"They're always under seal when the government investigates them, so there will be a period of time before cases come to light," says Kenney. "But I do believe there's a lot of government interest in using the False Claims Act in order to try to recover funds from banks that have defrauded the federal government out of moneys." Another attorney who works closely with the Justice Department on False Claims Act health care cases says, "I would be shocked if there weren't already dozens of cases filed against banks that the government is working on that we just haven't heard about." Adam Feinberg, a defense attorney who chairs the litigation department at Washington, D.C.-based law firm Miller & Chevalier Chartered, says banks have been scrambling to prepare for potential claims. "We're about to see a slew of this," says Feinberg. "Twenty years ago, health care fraud was not that big a deal. Now it is the single biggest use of the False Claims Act. Mortgage fraud is going to be the next big wave." Congress passed the False Claims Act, also known as the "Lincoln Law," in 1863 to recoup money from grifters who cheated the government on supplies during the Civil War. The law has been altered and expanded a few times since then, but still protects federal dollars that are distributed under false pretenses -- from defense companies that receive military contracts to health-care providers that receive funds from programs like Medicare and Medicaid. Cases originate in two ways: The Justice Department can start investigating a company of its own accord, or, more often, it's tipped off by whistleblowers. Those individuals, known as "relaters" in DOJ parlance, can sue a company on the government's behalf under what's known as a "qui tam" provision. They are eligible to receive as much as 30% of a recovery, if and when monetary settlements are reached. In theory, the False Claims Act protects not just federal grants, but money that has gone to support affordable housing or cover defaults on mortgage debt guaranteed by Fannie Mae ( FNMA.OB), Freddie Mac ( FMCC.OB) and other government-backed entities. Such subsidies represent the biggest cost to taxpayers stemming from the financial crisis. The Federal Housing Finance Agency
estimates Fannie and Freddie will cost taxpayers $142 billion to $363 billion through 2013.