BofA Ordered to Pay $930,000 to Fired Whistleblower
Bank of America Corp. (BAC) must pay $930,000 to an employee who uncovered fraud at Countrywide Financial Corp. and was fired in violation of whistleblower protections, the U.S. Department of Labor said.
The employee was terminated soon after the Charlotte, North Carolina-based bank took over Countrywide in 2008, the agency said today in a statement. The worker, who must also be reinstated, led internal investigations that found “pervasive wire, mail and bank fraud involving Countrywide employees,” according to the release.
“It’s clear from our investigation that Bank of America used illegal retaliatory tactics against this employee,” said David Michaels, assistant secretary of the Labor Department’s Occupational Safety and Health Administration, in the statement. “This employee showed great courage reporting potential fraud and standing up for the rights of other employees.”
Bank of America Chief Executive Officer Brian T. Moynihan, 51, has been settling demands from buyers and insurers of soured mortgages created by Countrywide, which had been acquired by his predecessor, Kenneth D. Lewis. Countrywide was the biggest creator of subprime loans, made to homeowners with the weakest credit, and regulators and lawmakers have blamed lax underwriting for fueling defaults.
Bank of America, the biggest U.S. lender by assets, had investigated the claims and is “disappointed” with the ruling, said Dan Frahm, a company spokesman.
Management Style
“The bank’s actions in dismissing this associate were solely based on issues with her management style and in no way related to the complaints and allegations she made,” Frahm said in an e-mail. “Bank of America encourages associates to raise issues they see. We take such escalations seriously and investigate them thoroughly.”
The Los Angeles-area worker claimed that people who tried to report fraud to Countrywide’s employee-relations department suffered persistent retaliation, according to the agency. The $930,000 includes back wages, interest, compensatory damages and attorney fees.
The worker and Bank of America have 30 days to appeal the monetary damages, the agency said.
To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net.
To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net.
BofA Ordered to Pay $930, 000
Guy Calaf/Bloomberg
Bank of America Corp. signage is displayed at a branch in Times Square, New York.
Bank of America Corp. signage is displayed at a branch in Times Square, New York. Photographer: Guy Calaf/Bloomberg
Rate this Page
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.