Whistleblowers who exposed misconduct at Bank of America and its subsidiaries have collected more than a quarter of a billion dollars in awards, driven by two separate waves of litigation: False Claims Act suits over mortgage fraud at Countrywide Financial, and SEC tips about misuse of customer funds at Merrill Lynch. The Bank of America whistleblower lawsuits that produced the largest payouts stem from the 2014 global mortgage settlement of $16.65 billion, which routed roughly $170 million to four individuals and one small lender, and from a 2016 SEC action that resulted in a record $83 million award to three former Merrill Lynch executives.
Countrywide Mortgage Whistleblowers
Bank of America bought Countrywide Financial in July 2008 for roughly $2.5 billion and inherited a book of mortgage practices that would generate years of federal investigations. Several insiders filed sealed False Claims Act complaints that fed into the Department of Justice’s 2014 global settlement, which was the largest civil settlement ever reached between the government and a single company. The deal included roughly $9.65 billion in cash and $7 billion in consumer relief, and Bank of America admitted it had sold risky mortgage-backed securities while hiding the poor quality of the underlying loans and misrepresenting loan quality to Fannie Mae, Freddie Mac, and the Federal Housing Administration.
Edward O’Donnell
Edward O’Donnell, a former Countrywide vice president, exposed a program internally called the “High Speed Swim Lane,” or “Hustle,” which paid employees to push loans through underwriting as fast as possible regardless of quality. Many of those loans were sold to Fannie Mae and Freddie Mac, which lost more than $1 billion when the mortgages defaulted. O’Donnell was a key government witness at the 2013 trial that produced a $1.27 billion jury verdict against Bank of America under FIRREA, along with a $1 million fine against former Countrywide executive Rebecca Mairone.
The Second Circuit threw out that judgment in May 2016, ruling the government had proved at most an intentional breach of contract rather than fraud. O’Donnell’s own False Claims Act recovery was separate and had already closed. He received $57 million, representing a 16 percent share of a $350 million portion of the federal settlement, plus a separate $1.6 million payment from Bank of America.
Kyle Lagow
Kyle Lagow worked as a property appraiser for LandSafe, a Countrywide subsidiary. In May 2009 he filed a False Claims Act suit alleging that executives pressured appraisers to inflate home values so loan sales would close. His case was the first major whistleblower action tied to Countrywide’s mortgage practices. It was folded into a $1 billion settlement in February 2012 under which Bank of America paid $500 million to the Federal Housing Administration, with the remainder directed to a loan modification program. Lagow received $14.5 million, roughly 19 percent of his designated share of the recovery. Bank of America admitted no wrongdoing.
Robert Madsen
Robert Madsen, another former LandSafe employee, filed a False Claims Act case in Manhattan federal court in 2011. His 220-page complaint alleged that Bank of America used improper appraisal methods to overvalue distressed properties, overstating the value of homes backing its nonperforming loan portfolio by $6.6 billion. Madsen cooperated with prosecutors for nearly four years and produced thousands of pages of documents. He received $56 million from the global settlement.
Shareef Abdou and Mortgage Now
Shareef Abdou, described as an executive in the bank’s operations group, received $48 million from the global settlement. Mortgage Now, a small New Jersey lender that filed its own qui tam complaint, received $8.5 million.
Gregory Mackler
Gregory Mackler filed a separate False Claims Act suit in the Eastern District of New York in 2011. He alleged that Bank of America committed servicing fraud in its handling of the federal Home Affordable Modification Program, which was designed to keep distressed homeowners in their homes. The government investigated and brokered a settlement. The dollar amount of Mackler’s share was not publicly disclosed.
Merrill Lynch and the SEC’s $83 Million Award
In June 2016 the SEC announced a $415 million settlement with Bank of America’s brokerage subsidiary, Merrill Lynch, which admitted wrongdoing. From 2009 to 2012, Merrill Lynch had used complex derivatives trades with no genuine economic purpose to shrink the amount it was required to hold in customer reserve accounts, freeing up billions of dollars each week for its own trading. From 2009 to 2015, the firm held up to $58 billion a day in fully paid customer securities in accounts where they were exposed to third-party claims, violating the Customer Protection Rule.
Three former Merrill Lynch executives tipped the SEC and shared $83 million, the largest whistleblower payout the agency had ever awarded at that point. Two of them split roughly $50 million; the third received about $33 million. The combined award was about 20 percent of the settlement, the maximum allowed. The SEC reduced the shares of two claimants because they had delayed reporting the misconduct.
The enforcement action also found that Merrill Lynch had used severance-agreement language that discouraged employees from reporting problems to regulators. The firm agreed to run annual whistleblower training and inform employees of their rights under the SEC Whistleblower Program.
Other Whistleblower Claims Against Bank of America
Not every whistleblower suit against the bank has produced a payout. Three cases show the range of outcomes.
Boris Galinsky, a former senior vice president, alleged he was fired after raising concerns about the bank’s money-laundering detection technology and being pressured to cut corners on a compliance project. An administrative law judge found that Galinsky’s internal complaints did contribute to his negative reviews and termination, but ruled for the bank under the Sarbanes-Oxley Act, citing legitimate reasons for the firing, including rude behavior, secretly recording managers, and downloading company files for personal use.
Realtor Scott Johnston brought a False Claims Act suit alleging Bank of America misrepresented a program providing down-payment grants to borrowers while certifying to the government that no financial assistance was given. The government declined to intervene, and a federal judge in the Middle District of North Carolina dismissed the case with prejudice in September 2023.
Salma Aghmane’s case was not a government fraud claim but a defamation and blacklisting suit tied to how the bank handled her firing. Terminated in 2013 over an allegedly unauthorized $12,800 withdrawal from a relative’s account, which she said was an authorized reimbursement, Aghmane was placed on an industry database maintained by Early Warning Services. That listing cost her a job offer from Chase. In February 2018, a California federal jury found Bank of America had illegally blacklisted and defamed her, awarding compensatory and punitive damages that could exceed $1.6 million.
Current Regulatory Pressure
On December 23, 2024, the Office of the Comptroller of the Currency issued a cease-and-desist order against Bank of America over failures in its Bank Secrecy Act and anti-money laundering compliance programs. The OCC found the bank had filed suspicious activity reports late, had not fixed previously identified problems with customer due diligence, and had deficiencies in internal controls, governance, testing, and training. The order carries no monetary penalty but requires the bank to hire three independent consultants, conduct lookback reviews of past suspicious-activity reporting, and submit an action plan within 90 days. Bank of America neither admitted nor denied the findings. The order does not reference any whistleblower, but the described failures track the kind of compliance gaps Galinsky had flagged internally years earlier.