By: Karen Weise – Bloomberg Businessweek

A whistleblower just helped the government force Citigroup to pay $158.3 million to settle claims that it falsely portrayed mortgages as meeting the standards for government insurance. Using info from Sherry Hunt, a quality-assurance worker at CitiMortgage, the U.S. Department of Justice built a case that said Citi cost the government millions when the mortgages soured.

Brace yourself, there’s more whistleblowing to come. That’s because the Dodd-Frank financial reform act created the first large-scale whistleblower program at the Securities and Exchange Commission. It applies to U.S. companies that have cheated investors or broken securities laws, whether through insider trading, accounting shenanigans, misleading statements, or bribing foreign officials. That expands well beyond the False Claims Act, the Civil War-era law Hunt used in the Citigroup case, which only covers fraud against the U.S. government.

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