Background
Countrywide Home Loans hired Foster in 2005 as a First Vice President overseeing borrower complaint risk in the Corporate Office of the President. Nine months later she was promoted to Senior Vice President, and in March 2007 to Executive Vice President of Fraud Risk Management. In that role, she supervised 30-40 staff responsible for investigating mortgage origination fraud. Foster was also responsible for reporting fraud and suspicious activity to regulators and the company’s Board of Directors.
Foster oversaw an investigation in the summer of 2007 of multiple branches in the Boston area of the subprime division. Investigators found massive evidence that employees had forged borrower signatures, altered and fabricated income and asset documentation, and manipulated the company’s automated underwriting and property valuation systems. The investigation was opened after receiving a tip from a former branch employee who had been fired after objecting to the fraudulent practices.
By February 2008, Foster had found equally shocking activities in investigations in Miami, Chicago, Cincinnati, San Diego, Las Vegas and Los Angeles. Foster believed that Countrywide Employee Relations and Lending Managers were colluding to circumvent fraud reporting channels in order to conceal the fraud perpetrated by high-producing loan officers and managers. Whistleblowing employees directed to report fraud and wrongdoing to Employee Relations were being transferred, demoted, harassed or terminated. In March of 2008, five employees of a branch in the Consumer Markets Division reported egregious levels of loan fraud, drug abuse and sexual harassment, and in doing so pleaded with the investigator not to reveal their names to Employee Relations out of fear of retaliation.
When Foster asked Countrywide’s Internal Audit to investigate Employee Relations, the company not only chose to conceal Foster’s allegations from BofA, it directed Employee Relations to investigate Foster.
In the meantime, BofA was identifying Countrywide employees for roles in the newly merged entity. In July 2008, after an intense vetting process, BofA offered Foster the position of Senior Vice President (SVP), Mortgage Fraud Investigations Division Executive.
Foster eventually learned of the investigation and that Countrywide’s Employee Relations managers had been questioning her staff and using coercion and intimidation in an attempt to obtain derogatory characterizations. Soon after that, Foster was interviewed by an SVP of Employee Relations and an SVP of Internal Audit. Although Foster’s manager raised concerns of retaliation to Countrywide executives prior to her interview, and Foster complained of the retaliatory acts during her interview, those allegations were ignored. Instead, Countrywide’s Employee Relations convinced BofA managers to terminate Foster, which occurred on September 8, 2008.
Case Status
Instead of accepting a payment of almost $228,000 for her silence, Foster wanted to ensure the corrupt practices at Countrywide were exposed and that the wrongdoers were held accountable. Foster filed a Sarbanes-Oxley Act whistleblower complaint with OSHA challenging the legality of her firing. In September 2011, OSHA ruled that Foster had been retaliated against in violation of the employee protection provision of the Sarbanes Oxley Corporate and Criminal Fraud Accountability Act of 2002. The Department of Labor ordered her reinstatement and $930,000 in damages.
OSHA Assistant Secretary Dr. David Michaels stated, "It's clear from our investigation that Bank of America used illegal retaliatory tactics against this employee. This employee showed great courage reporting potential fraud and standing up for the rights of other employees to do the same."
BofA has challenged OSHA’s ruling and is seeking a hearing. In the meantime, the Bank is required to reinstate Ms. Foster pending a final determination by the Department of Labor in the case.
The OSHA press release about the decision can be read here: http://goo.gl/zCzf4
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