It wasn't Sherry Hunt's original intent to go public on the shoddy quality control at a mortgage unit at Citigroup Inc, her employer since 2004.
But by March 2011, as it became apparent to her that the problems were getting worse and not being addressed, the Missouri quality assurance manager decided enough was enough.
"I set up an appointment with human resources and ethics and told them everything," Hunt recalled in a telephone interview. "They did some cursory investigation. The sad part is, they never ever told me, 'Sherry, you were right,' or 'Sherry, you're looking at this wrong.' There were no assurances."
Instead, Hunt, who got her start in the mortgage industry in 1975 at age 18, filed a whistleblower lawsuit against Citigroup, the third-largest US bank by assets.
The United States joined the civil fraud case, which raised claims under the False Claims Act, a federal law designed to recover money taken from the government by fraud, and discourage further wrongdoing. Whistleblowers can receive up to 25% of settlement amounts in such cases.
On Wednesday, Citigroup agreed to pay $158.3 million to settle. Hunt said her share will be $31 million, before taxes and attorney fees. Her lawyer declined to disclose those fees.
In settling, Citigroup accepted responsibility for conduct alleged in the complaint, dating back to 2004.
The government accused CitiMortgage of misleading it into insuring thousands of risky home loans that it knew or should have known did not qualify for insurance from the Federal Housing Agency, costing taxpayers nearly $200 million in claims.
CitiMortgage had certified for FHA insurance nearly 30,000 home loans valued at more than $4.8 billion since 2004, but more than 30% -- or 9,636 loans -- had gone into default, the Justice Department said. The default rate topped 47% for such loans made in 2006 and 2007, it added.
The government also said CitiMortgage failed to report many underwriting flaws and other problems as required to the FHA, part of the US Department of Housing and Urban Development. This even extended to mortgages where borrowers were so stressed that they could not make their first payment.
In the settlement, Citigroup accepted responsibility for improperly certifying many loans for insurance, and failing to comply with disclosure rules.
A bank spokesman, Mark Rodgers, said the New York-based bank had improved its procedures, and plans to continue participation in the FHA program. Citigroup declined to comment on allegations in the complaint or by Hunt.
The complaint contended that senior bank personnel applied "brute force" to quality control managers to effectively sweep "defects" under the rug.
Hunt said such defects, mostly the fault of borrowers, included mismatched signatures on loan documents, white-out on income documentation, and mistakes on employment statuses. She said there were also errors on whether borrowers planned to live in homes they were buying as required for FHA loans.
But Citigroup had tied some salaries to the infrequency with which such defects cropped up, according to the complaint.
Hunt lives with her husband in Silex, Missouri, a St. Louis suburb close to CitiMortgage headquarters in O'Fallon, Missouri.
She said she began working in the mortgage industry in 1975 at the First National Bank of Fairbanks in Alaska, and has since April 2008 been a vice president and quality assurance manager at CitiMortgage.
At CitiMortgage, Hunt said she got pressure to keep the number of defects down, especially if the percentage were above the 5% that would be considered acceptable.
She recalled a January 2011 "Star Players Award" ceremony attended by about 1,000 people, to honor workers who challenged defects reported by the quality control unit.
"Three people won this award -- they stood up, everyone applauded, and they (were told) they effectively rebutted Quality Assurance's findings," Hunt recalled. "That statement made my team members and other team members feel like morons: that they were making bad decisions, when they were not."
By mid-year, long after she had first raised concern to the human resources unit, she recalled that "upper senior management told me and one of my peers that our asses were on the line if these defects didn't come down. I took that as a threat. That was the final act that pushed me into the direction I went."
PROBLEMS PERSIST, EVEN AFTER CRISIS
What stands out is that some of the conduct targeted in the complaint took place so late -- the middle of 2011.
This was more than four years after the nation's housing downturn began, and nearly three years after a global financial crisis that resulted in Citigroup losing $27.7 billion in 2008 and accepting $45 billion of taxpayer bailouts.
While the bank has since repaid the government, longtime shareholders are still paying a price, with the stock down more than 94% since the end of 2006.
Finley Gibbs, Hunt's lawyer, said he reached out to the Justice Department before filing the lawsuit in August. The lawsuit in Manhattan federal court was kept secret until Wednesday.
"This case, and Citi's reaction to this case, exemplifies the reason we have the False Claims Act," he said. "It is a structure to allow the little guy to stand up when something is being done wrong that harms the US government and taxpayers."
More than $34 billion has been recovered in False Claims Act cases since 1986, with the largest award totaling $1 billion, according to the Taxpayers Against Fraud Education Fund.
Hunt said she had seen improvements at CitiMortgage. "The reporting structure of the quality assurance function has changed, and I do believe the attitude of upper management is 'we're going to do this right.'"
Gibbs said Hunt remains a Citigroup employee, but has not been in the office for "a few weeks."
Hunt said she hoped the case would leave her colleagues feeling comfortable to do what's right if a comparable situation arose.
"I came forward out of a passion for what I do, and what I chose for a career, and I did it for my children, my grandchildren," she said. "I'm hoping that they can have the same opportunities that I had when I bought my first house and started my family.
"I didn't care if I lost my house, and I knew I would risk my career, but I was willing to go forward even if we had to start over in an apartment and I had to get a job outside the mortgage industry," she added. "And I have no regrets."