Reuters-
When the U.S. Justice Department sued Bank of America Corp last week for $1 billion, federal prosecutors in Manhattan once again based their case on the False Claims Act, the Civil War-era whistle-blower law that’s recently become the Justice Department’s handiest tool in its efforts to hold banks accountable for their role in the mortgage meltdown and foreclosure crisis.
The FCA permits private whistle-blowers to file suits alleging that the government has been defrauded. The Justice Department then determines whether to intervene and litigate the whistle-blower’s claims. If the suit pans out — which is almost always the case if the government intervenes — private plaintiffs receive a cut of whatever the Justice Department recovers.