Sunday, June 22, 2008
Mortgage Fraud Background Information
The FBI and Department of Justice formulated Operation Malicious Mortgage (OMM) in response to the rapidly escalating mortgage fraud crime problem. This initiative was a multi-agency, coordinated national mortgage fraud effort. From March 1, to June 18, 2008, Operation Malicious Mortgage resulted in 144 mortgage fraud cases in which 406 defendants were charged, convicted or sentenced On June 18, 2008, sixty (60) arrests, nationally, were conducted. The FBI estimates that approximately $1 Billion in losses were inflicted by the mortgage fraud schemes employed in these cases.
On June 18, 2008, as part of the Operation Malicious Mortgage initiative, the Dallas FBI executed arrest warrants on eight (8) of eleven (11) individuals sought in a mortgage fraud scheme. As reported yesterday, these individuals were Eric Rulack Farrington, Jr., Regis Lamont Williams, Kevin Ray Sanderson, Tony Earl Anderson, James Edward Jones, Edwin Terrence Bell, Robert John Mason and Christopher N. Williams. Today, a ninth individual, Michael Lewis Andrews, surrendered himself to federal authorities.
Data collected from the FBI, other law enforcement, and industry sources were compared to determine which states were most affected by mortgage fraud in 2007. The top 10 mortgage fraud states for 2007 were identified as follows: Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado and Minnesota.
Forty One (41) Mortgage Fraud Task Forces or Working Groups addressing Mortgage Fraud have been created. The North Texas Mortgage Fraud Working Group is one of the forty one (41).
The following agencies participate in the North Texas Mortgage Fraud Working Group:
- FBI Dallas
- Internal Revenue Service (IRS)
- Housing and Urban Development, OIG (HUD-OIG)
- U.S. Secret Service (USSS)
- U.S. Postal Inspection Service (USPIS)
- Federal Deposit Insurance Corporation (FDIC)
- Bureau of Immigration and Customs Enforcement (BICE)
- Texas Attorney General’s Office
- Dallas County District Attorney
- Tarrant County District Attorney
- Collin County District Attorney
- Rockwall County District Attorney
- Denton County District Attorney
- Kaufman County District Attorney
- Ellis County District Attorney
- Texas Department of Insurance
- Texas Appraisal and Licensing Board
- Texas Real Estate Commission
Each mortgage fraud scheme contains some type of material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan. The most common form of mortgage fraud involves illegal property flipping which entails false appraisals and other fraudulent loan documents. Many mortgage fraud schemes are based upon or incorporate some form of illegal property flipping. Emerging and re-emerging schemes in 2007 included builder-bailouts, seller assistance, short sales, foreclosure rescue and identity thefts exploiting home equity lines of credit.
What should homeowners do to avoid these schemes?
- Get referrals for real estate and mortgage professionals. Check the license of the industry professional with state, county or city regulatory agencies.
- If it sounds too good to be true, it probably is. An outrageous promise of extraordinary profit in a short period of time signals a problem.
- Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques.
- Look for written information to include recent comparable sales in the area, and other documents such as tax assessments to verify the value of the property.
- Understand what you are signing and agreeing to. If you do not understand, re-read the documents, or seek assistance from an attorney.
- Make sure the name on your application matches the name on your identification.
- Review the title history to determine if the property has been sold multiple times within a short period. It could mean that this property has been “flipped” and the value falsely inflated.
- Know and understand the terms of your mortgage. Check your information against information in the loan documents to ensure they are accurate and complete.
- Never sign any loan document that contains blanks. This leaves you vulnerable to fraud.
Robert E. Casey Jr., Special Agent In Charge, Dallas, FBI, provided the above information for background purposes.
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Some Sources require Registration.
Erie Area Mortgage Broker Gets Prison in Fraud Case
GoErie.com - Erie, PA
Shortly before receiving a nearly three-year federal prison sentence, former mortgage office manager Francis R. Conti told the judge he never meant to defraud any of the homeowners caught up in a widespread local mortgage-fraud scheme.
