As we have reported in the past, the False Claims Act has been hugely successful in helping the U.S. government recover money lost as a result of scam artists and fraudulent contractors. The FCA condemns and punishes acts resulting in unlawful amounts of money forwarded from the U.S. government to private individuals or businesses, and includes extremely harsh monetary penalties, including triple damages. Many times, defendants facing FCA liability are also undergoing criminal investigations and are required to pay concurrent fines and penalties under federal criminal laws.
In one recent case, the federal government is seeking to recoup money forwarded to a member of the Blackfeet Native American tribe pursuant to a settlement agreement between several tribes and the USDA. As with any class action settlement agreement, only certain, qualified members of the tribe are permitted to collect the funds and former Blackfeet Tribal Chairman Patrick Charles Thomas has allegedly failed to meet this burden, despite collecting nearly $1 million from the fund.
Background of Case Against Mr. Charles
In mid-2011, the USDA settled a case with a number of Native American groups over claims of discrimination in lending practices – misconduct squarely prohibited by the Fair Lending Act. Federal lenders, including private lenders handling federal funds, are prohibited from using race, gender, national origin or other protected classes as a factor when making a lending decision. Without admitting liability, the USDA offered a $760 million settlement to the Keepseagle class action group based on its claims of discrimination in agriculture lending, causing many to give up their dreams of land ownership. Similar settlements were recently reached with regard to African American, Hispanic and female farmers.
Mr. Charles of the Blackfeet Indian tribe collected $50,000 from the settlement under its Track A categorization, received a loan forgiveness of $201,917 and forgave $62,979.38 in tax liability under the loan forgiveness. All in all, the government claims it lost $314,896.91 on Mr. Charles who allegedly did not qualify for the Keepseagle settlement for failure to meet its criteria. Under the treble damages provision of the FCA, the government has tripled the amount owed and is demanding close to $1 million from Mr. Charles.
Basis of Fraud Complaint
According to a statement by the DOJ, “The Keepseagle settlement fund was established by the Department of Agriculture to remedy a bona fide complaint that Native American producers had been treated unfairly in agricultural lending practices. Like all fraud, waste, and abuse in government programs, a fraudulent claim to a share of that fund diminishes the opportunity for the truly aggrieved to be properly compensated. And it undermines the integrity of the judicial system.”
In order to qualify for a payment, a tribal member must meet all of the following criteria:
- a) Farmed or ranched or attempted to farm or ranch between January 1, 1981 and November 24, 1999;
- b) Sought, or attempted to seek, a farm loan from the USDA during that period;
- c) Had their application denied, provided late, approved for a lessor amount than asked, was encumbered by restrictive conditions, or failed to have appropriate loan servicing;
- d) Complained about discrimination to the USDA during the same time period; and
- e) Suffered economic harm attributable to USDA actions.
As the basis of its complaint, the DOJ asserts that Mr. Charles failed to meet at least one of these criteria and should never have qualified for the payment under the settlement.
Always Report Lending Fraud
Fraud in lending, particularly pertaining to federal loan money, is prohibited by a number of different statutes and can lead to extremely harsh penalties and fines. If you suspect your lender or employer is engaging in fraudulent misconduct regarding secured interests, we encourage you to speak with an experienced whistleblower attorney right away.