BofA $1 Billion Whistleblower Also Faced Fraud Claims
The whistle-blower helping the U.S. government mount a $1 billion fraud lawsuit against Bank of America Corp. was himself accused of fraud by an investor in a financing company he co-founded, and now works at Fannie Mae (FNMA), one of two entities he claims the bank defrauded.
Edward O’Donnell sued Bank of America, the second-biggest U.S. lender by assets, in February under the False Claims Act, saying the bank’s Countrywide Financial unit, where he once worked, issued defective mortgages and sold them to Fannie Mae and Freddie Mac. Last month, the Justice Department joined his suit, making it the first time the U.S. has accused a bank of fraud over loans sold to the two government-sponsored mortgage- finance companies.
To make the case, the U.S. may have to confront its whistle-blower’s own tangled history. A year after leaving Countrywide, O’Donnell was sued by an investor in a deal organized by a commercial financing firm he co-founded. Bank of America may use that lawsuit, and O’Donnell’s job at Fannie Mae, to raise doubts about his credibility before a jury, according to Peter Hutt, a lawyer who defends whistle-blower cases.
“It could certainly be argued that the whistle-blower had an interest in making the allegation either to secure employment at Fannie Mae or making himself look good at Fannie Mae,” Hutt, a partner at Akin, Gump, Strauss, Hauer & Feld LLP in Washington, said in a phone interview.