Labor Department officials have ordered Bank of America to pay damages and reinstate a former executive they say was illegally fired for reporting fraud at the company’s Countrywide Financial Corp. unit.
The award of $930,000 to former Countrywide vice president Eileen Foster follows a ruling by an administrative law judge that her firing violated whistleblower protections under the Sarbanes-Oxley law, which aims to fight accounting fraud.
Foster led internal investigations that revealed widespread fraud involving employees of Countrywide, the Calabasas, Calif., based mortgage giant, which merged with Bank of America in July, 2008.
Whistleblowers who tried
to report forged documents, faked data and other questionable activities inside the nation’s largest mortgage lender were fired, according to Foster. Foster herself was fired shortly after the merger.
“It’s clear from our investigation that Bank of America used illegal retaliatory tactics against this employee,” said Assistant Secretary of Labor for OSHA
Dr. David Michaels in a news release. “This employee showed great courage reporting potential fraud and standing up for the rights of other employees to do the same.”
As the Center for Public Integrity’s iWatchNews reports, Countrywide’s management protected sales staffers who inflated borrowers’ incomes on loan applications and falsified paperwork in order to push through a high volume of risky mortgages.
Asked about the ruling, Foster told iWatchNews: “I don’t want to comment at this time, considering that I may be returning to Bank of America as an employee.”
Bank of America says it plans to appeal the ruling.
Shirley Norton, a bank spokesperson, said the decision to fire Foster was “solely based on issues with the employee’s management style and in no way related to the employee’s complaints and the allegations made in the complaint.”
The case was investigated by the Occupational Safety and Health Administration, the labor department branch that enforces whistleblower provisions of 21 diverse federal statutes, ranging from the Occupational Safety and Health Act and Sarbanes-Oxley to laws on airline, trucking and food safety and environmental protection. Under the statutes, it is illegal to retaliate against employees for reporting violations of law.
and Bank of America can appeal the monetary damages to the Labor Department’s Office of Administrative Law Judges within 30 days of receiving the findings.
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