FIRREA: Whistleblower Declarations in Bank Fraud Cases
The Financial Institutions Reform, Recovery, and Enforcement Act allows the Department of Justice to bring civil actions for fraud affecting federally insured financial institutions. A whistleblower who files a declaration can receive up to 1.6 million dollars, and the standard of proof is lower than in criminal cases.
A different mechanism from qui tam
FIRREA is not a qui tam statute. The whistleblower does not file suit on behalf of the government and does not control the litigation. Instead, a declaration is submitted and the Department of Justice decides whether to act.
The award is capped rather than proportional. That makes FIRREA less lucrative than the False Claims Act on large recoveries, but it reaches conduct the False Claims Act does not, because it does not require a claim for federal money.
What it reaches
The statute covers a list of predicate offenses affecting a federally insured financial institution, and the government has used it expansively.
- Mail and wire fraud affecting a financial institution
- Bank fraud and false statements to a financial institution
- Mortgage origination and securitization fraud
- Appraisal fraud and loan document falsification
- Fraud by an institution against itself, a theory the government has used successfully
Why the lower standard matters
FIRREA is a civil statute using civil predicates and a preponderance standard, with a ten year limitations period. That combination let the government pursue conduct from the financial crisis long after criminal exposure had lapsed.
For a whistleblower, the practical point is that conduct too old or too difficult for a criminal referral may still support a FIRREA declaration.
Frequently asked questions
How much can a FIRREA whistleblower receive?
Up to 1.6 million dollars. The award is capped rather than a percentage of the recovery, which differs from the False Claims Act.
Do I control the case?
No. Unlike a qui tam case, you cannot proceed on your own if the Department of Justice declines to act.
Can I bring both FIRREA and a False Claims Act case?
Where the conduct also involved claims for federal money, both may be available. The analysis depends on the specific facts and is worth doing before filing.
The attorneys who handle these cases
Related reading
Talk to a whistleblower attorney before you report
A conversation costs nothing and is confidential. We will tell you honestly whether what you have describes a case, and what the first-to-file rule means for your timing.