Whistleblowing has its rewards. For some, that reward may be simply peace of mind for doing the right thing. But then for others, such as former JPMorgan Chase employee Keith Edwards, the reward could be as much as $63.9 million.
A U.S. district court in Manhattan announced in a March 7 filing that Edwards received the large sum for disclosing tips that led to JPMorgan’s $614 million settlement with the federal government. In its settlement, JPMorgan resolved charges that it defrauded the government into insuring flawed home loans.
Edwards had worked as an assistant vice president supervising a government insuring unit for JPMorgan or its predecessors between 2003 and 2008. In a January 2013 False Claims Act suit, he claimed that the bank submitted thousands of mortgages to the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) that were not eligible for governmental insurance guarantees.
The district court’s filing said that Edwards was paid $56.5 million for the FHA portion of the case and $7.4 million for the VA portion of the case.
“There were a lot of bad loans made during the financial boom, and the United States taxpayer was left holding the bag through the VA and FHA loan programs,” Edwards' lawyer, David Wasinger, told Reuters. “Hopefully the settlement sends a message to Wall Street that this conduct is not allowed, and that in the future it will be held accountable.”
In its settlement, JPMorgan admitted that it failed to tell the agencies that internal reviews had discovered problems with the mortgages. The company has agreed to tighter oversight of its compliance with governmental regulations as a result.
Edwards’ reward should only be the latest catalyst in a burgeoning whistleblower environment. In November 2013, the Securities and Exchange Commission announced that whistleblower tips rose 8 percent in the fiscal year 2013, to 3,238 tips. Fraud comprised 553 of those tips, just behind corporate disclosures and financials which led the way with 557 tips.
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