TARP Financial Fraud Qui Tam Cases

The Troubled Asset Relief Program (TARP) is a government initiative created to purchase “troubled assets” in an attempt to stabilize the U.S. economy. Since its inception in 2008, the program has grown to include banks, insurance companies, mutual fund and investment firms, and automakers and their related enterprises.

The selection criteria for TARP participation are largely unknown but likely involve Treasury evaluations regarding a company’s likelihood of survival or the potential impact its failure could have on the broader economy. Because these criteria are unclear and federal oversight is limited, the program carries a significant risk of fraud.

If you have knowledge that a company or financial institution has fraudulently obtained TARP funds or misused those funds contrary to regulations, you may have grounds for a qui tam claim—allowing you to help recover taxpayer money and receive a financial reward for your information.

Major Programs Under TARP

1. Capital Purchase Program (CPP)

The largest program within TARP, the Capital Purchase Program (CPP) was designed to provide capital for qualifying financial institutions (QFIs) to ensure their stability and promote lending.

The government purchased securities and warrants from these institutions, which could later be repurchased.

Each QFI was required to sign a contract with the government, outlining limited restrictions—most notably on executive compensation. Over 500 institutions received funding through the CPP, with the largest recipients including Wells Fargo, Bank of America, Citigroup, PNC Financial Services, and SunTrust Banks.

2. Making Home Affordable Program

The Making Home Affordable Program sought to reduce monthly payments for homeowners to prevent foreclosures and stabilize communities.

The program provided financial assistance and government guarantees to encourage loan refinancing.

Mortgage servicers and lenders could receive incentive payments for finding foreclosure alternatives, modifying loans, and helping borrowers stay current.

The program was overseen by Freddie Mac and Fannie Mae, which relied on mortgage servicers for program updates. Participants included major financial institutions such as Bank of America, Chase Home Finance, Countrywide, GMAC Mortgage, and Wells Fargo.

3. Targeted Investment Program & “Systemically Significant” Failing Institutions

These programs were designed to stabilize corporations whose failure would have a significant ripple effect on the economy.

Notable participants included Citigroup, Bank of America, and American International Group (AIG).

While the programs imposed limits on executive compensation, many of the terms and conditions remained vague and mirrored those of the CPP agreements.

4. Automotive Industry Financing Program & Auto Supplier Support Program

Together, these programs provided more than $85 billion in funding to automakers, suppliers, and related financial companies to ensure stability in the automotive industry.

Recipients were required to meet strict conditions, including limits on executive compensation and expenditures, as well as restructuring milestones for Chrysler and General Motors.

Oversight and Enforcement

The U.S. Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) has identified several audit areas, including:

• Executive compensation by TARP recipients
• Influence of outside parties on Treasury or bank regulators
• Treasury’s review process for funding decisions
• AIG’s bonus structure and expenditures
• Whether TARP recipients made good faith efforts to comply with government contract terms

Legal Representation for TARP Whistleblowers

Individuals with evidence of fraud, misuse of funds, or false statements in connection with TARP-related programs may pursue claims under the False Claims Act (FCA).

The Law Offices of David Berg can assist in evaluating and pursuing these claims to recover taxpayer funds and protect whistleblowers.

Notice

This website is designed to provide general information only. This information is not and should not be construed to be legal advice. The transmission of the information found on this website also does not result in the formation of a lawyer-client relationship.

You should be aware that qui tam claims are subject to a Statute of Limitations. The area of limitations periods is complex. There are also first to file rules, public disclosure bars, original source issues, and varying limitations in pursuing retaliation claims. If you wish to pursue your claims, you should promptly seek the opinion of an attorney regarding the merits of your qui tam claim and the applicable statute of limitations.