Three Former Portland-Area Mortgage Brokers Face Fraud Charges
OregonLive.com - Portland, OR
Joel D. Surprenant, Michael Duc Han and Benjamin Lucian Lucescu all were charged with one count of obtaining mortgage loans through materially false and fraudulent pretenses.
Shaker Pair Pleads Guilty to Mortgage Fraud Charges
Cleveland.com - Cleveland, OH
Two Shaker Heights residents recently pleaded guilty to charges involving a mortgage scheme with seven area houses and $3 million in fraudulent loans.
Feds File Charges in Five Mortgage Fraud Cases
Chicago Breaking News - Tribune - Chicago, IL
Federal charges were filed today against 37 people and four companies in five separate mortgage fraud cases.
Feds Fighting Back
Contra Costa Times - Walnut Creek, CA
Mortgage fraud has increased so dramatically in the San Joaquin Valley that a task force of federal, state and local agencies has been formed to fight back.
Private Investigator Sees Rise in Mortgage Fraud Due to Economy
PR Web - Ferndale, WA
In the past 12 months his firm has been retained to conduct over 300 mortgage fraud investigations, a 100% increase from 2007.
Former UGA, NFL Football Player Arthur Marshall Charged With Mortgage Fraud Claims
WJBF-TV - Augusta, GA
He is also accused of defrauding three banks in obtaining loans for seven different properties in Columbia and Richmond Counties.
Cuomo Subpoenas Loan Modification Companies
New York Times - United States
“The entire industry is a scam, in my opinion,” Mr. Cuomo said Tuesday. “These are services that homeowners don’t need to pay for in the first place.”
Defendant Pleads Guilty to Wire Fraud Relating to Mortgage Fraud Scheme
Imperial Valley News - Holtville, CA
Scavitti admitted that between 2003 and August 2008 he unlawfully diverted mortgage funds that were wire transferred into his client office account to his own personal benefit, resulting in losses in excess of $2.5 million.
Fed Drug Report: Double Trouble for Metro Chicago
ABC7Chicago.com - IL
...Chicago street gang members run a network of legitimate businesses and have engineered mortgage fraud schemes, both to launder drug proceeds...
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Trial coverage provided by Anne Mitchell, Crazy Fish Realty.
Update - US v. F. Jeffrey Miller, et al.
Miller II: Judge Julie Robinson has ruled in favor of the defense motion granting a continuance for sentencing of the 3 convicted defendants: F. Jeffrey Miller, Steve Vanatta and Hallie Irvin. The three will now be sentenced after ruling on post trial motions set for August 10, 2009.
Vanatta has been in custody for over 2 years. Vanetta filed a motion for his release pending sentencing. That motion was denied.
Miller remains free pending his sentencing. He has hired a new attorney who filed a motion to delay Miller's sentencing. In one post trial motion, the defense argues as to what assets are subject to seizure.
Defendant Todd Earnshaw is a Kansas City real estate Broker (and brother in law of Miller). Earnshaw has been indicted in what is commonly referred to as Miller I. A trial date for that matter has been set for January, 2010 in Topeka, Kansas.
The Government filed a motion to revoke Earnshaw's bond and remand him to custody while he awaits trial after learning that he allegedly committed the state crimes of Driving Under the Influence, Handicap Parking Violation and Failure to Control Speed to Avoid a Collision while on pretrial release. Notwithstanding finding that probable cause existed to believe that Earnshaw committed the aforementioned state crimes, Judge Robinson denied the motion, but ordered several strict conditions that Earnshaw must follow pending his trial.
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Rachel Dollar is an attorney and Certified Mortgage Banker who handles fraud recovery litigation for lenders and secondary market investors nationwide. She is a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is licensed to practice law in California and maintains offices in Santa Rosa, California. 
