Geoffrey Berman, U.S. attorney for the Southern District of New York, speaks during a news conference in New York, U.S., on Wednesday, Aug. 8, 2018. Berman announced insider trading charges against Christopher Collins, a Republican Congressman representing the 27th District of New York (Photo: John Taggart/Bloomberg) Geoffrey Berman, U.S. attorney for the Southern District of New York (Photo: John Taggart/Bloomberg)

The prominent foreclosure law firm Rosicki, Rosicki & Associates has reached a settlement with the U.S. Attorney’s Office for the Southern District of New York on Tuesday, over allegations it bilked the federally-sponsored mortgage banker Fannie Mae by falsely inflating bills to the mortgage servicing companies for which it worked.

The settlement resolves the civil fraud suit brought by Manhattan prosecutors under the False Claims Act. The government alleged that Rosicki under two affiliates generated false and inflated bills for foreclosure and eviction expenses. Those inflated expenses were then submitted to and paid for by the Federal National Mortgage Association.

The Manhattan U.S. Attorney’s Office said the settlement also covers identical conduct around eviction expenses paid for by the U.S. Department of Veterans Affairs.

“Lawyers are not above the law,” U.S. Attorney Geoffrey Berman said in a statement. “For years, the Rosicki firm submitted bills to Fannie Mae and the VA that contained inflated and unnecessary charges. This office will continue to hold accountable those who seek to achieve profits by fraudulent conduct.”

The government’s actions against Rosicki and a pair of wholly owned affiliates came as a complaint-in-intervention in a suit already being pursued by a whistleblower against the law firm Peter Grubea.

The FCA violations by Rosicki began in the aftermath of the housing crisis a decade ago. An embattled Fannie Mae began using servicers to help, among other things, pursue foreclosures. These servicers would retain law firms, such as Rosicki, to go through the legal foreclosure process.

According to prosecutors, beginning in 2009 Rosicki used the affiliates as vehicles for marking up foreclosure expenses as much as possible, while adding as little operating expense as possible, in order to maximize revenue.

As part of the settlement approved by U.S. District Judge Jed Rakoff of the Southern District of New York, the firm admitted and accepted responsibility for its conduct and agreed to pay $4.6 million in restitution to the government, prosecutors said.

In a statement provided by a spokesman, the firm defended its decision and practices.

“We chose to resolve this matter in the best interests of our clients,” the firm said. “Our practices and procedures adhere to the strictest principles and ethical standards of the legal profession, and we look forward to continuing to deliver the highest-caliber counsel that our clients have come to expect.”

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