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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Mortgage Fraud Risk Index Jumps 11 Percent, According to Verisk Analytics Subsidiary Interthinx
CNNMoney.com
The report...indicates that the overall Interthinx Mortgage Fraud Risk Index surged more than 11 percent from the previous quarter...
Mortgage Fraud Case Appears Headed to Jury in Jackson County Circuit Court
The Jackson Citizen Patriot - MLive.com
The prosecution and defense rested Thursday in the mortgage fraud cases against Teresa Marie WIlson and Angelo Surveo Williams.
Wyoming Woman Charged with Mortgage Fraud After Allegedly Stealing Sister's Identity
MLive.com
A Wyoming woman is facing felony charges accusing her of stealing her sister's identity to obtain a mortgage...then defaulting on that mortgage, leaving taxpayers on the hook.
U.S. Attorney Targets White-Collar Crime
Wall Street Journal
In San Francisco, Mr. Russoniello said he is trying to crack down on cases like mortgage fraud, though he doesn't have the budget to hire additional white-collar prosecutors.
Arrests Made in Orlando Mortgage Fraud Roundup
MyFoxOrlando.com
During the real estate boom two years ago, some units were going for a half million dollars. Now some are short selling for just 50 grand.
10 Accused of Mortgage Fraud at PR Coastal Resort
Forbes
A developer and nine other people, including a former salsa singer, have been charged in an alleged $14 million mortgage fraud in Puerto Rico...
Strodtman Jury Selected in Mortgage Fraud Trial
Greeley Tribune
Attorneys will deliver opening statements this morning in the trial of Mark Strodtman, who is accused of bilking homeowners in a mortgage scheme years ago.
FHA Digging Out After Loans Sour
Wall Street Journal
Most banks rejected Ms. DeForte because her debt level was too high and her credit score too low. But Lend America put Ms. DeForte into a $402,000 loan backed by the Federal Housing Administration...
Mortgage Fraud Probe Nets 105 Across State
Bradenton Herald
At least one local man is among 105 people arrested across the state following a nine-month investigation into organized mortgage fraud.
Mortgage Fraud Increases
MortgageRates.co.nz
The number of frauds involving professional advisors, such as accountants and lawyers, has increased from two to four since March 2008.
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Trial coverage provided by Anne Mitchell, Crazy Fish Realty.
F. Jeffrey Miller Update - October 20, 2009
A hearing was held in Topeka, Kansas in front of Judge Julie Robinson. Miller is currently being held pending his sentencing which is set for December 22nd, 2009 at 9:00 a.m.. Steve Vanatta and Hallie Irvin, Miller's codefendants, will be sentenced at that time also.
Several motions were heard this week. One was a motion for Miller to be released pending his sentencing. Miller's attorney, Jeff Morris, argued that the court had dismmissed with predjudice the matter involving Miller's purchase of a commercial lawnmower, violating the court ordered monitoring agreement. He also argued that Miller was not a flight risk and should be released. This motion was denied.
Another motion heard by Judge Robinson was that of an escrow account containing proceeds from the sale of Miller's forfeited assets. This account has a balance of $143,000. Attorney Morris argued that his firm was due $100,000 for work done in the Miller matter, to date. The government argued that his 'un-itemized fees' were 'exhorbitant'. The balance of the funds, Morris argued, should be released to the Miller family to help pay for mounting household expenses.
The government argued that the 'Asset Forfeiture Provision' applies down to 'the last penny' and that 'the rights of the victims to made whole are of paramount immportance' and that no routine household expenses like Visa bills, are allowed.
Attorney Morris argues that there is more than enough assets to satisfy the jury's judgement of $2.65 million dollars. The government argues that the estimated value of his assets are only $1.4 million.
The government also stated that Miller has been paid dividends from a company Miller has an ownership interest in; Boreflex. From July, 2008 to present, Miller has been paid $330,509.30 from Boreflex, unbeknownst to the court appointed monitor.
Present in the courtroom was Todd Earnshaw. Earnshaw was indicted along with Miller and others in what is commonly referred to as 'Miller I'. That trial is scheduled to begin on January 11, 2010 in Topeka, Kansas.
More Trial Coverage
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Rachel Dollar, the editor of Mortgage Fraud Blog, is an attorney and Certified Mortgage Banker who handles litigation for lending institutions and secondary market investors. She is an author and a nationally recognized speaker on the topic of mortgage fraud. Ms. Dollar is a shareholder with the law firm of 
