PHH reaches $75 million settlement with DOJ over False Claims Act violations

Whistleblower awarded $9 million

PHH Corp. announced it finally settled with the U.S. Department of Justice on behalf of the Department of Housing and Urban Development and separately with the DOJ on behalf of the U.S. Department of Veterans Affairs and the Federal Housing Finance Agency in order to resolve certain previously disclosed matters regarding legacy mortgage origination and underwriting activities.

Separately, key parts of the settlement came to fruition thanks to a whistleblower. Mary Bozzelli, a former employee of PHH, filed a lawsuit under the qui tam whistleblower provisions of the False Claims Act. Bozzelli worked for PHH from 1992 to 2011 as an underwriter and underwriting supervisor.

Due to her contributions to the settlement, the United States awarded Bozzelli more than $9 million for the role she played in blowing the whistle on PHH's mortgage fraud. read more »

Insurer That Benefited From Wells Fargo Abuses Defends Practices

National General Holdings Corp., the auto insurer that picked up business from Wells Fargo & Co. customers who didn’t realize they were buying the coverage, said it acted appropriately.

“We believe that our practices in this highly regulated industry are compliant,” National General Chief Executive Officer Barry Karfunkel said in a conference call Tuesday discussing quarterly results.

Customers have sued Wells Fargo for forcing them to pay for unnecessary insurance that drove some of them into default on their car loans. They have alleged that National General was also involved in the scheme. read more »

There Is Nothing New Under the Sun, Martin Shkreli Edition

His big-talking, livestreaming persona underlines not how much American fraudsters have changed in the last century, but how little.

Martin Shkreli could not be more of this moment. He livestreams freewheeling monologues on YouTube to anyone who will watch. He’s been suspended from Twitter. His hiking, overnight, of the price of a lifesaving drug in 2015 from $13.50 to $750 so perfectly embodied Americans’ current complaints about health care that he was denounced by both Hillary Clinton and Donald Trump.

Last Friday, Shkreli was found guilty on three counts of fraud (and acquitted on five) in a federal court in New York. The trial was not related to that infamous price hike, but rather to hedge funds he ran before his price gouging made news. One wrinkle is that even though the jury determined that Shkreli deceived his hedge-fund investors, he did ultimately pay them back, albeit with money from a separate endeavor. (In a livestream shortly after the trial concluded, as he drank an IPA, he said he guessed his sentence would be “close to nil,” adding, “I think we’re going to end up appealing this.”)

As quintessentially modern as Shkreli is, last week’s verdict added his name to a long list of convicted fraudsters that reaches back more than a century. Edward Balleisen, a professor of history at Duke University, is quite familiar with that list. Earlier this year, he published Fraud: An American History from Barnum to Madoff, which attributed Americans’ trust of con men to a deeply held belief in innovation and world-changing ideas. “From the American Revolution onward,” he writes, “the country’s lionization of entrepreneurial freedom has given aid and comfort to the perpetrators of duplicitous business schemes.” read more »

Uber Plans To Significantly Alter Its Reportedly Disastrous Subprime Lending Program

Uber has long been criticized for lending practices designed to reel in prospective drivers to the ride-hailing company, particularly their program to push people into subprime auto loans. Now, facing significant losses, the company’s planning to wind down the lending business, according to the Wall Street Journal.

Uber’s business model requires a constant influx of drivers, so it’s taken to investing in controversial leasing programs. But those options haven’t come without controversy.

The WSJ reported last week that Uber knowingly leased defective Honda Vezels to drivers without getting the necessary fixes done beforehand. In June, Quartz looked into Uber’s leasing efforts with third-party vendors in New York City and found an array of unseemly tactics. (The company said it planned to temporarily shutter the NYC program while it reviewed the claims.) read more »

Citigroup to pay $130 million to end Libor rigging lawsuit in U.S.

Citigroup Inc has agreed to pay $130 million to settle private U.S. antitrust litigation accusing it of conspiring with rivals to manipulate the Libor benchmark interest rate.

The bank is the second to resolve claims by so-called "over-the-counter" investors that transacted directly with banks on a panel to determine Libor, according to filings late Monday with the U.S. District Court in Manhattan.

Barclays Plc the British bank, reached a similar settlement in November 2015 for $120 million. read more »

U.S. appeals court upholds trader's spoofing conviction

A U.S. appeals court on Monday upheld the conviction of a former New Jersey-based high-speed trader who was found guilty in the first U.S. criminal trial involving the manipulative trading practice known as spoofing.

The 7th U.S. Circuit Court of Appeals in Chicago rejected the appeal of Michael Coscia, who was sentenced in 2016 to three years in prison after a federal jury found the owner of New Jersey-based Panther Energy Trading guilty of commodities fraud and spoofing.

Spoofing involves placing bids to buy or offers to sell futures contracts with the intent to cancel them before execution. By creating an illusion of demand, spoofers can influence prices to benefit their market positions.

The case has been closely watched as Coscia was the first person to be criminally prosecuted under an anti-spoofing provision implemented as part of the 2010 Dodd-Frank financial reform. read more »