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— Quicken Loans founder Dan Gilbert says the U.S. Department of Justice is on a "witch hunt" and sought a "nine-figure settlement" before filing suit on allegations his company approved hundreds of mortgage loans that didn't meet federal standards.

Speaking to The Detroit News one day after the lawsuit was announced, Gilbert on Friday vigorously defended his company against government claims the FHA lost "millions of dollars in insurance claims on hundreds of bad loans."

He called Quicken the "gold standard" of FHA-insured lenders and said the government is building a case by "cherry picking" evidence. He said the government wanted Quicken to agree to a "massive settlement" and sued when the company refused.

"It's admitting you committed fraud. It's untrue," said Gilbert, who is also chairman of Rock Ventures, majority owner of the NBA's Cleveland Cavaliers and owner of more than 70 buildings in downtown Detroit.

"The bottom line is they went on a witch hunt."

Gilbert would only say the proposed settlement was "nine figures," suggesting it totaled more than $100 million.

The government alleges that Quicken knowingly submitted claims for hundreds of improperly unwritten FHA-insured loans. Some of the errors included: inflated appraisals, poor credit risks and insufficient incomes. The government alleges Quicken gave "speed bonuses" to underwriters and encouraged a culture of bending the rules to encourage loan approvals.

The lawsuit came one week after Quicken sued the Justice Department and HUD last week on claims it "demanded Quicken Loans make public admissions that were blatantly false."

"We have 30 years of work here and have built a reputation. (For) the Department of Justice to come in because we happen to be a large lender and demand this kind of stuff is ... I don't know the word, is beyond comprehension," Gilbert said.

Nicole Mavas, a spokeswoman for the U.S. Justice Department, said the government would have no comment beyond a written statement issued Thursday.

The government's suit contained numerous emails between high-level Quicken supervisors.

In one, Quicken's operations director Mike Lyon, wrote that a lender had "bastard income," which was defined as "trying to put some kind of income together that is plausible to the investor even though we know its creation from something evil and horrible."

In another, an executive wrote that a customer was still approved for a loan even after he stopped paying on other bills and his credit score dropped 100 points. The government claimed Quicken employees regularly spoke of "fudging" a borrower's income to get approval for FHA insurance.

Gilbert said the majority of the emails in the lawsuit didn't involve loans the government is investigating. He said the government subpoenaed 85,000 documents and is singling out 55 of 250,000 loans the company wrote during that time.

Of those, Quicken can only find issues with "eight or nine" loans, said Jay Farner, Quicken president.

"It looks like there was a decision made: See who is making the most loans and let's extract settlements because there is a need to make sure the mortgage people pay for whatever crisis happened, whether or not they are guilty or innocent," Gilbert said.

The Justice Department has reached several settlements with prominent lenders over accusations of fraud in FHA lending practices, including JP Morgan Chase, SunTrust, U.S. Bank and Bank of America. Wells Fargo has been in litigation with the Justice Department since 2012.

The Wall Street Journal reported in February that the San Francisco-based Wells Fargo was in negotiations with the U.S. attorney's office on a settlement for under $500 million, according to people familiar with the matter. But those talks broke down and the bank is "again engaged in discovery," according to its annual report.

Gilbert on Friday repeated that Quicken may not participate in FHA loans because of the litigation. The loans represent about 12 percent of the company's business, he said.

"How do you stay in a program where it is so unknown of what a government agency is going to do or demand," Gilbert said. "And not just in money terms but in your reputation. Especially related to things that aren't true."

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