Quicken Loans Sues US Over False Claims Act Investigation

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Quicken Loans filed a lawsuit against the Department of Justice and the Department of Housing & Urban Development on Friday accusing them of pursuing a political agenda in the investigation of the mortgage lender for potential violations of the False Claims Act. The complaint may be part of a more offensive approach to fraud litigation by companies and their counsel as they attempt to avoid the treble damages permitted by the law.

Mortgage lenders have already paid billions to settle potential lawsuits by the United States related to suspected wrongdoing from 2006 to 2008 under the False Claims Act and FIRREA. Quicken Loans is a private company so it doesn’t have the same disclosure requirements that lead public companies to provide regular updates on litigation to their investors.

The DOJ investigation into Quicken started at least three years ago and has subpoenaed more than 85,000 documents. The Justice Department has apparently been trying to get the company to settle the investigation in order to avoid litigation, if the lender’s description of events is accurate.

Media reports indicate that the company has an issue with the small sample size of loans the DOJ is using to extrapolate its settlement demands. It also said that two of the defects at issue were minor, involving errors of less than $30. Quicken is the “largest and highest-quality FHA lender,” according to CEO Bill Emerson.

Quicken is not the first company to lob accusations at the DOJ investigation into mortgage fraud. S&P told the media the government was using the investigation of the company over its ratings practices to retaliate against it for lowering the credit rating of the United States. S&P settled the lawsuit into its practices in February with an agreement to pay $1.375 billion to the Justice Department and the States. S&P dropped the assertion of wrongdoing by the government as part of the settlement agreement.

Could this be the start of a new defense tactic in False Claims Act litigation? Previously, companies have sued whistleblowers or filed counterclaims in order to try to take the offensive. But a lawsuit against the United States isn’t likely to curry favors with the Government. It obviously goes against the advice in several recent articles highlighted the benefits of cooperation with the government by self-reporting violations of the False Claims Act and internal investigations of the Foreign Corrupt Practices Act.

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