|
 As the sole partner at a five-attorney firm in St. Louis, Missouri,
Wasinger was mostly focused on local business litigation and had
never represented a whistleblower.
But in January 2012 an old business acquaintance was ready to go
public with accusations of widespread mortgage fraud at Bank of
America's Countrywide unit, and he turned to Wasinger.
That touched off a series of events that put Wasinger at the center
of two of the biggest legal cases to emerge from the 2007-2009
financial crisis, against Bank of America and JPMorgan Chase & Co,
respectively.
In January, the U.S. Attorney's office in Manhattan said it is
seeking up to $2.1 billion in penalties from Bank of America after a
jury in October found the firm liable for fraud over defective
mortgages sold by Countrywide. Wasinger's client, former Countrywide
Executive Vice President Edward O'Donnell, was the star witness for
the prosecution.
And earlier this month, JPMorgan Chase agreed to pay $614 million to
settle claims that it defrauded the U.S. government by submitting
sub par home loans for federal insurance. The case relied in part on
evidence provided by another Wasinger client.
"We've been very, very fortunate," Wasinger, 50, told Reuters in an
interview. "I am just a country lawyer from Missouri trying to hold
Wall Street accountable."
It has not been determined how much money Wasinger's firm or his
clients will receive. Typically, a whistleblower who exposes fraud
against the government can receive 15 percent to 25 percent of the
settlement, though a court can cut the award depending on how much
the person contributed to the case and other factors.
Experts say Wasinger's payout from the JPMorgan case could reach
into the millions of dollars, an amount that would be a windfall for
his relatively modest firm. His potential gains from the Bank of
America case would likely be much smaller, as that case was tried
under a law that limits whistleblower recoveries. Wasinger declined
to comment on possible earnings.
Representing whistleblowers is a lucrative business for lawyers and
is hyper competitive, since few corporate insiders who come forward
actually have the information that leads to big government lawsuits.
What makes Wasinger's situation unusual is that he stumbled into the
field.
A CALL FROM A FRIEND
Wasinger grew up two hours north of St. Louis in Hannibal, Missouri,
an agricultural community of 18,000 people that is famous for being
Mark Twain's hometown. He earned his law degree from Vanderbilt
University in Tennessee in 1988, and worked for a short time at a
large regional firm in St. Louis.
In 1991, Wasinger joined a small law firm with a colleague that has
morphed into the Wasinger Law Group. His wife, Colleen, is also an
attorney at the firm, which handles real estate litigation and
partnership disputes, among other local business matters.
It is a small but busy practice, according to Wasinger, who said he
typically worked 40 to 50 hours a week. The Bank of America case
took him to a whole new world of high-pressure New York trials and
90- to 100-hour work weeks.
Prior to that case, Wasinger had never before worked on litigation
involving the False Claims Act, the law that allows whistleblowers
to collect rewards if they disclose fraud against the government.
But Wasinger had known his client for years, having represented
another company O'Donnell worked at in an unfair competition case in
the 1990s.
In February 2012, Wasinger filed a sealed case against Bank of
America on behalf of O'Donnell, who accused Countrywide of selling
thousands of shoddy mortgage loans to the government-controlled
Fannie Mae and Freddie Mac.
Wasinger said he decided to file the suit in New York as the local
U.S. Attorney's office did not have much experience with financial
fraud cases. He drafted the complaint and traveled to the Big Apple,
his third visit.
"He is a very dogged and determined lawyer," said Heidi Wendel, who
dealt with Wasinger when she was a lawyer in the civil frauds unit
at the Manhattan U.S. Attorney's office. She is now in private
practices at the law firm Jones Day.
"He drafted a solid complaint that could get the government's foot
in the door," Wendel said, referring to the Countrywide lawsuit.
Wasinger also filed a similar complaint with the Justice Department
under another law, the Financial Institutions Reform, Recovery, and
Enforcement Act (FIRREA). Then he waited.
In October 2012, the Justice Department joined O'Donnell's lawsuit.
Bank of America decided to fight it, and the trial took four weeks
with O'Donnell as the primary witness.
