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David Wasinger Named “Litigator of the Week”

The following article appeared in the American Lawyer Litigation Daily on August 7, 2014.

A lot of bold-faced names on Wall Street and in Washington are playing a role in Bank of America’s reported $16 billion settlement with the Department of Justice, which may be right around the corner.

But for indirectly helping set the stage for the deal—and for directly helping the government win nearly $2 billion from Wall Street—credit goes to David Wasinger, a small firm lawyer in St. Louis who beefed up the government’s allegations of mortgage fraud at BofA’s Countrywide Financial unit.

On July 30, U.S. District Judge Jed Rakoff ordered Bank of America to pay a $1.27 billion civil penalty in the whistleblower case. The ruling came after a four-week trial in which Wasinger’s client, a former vice president at Countrywide Home Loans named Edward O’Donnell, was the star witness. And according to The New York Times and The Wall Street Journal, Rakoff’s ruling was part of a one-two punch—combined with the threat of a new lawsuit related to mortgage practices at Countrywide and Merrill Lynch—that convinced BofA that only a settlement in the $16 to $17 billion range would appease the DOJ.

As head of the five-lawyer Wasinger Law Group, Wasinger’s practice is focused on real estate law and general business litigation. He had never filed a whistleblower suit until he and O’Donnell, an old business associate, brought their case against Countrywide and BofA in 2012. “I am just a country lawyer from Missouri trying to hold Wall Street accountable,” Wasinger said in an interview with Reuters earlier this year. (Wasinger was out of the office this week and didn’t respond to requests for comment.)

O’Donnell’s suit, filed under the federal False Claims Act, alleged that Countrywide defrauded the government by misrepresenting the quality of mortgages it sold to Fannie Mae and Freddie Mac through a program known internally as “high speed swim lane.” After an unusually short deliberation process, the Department of Justice intervened in the case in October 2012. Rakoff presided over a jury trial a year later, and last week he issued his $1.27 billion penalty. Countrywide had committed a “brazen fraud,” Rakoff ruled, “driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but also on the financial system as a whole.”

Rakoff had dismissed the False Claims Act portion of the case before trial, erasing any hope that Wasinger and his client might collect as much as 30 percent of the government’s recovery under the FCA’s qui tam provisions. What remained were claims under the Financial Institutions, Reform, Recovery, and Enforcement Act (FIRREA). Rakoff’s first-of-its-kind ruling last week established that penalties under FIRREA can be huge. But the law allows for very limited recovery for whistleblowers, so O’Donnell’s bounty is capped at $1.6 million.

Don’t feel too bad for Wasinger though. After the Countrywide case was unsealed, Wasinger connected with a supervisor at JPMorgan Chase & Co. who said the bank was fraudulently obtaining government insurance for mortgages. The DOJ joined that case too, and ultimately extracted a $614 million settlement from JPMorgan in February. The whistleblower in that case stands to collect up to $150 million, a nice chunk of which will likely go to Wasinger.

That’s not much compared to the astronomical numbers BofA and the Justice Department are throwing around this week. But it’s pretty darn good for a country lawyer from Missouri.