The False Claims Act

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On October 24, 2012 the Unites States of America filed a lawsuit against the Bank of America Corporation for selling toxic mortgages to Fanny Mae and Freddy Mac which cost the taxpayers more than $1 billion dollars. The lawsuit sought penalties under two laws; the False Claims Act, which is normally used to target fraud against the government, and the 1989 FIRREA Law. FIRREA does not usually hold up in court, but the government is once again relying on it because of the financial crisis as a possibility for targeting civil fraud concerning financial institutions. (Viswanatha, Aruna, 2013) (Stempel, Jonathan, 2012) On May 8, 2013, U.S. District Judge Jed Rakoff issued a two-page ruling that dismissed the claims in the lawsuit seeking penalties under the False Claims Act, but allowed the claims that sought penalties under Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to advance. The relevance of the False Claims Act and the FIRREA Law will be further explored in this case. (Viswanatha, Aruna, 2013) The False Claims Act The False Claims Act, also known as the "Lincoln Law" is an American federal law that holds persons and companies accountable for abusing governmental programs. However, the law includes a "qui tam" provision that allows people without government ties to file actions on behalf of the government. This is also referred to as “whistleblowing”. The Act prohibits such measures as knowingly presenting false claims for payment or approval,
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