Although the Financial Institutions Reform, Recovery, and Enforcement Act was passed in 1989, the statute has appeared in only a few dozen cases until recently.  Seeking all useful tools under the False Claims Act, the Department of Justice, U.S. Attorney’s Offices around the country and President Obama’s mortgage fraud task force have all been experimenting with the law.  The law allows federal prosecutors to issue subpoenas and take testimony from witnesses, carries penalties of up to $1 million per violation–$5 million for continuing violations–, requires only proof by a preponderance of the evidence, and includes a 10 year statute of limitations, far longer than many other financial laws.

President Obama’s mortgage fraud task force, a joint effort including DOJ, the SEC, the FBI and HUD, has issued over a dozen subpoenas under the act since the its creation at beginning of this year.  The landmark $25 billion mortgage settlement earlier this year involving five of the nation’s largest banks included FIRREA allegations.  The U.S. Attorney’s Office for the Southern District of New York has included FIRREA charges in several recent cases, including the CitiMortgage case resolved in February of this year.  According to those familiar with the cases, other U.S. Attorney’s Offices, including Colorado, Philadelphia, and Boston, have recently issued subpoenas under FIRREA.

Read the entire article, “U.S. tests rare legal path in financial crisis cases”
Read the statute, Financial Institutions Reform, Recovery and Enforcement Act of 1989