Court

Ninth Circuit Holds that Fannie Mae and Freddie Mac Are Not Agents of the Government Under the False Claims Act

Via jdsupra:

In United States ex rel. Adams v. Aurora Loan Servs., 813 F.3d 1259 (9th Cir. 2016), the Ninth Circuit affirmed the district court’s dismissal of Relators False Claims Act (“FCA”) complaint, holding that the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) were not officers, employees, or agents of the federal government for purposes of the False Claims Act, and thus Relators had failed to plead any claim for payment from the government under 31 U.S.C. § 3729(b)(2)(A)(i) of the FCA.

The Ninth Circuit affirmed the district court’s dismissal of the complaint, observing that, although Fannie Mae and Freddie Mac were initially chartered by the federal government, they are private companies. The court found that previous rulings that Fannie Mae and Freddie Mac are federal instrumentalities for state and city tax purposes are inapplicable to FCA actions. Additionally, the court found that the FHFA’s conservatorship does not make the GSEs federal instrumentalities. Under the conservatorship, the FHFA assumes the rights and duties of Fannie Mae and Freddie Mac, without giving these entities any federal authority. In the absence of federal authority in the GSEs, or any allegation that the FHFA had taken permanent control, the conservatorship did not transform Fannie Mae and Freddie Mac into federal instrumentalities.

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