Virginia Attorney General’s Office Intervenes in $1.15 Billion Suit Against 15 of the World’s Largest Banks in an Action Under the Virginia False Claims Act

January 13, 2015

Like most states, Virginia has its own state statute that mirrors the federal False Claims Act and allows whistleblowers to collect rewards for bringing to light fraud against the state government. Virginia’s Fraud Against Taxpayers Act, like its federal counterpart, permits the state to intervene in cases brought by qui tam (false claims) relators. On September 16, 2014, Virginia’s Attorney General Mark Herring did just that, filing a 317 page complaint alleging that fifteen of the world’s largest banks knowingly misrepresented the financial stability of mortgage securities to the state’s retirement system in the years leading up to the financial crisis in 2007 and 2008.

The complaint alleges that as a direct result of the banks’ misrepresentations, the state’s retirement system purchased doomed mortgage securities and ultimately lost $383.91 million. The Commonwealth seeks $1.15 billion in damages from the banks (three times the amount of actual damages, as permitted by the statute), plus civil penalties for each violation. The relator was Integra REC, LLC, a financial modeling firm. This historic lawsuit demonstrates the price that can be paid for fraud against taxpayers and the government. And because the relator may receive between 15 to 25 percent of the ultimate settlement ($172.5 million to $287.5 million if the full $1.15 billion sought is awarded), it also demonstrates the incentives for whistleblowers to expose fraud.

Virginia Bill Would Protect State Employees Who Report Wrongdoing

October 11, 2010

Virginia Delegate Bill Janis filed House Bill No. 1399 for the General Assembly which would protect state employees who report wrongdoing from retaliation by their supervisors.  The Bill was drafted in response to Ligon v. Goochland in which Judge Timothy Sanner, basing his decision on the principle of sovereign immunity, ruled in favor of the county against a whistleblower who was terminated for reporting misdeeds in county shops.