and sold leading up to the financial meltdown.

The False Claims Act allows whistleblowers to collect between 15 percent and 25 percent of any recoveries.

Jeffrey Newman represents whistleblowers