United States Files False Claims Act Suit Against California Mortgage Lender Capmark Finance

WASHINGTON – The Department of Justice filed suit today against California mortgage lender Capmark Finance Inc., charging that Capmark violated the False Claims Act by making false statements on applications for federal mortgage insurance covering residential nursing homes. The lawsuit, filed in United States District Court in Los Angeles, relates to a federal program under which the U.S. Department of Housing and Urban Development (HUD) guarantees mortgage loans used to acquire healthcare facilities such as hospitals and nursing homes.

The United States alleges that Capmark made false statements in HUD applications to guarantee mortgage loans made to acquire the Canoga Care Center, a residential nursing home facility in Canoga Park, Calif., and the Hudson Valley Care Center, located in Ghent, N.Y. After accepting Capmark’s applications for mortgage insurance, HUD was forced to pay $25,895,701.21 when both the Canoga Care Center and Hudson Valley Care Center defaulted on their loans. Pursuant to the False Claims Act, the United States is seeking treble damages and penalties.

"Mortgage fraud is a top priority for this Administration, especially when public dollars are at stake," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "This complaint sends a clear message that we will aggressively pursue allegations of fraud on federal mortgage insurance programs, which are so vitally important to this economy."