Financial Fraud

Stone & Magnanini has substantial experience in litigating financial fraud cases – particularly cases arising out of the collapse of the financial markets in 2008. Among others, Stone & Magnanini has represented victims of the Madoff Ponzi scheme, Fortune 500 companies damaged by the collapse of the auction rate securities markets, insurance companies and individuals damaged by the collapse of the housing market and wide spread fraud by mortgage companies, banks, rating agencies and investment bankers. Stone & Magnanini attorneys have extensive experience on all sides of these cases, including representation of major corporations and high net worth clients in connection with SEC investigations.

Financial fraud resulting in the submission of false claims for payment to the government has taken a variety of forms over the last several years, and played a central role in the financial crisis suffered by taxpayers and the federal government recently. The financial sector receives billions of dollars in taxpayer funds from the federal and state governments, including state pension funds. Among the kinds of frauds that may constitute a violation of the False Claims Act, include:

  • Mortgage Fraud: The crash of the housing market and resulting financial crisis was, in large part, due to the abuse of government programs designed to encourage lending to lower income families, including FHA/HUD, VA, Fannie Mae, Freddie Mac, among others. Some frauds that may have resulted in the submission of false claims to these programs include pervasive predatory lending to borrowers that cannot qualify for government backed loans, the falsification of underlying borrower applications and loan closing documents, and the fraudulent certification of federal underwriting guidelines, among others.
  • Procurement Fraud: Any overcharging of the government for goods or services, falsely billing the government for services never completed or not fully completed, or the failure to comply with governmental regulations or contractual may result in violations of the False Claims Act.
  • Bailout Fraud: Under the Government’s Troubled Asset Relief Program (“TARP”) $700 billion bailout program of the financial industry in 2008, the Government restored liquidity and stability to several large financial institutions. In exchange, the Government required, among other things, that these financial institutions offer sweeping mortgage modification programs to distressed homeowners. False Claims Act violations committed through TARP and other federal bailout programs include false certifications of eligibility or compliance under TARP, fraud in connection with the mortgage modification program under TARP, and the use of TARP or other federal bailout funds for purposes other than the purpose for which they were designed.
  • Pension Fund Fraud: Each year, state pension funds pay billions of dollars for the procurement of services from private institutions, and invest billions of dollars in products offered by these institutions. In certain circumstances, a fraud on these pension funds may violate the state false claims acts where these state pension funds are located. False Claims Act violations on state pension funds include false statements made in the sale of securities to a state pension fund as well as procurement fraud related to purchase of services related to the management of investments by financial institutions for the pension fund.

To learn more about reporting Financial Fraud or to request a free, confidential case evaluation contact Stone & Magnanini’s Financial Fraud Team.