NEW YORK (
) -- The Justice Department is pursuing criminal charges against
(JPM - Get Report)
on the basis of information provided by a cooperating employee, according to a
report by the Wall Street Journal.
According to the report, the offices of the Justice Department in Sacramento, Calif. have been investigating documents related to billions of dollars of mortgage-backed securities originated between 2005 and 2007.
Among the documents, prosecutors found an email from a bank employee warning her superiors that the bank was overestimating the quality of the underlying mortgages. But the bank went ahead and sold them to investors anyway.
The woman who wrote that email is cooperating with the authorities and is expected to be available as a witness if the case is brought before court.
Prosecutors plan to use her information and emails to get the bank to admit wrongdoing as part of a settlement. JPMorgan, however, has denied that any crime or wrongdoing has been committed.
JPMorgan is reportedly in talks with the Department of Justice and other federal agencies over a broader settlement. Reports suggest the fines could be as high as $11 billion.
-- Written by Shanthi Bharatwaj New York.