DOJ Sues Barclays Bank For Crisis-era Mortgage Securities Fraud | Fox Business

The United States Department of Justice filed a civil suit on Thursday against Barclays Bank PLC and several of its U.S. affiliates that alleges that Barclays engaged in a fraudulent scheme from 2005 to 2007 to sell securities backed by residential mortgage loans that it knew were likely to fail, all while telling investors that the mortgages backing the securities were sound. The complaint alleges Barclays knew the loans were defective and that due diligence on these deals was a sham. The lawsuit alleges that investors all over the world lost billions of dollars as a result of the fraudulent scheme. The suit also names two former Barclays executives as defendants, Paul K. Menefee, who served as Barclays' head banker on its subprime RMBS securitizations, and John T. Carroll, who served as Barclays' head trader for subprime loan acquisitions. According to the Department of Justice both men made representations about the characteristics of the loans backing the securities that they knew were false when they made them. The complaint alleges violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 based on mail fraud, wire fraud, bank fraud, and other misconduct.