Dan Gilbert’s Legal Trickery Blows Up In His Face. Federal Judge Smacks Down Quicken Loans Preemptive Lawsuit Against DOJ
The preemptive lawsuit filed Quicken Loans against the Department of Justice and HUD blew up in Dan Gilbert’s face. U.S. District Judge Mark A. Goldsmith rejected Quicken’s arguments for the suit. Quicken Loans was attempting to stop the federal government from filing a False Claims Act lawsuit. The company’s lawyers argued the government’s case was defective.
Quicken Loans was attempting to stop the federal government from filing a False Claims Act lawsuit. The company’s lawyers argued the government’s case was defective.
Quicken had filed their suit in Detroit rather than Washington D.C. in hopes they would get a Quicken friendly judge or a judge. Hence the sting Dan Gilbert and Quicken felt with the loss was even more painful.
In addition, Quicken Loans filed the preemptive lawsuit after a phone call between the DOJ and Gilbert. The DOJ threatened Quicken’s founder Dan Gilbert with a lawsuit if there was no progress in reaching a settlement.
Quicken calls the government’s three-year investigation of Quicken a flawed effort.
According to the Detroit News:
Judge Mark A. Goldsmith issued a 24-page opinion and order dismissing the case, rejecting Quicken’s argument the federal government’s case was defective because it involved a sample of loans and emails.
Judge Goldsmith also said the federal government had not “actually deprived Quicken of any money.”
The settlement was only a proposal and said Quicken’s complaint is:
broad and conclusory characterizations of agency (HUD) activities, but short on specificity.
Quicken Loans Is Accused Of Exaggerating Applicant’s Income And Shaking Down Appraisers
The DOJ sued Quicken Loans under the False Claims Act alleging that Quicken bullied appraisers in order to receive higher values for applicants and that underwriting managers encouraged underwriters to “fudge” the incomes of hundreds of applicants.
The complaint states Quicken Loans VP Mike Lyon approved a loan for FHA insurance based on what his department called “bastard income,”
He explained this was income that was:
Plausible to the investor even though we know its creation comes from something evil and horrible.
The complaint also states that Quicken executives pressured underwriters to move things quickly. Executives also improperly incentivized volume over quality. Hence they paid underwriters prohibited commissions, including speed bonuses. Disciplined underwriters who were not reviewing loans fast enough were threatened with termination.
Bill Emerson, Quicken Loans CEO told the Detroit News in typical bravado that only an employee of Dan Gilbert’s could do, “No threat, including high-profile senseless lawsuits from powerful federal officials, will deter our company and its leadership from doing the right thing. We will stand in defense of our impeccable reputation established by thousands of hard-working ethical team members over our 30-year history.”
You can read Judge Goldsmith’s decision below:
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