The Whistleblower's Tale: Countrywide Investigator Fired for Doing Her Job While Rampant Fraud Was Concealed
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And perhaps nothing would have been done, but, Foster said, her counterpart in the fraud control unit within FSL was on vacation. “That made it pretty easy for me to step into a leadership role, take over and call the shots on how the investigation was going to be conducted.” And as the investigation went on, all the allegations the tipster made were vetting out.
A team of investigators went to Boston to look into the complaints in person and were shocked by what they found. “Typically when you're looking for fraud you've got to really look because one of the primary components of a fraud is concealment,” Foster said. “These people weren't concealing it. They were concealing it from corporate, but every person who walked into those branches every day was a participant.”
“One process was to cut a signature off one document, paste it and make a photocopy so it looks like an original signature,” she continued. “A part and parcel of everyday business was to do anything it took to fund a loan.”
They had templates for fabricating documents, cases of Wite-Out for changing names and a method for gaming the automated underwriting system—plugging in income values until they got one that worked and allowed them to underwrite the loan. They'd keep a template bank statement from each bank, then plug in different borrowers' names and an asset amount to prove that the borrower could make the payments on the loan.
The Department of Labor report that vindicated Foster described “multiple incidents of egregious fraud spread throughout the entire region, including loan document forgery and alteration, manipulation of borrower's assets and income, manipulation of the company's automated underwriting system, the destruction of valid client documents, and evidence that blank templates of bank statements from several different financial institutions were emailed back and forth among loan officers in various branches for use in forging proof of borrower income and assets.”
“I initially was thinking, 'God this is a big problem,' it's not one little thing where you send an email out and it fixes it,” Foster said. “I recognized it as a huge problem but in my mind I was questioning if this was why they put together this fraud reengineering plan.”
Investigating the Investigators
Forty-five days into Foster's investigation, she got a phone call from the president of the FSL division. “He just went on a rant on the phone,” she said, saying he was “sick and tired of these witch hunts” and demanding to know what she was doing. (Greg Lumsden, the executive in question, told iWatch News that he didn't remember Foster or the phone call.)
Foster, meanwhile, was trying her best to come up with reasonable explanations for the things she'd seen. “In order to know that what you're seeing is what you believe you're seeing, you have to play devil's advocate with yourself,” she said. But in this case, the fraud was undeniable—Countrywide wound up closing six of its eight branches in that region and firing around 44 people because of what she'd found.
To some degree, the pushback didn't really surprise her. “Most places that I've worked for the past 25 years there's always been the sales people and the fraud people, really on two different sides of the spectrum,” she explained. “They say that we're loan prevention. Their goal is to get as many loans funded as they can and in their mind our goal is to stop the loans from funding. Neither side can go crazy but what clearly happened here was this side was going crazy, their goal seemed to be to eliminate any interference with their revenue, bonuses and commissions.”