It was a much larger trial than any cases Wasinger had been involved
with, and one he described as intense and stressful. The
government's Countrywide trial team would often stay in the office
until midnight or 1 a.m. One Justice Department lawyer slept on an
air mattress in the office after his home was damaged by Hurricane
Sandy.
Wasinger said he was often daunted by the army of Bank of America
lawyers that would pull up to court each morning. "It was like a
presidential motorcade," he said. "Meanwhile, DOJ doesn't even have
a coffee pot in their office."
[to top of second column] |
The government and Bank of America are waiting for a judge to
determine the bank's penalty. A spokesman for Bank of America,
headquartered in Charlotte, declined to comment. A spokeswoman for
the U.S. Attorney's office also declined to comment.
A CALL FROM A STRANGER
After the Bank of America case became public in October 2012,
Wasinger said he received dozens of phone calls from people claiming
to be whistleblowers.
Most of their tales of corporate fraud were not credible, he said,
and turned them away.
One of the callers was Keith Edwards, a former supervisor in
JPMorgan's government insuring unit in Louisiana. Edwards told
Wasinger he had been pushed aside when he tried to improve the
quality control of loans submitted for insurance to the Federal
Housing Administration or the Department of Veterans Affairs.
After hearing so many similar claims, Wasinger was skeptical.
"You've got a lot of good lawyers in Louisiana," he told Edwards. If
Edwards was serious, Wasinger added, they would have to meet.
Edwards drove through the night to St. Louis from Monroe, Louisiana,
a nine-hour trip. He was impressed with Wasinger after their initial
conversation, Edwards told Reuters via email.
In January 2013, Wasinger filed his second False Claims Act case,
this time against the largest U.S. bank, on its home turf.
The U.S. Attorney's office was already deep into an investigation
into JPMorgan's mortgage-lending practices. Edwards provided the
government with new information, including about VA loans. Instead
of litigating the case, as Bank of America had, JPMorgan decided to
settle.
A JPMorgan spokeswoman declined to comment beyond its previous
statement that the settlement "represents another significant step
in the Firm's efforts to put historical mortgage-related issues
behind it."
NO PAYMENT YET
Wasinger has yet to be paid for the two cases that he spent much of
the past couple of years working on.
The government and Wasinger are currently negotiating Edwards' share
of the JPMorgan deal. Under the False Claims Act, he can
theoretically earn up to $150 million, but is likely to get less
than that because the government had already conducted some of the
investigation into JPMorgan prior to his complaint.
In the Countrywide case, although O'Donnell was a key witness, his
payment is capped at $1.6 million under FIRREA because the False
Claims Act portion of the suit was dismissed prior to trial.
O'Donnell may be able to collect more money if he appeals that
ruling.
Wasinger said he will get a cut of what his clients are awarded, but
declined to give details.
The percentage that a lawyer for a whistleblower gets varies widely,
but a general rule of thumb is 33 percent to 40 percent, according
to Stephen Kohn, executive director of the National Whistleblower
Center, a non-profit group that advocates for whistleblowers.
There have been only about 25 large cases — more than $200 million — in three decades' worth of False Claims Act prosecutions, he said.
In one of the largest payouts ever, a former quality manager at
GlaxoSmithKline Plc won $96 million in October 2010 for exposing
manufacturing defects at a plant in Puerto Rico. The drug company
paid $750 million to settle the charges.
As Wasinger awaits payment, he and his firm have continued to work
on their usual stable of local business litigation. Wasinger said he
has no plans to seek out whistleblowers as clients but could
represent another if the case was right.
The attorney said he wants some time to decompress. He has had to
travel to New York frequently in the past two years, but spent most
of his time in conference rooms and the courtroom. With each visit
to the U.S. Attorney's office in downtown Manhattan, he has enjoyed
watching construction progress on One World Trade Center and the
9/11 Memorial.
Once he gets paid, Wasinger said he plans to spend some of the money
on his sons: Alex, who just turned 12, and Andrew, who is 10.
"I'm taking them to New York City," Wasinger said.
(Reporting by Aruna Viswanatha in
Washington; additional reporting by Nate Raymond in New York;
editing by Karey Van Hall, Tiffany Wu and Doug Royalty)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
