Justice Dept. goes after Capmark Finance

LOS ANGELES, June 9 (UPI) -- The U.S. Justice Department Tuesday sued Capmark Finance Inc. in Los Angeles, accusing the lender of violating the False Claims Act.

Justice officials allege the California company made false statements on U.S. Department of Housing and Urban Development applications for federal mortgage insurance covering the acquisition of residential nursing homes.

The applications involved the purchase of the Canoga Care Center, a residential nursing home facility in Canoga Park, Calif., and the Hudson Valley Care Center, located in Ghent, N.Y.

After accepting Capmark's applications for mortgage insurance, HUD was forced to pay nearly $26 million when both nursing homes defaulted on their loans.

The federal government is seeking triple damages and penalties.

"Mortgage fraud is a top priority for this administration, especially when public dollars are at stake," said Tony West, assistant attorney general for the Justice Department's civil division. "This complaint sends a clear message that we will aggressively pursue allegations of fraud on federal mortgage insurance programs, which are so vitally important to this economy."