Tuesday, June 24, 2008
SCAM Addresses Mortgage Fraud
A multi-agency task force to address the significant crime problem of mortgage fraud has been established in Los Angeles, announced Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles. The SCAM Task Force is the most recent to be added to more than 40 such task forces around the country.
As mortgage fraud crimes continue to have significant ramifications that affect the credit market, the burden on federal law enforcement increases. With the anticipated upsurge in mortgage fraud cases, the FBI has employed strategies to proactively address the problem, including the creation of multi-agency task forces. In Los Angeles, nine federal agencies have partnered to form squads of agents to investigate various types of fraud in connection with mortgage lending and the housing market, all of which have a significant effect on the nation’s economy.
“While there are nearly two hundred FBI agents around the country who investigate mortgage fraud cases, this multi-agency model serves as a force-multiplier, providing an array of resources to adequately identify the source of the fraud, as well as finding the most effective way to prosecute each case, particularly in an active market such as ours, where fraud is widespread,” said Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles.
“Whether committed by unscrupulous lenders, real estate professionals or desperate homeowners, mortgage fraud affects all of us,” said United States Attorney Thomas P. O’Brien. “Defaults on inflated loans and resulting foreclosures impose huge monetary and social costs, as well as making it more expensive for everyone to obtain credit. My office has a long tradition of prosecuting all types of mortgage frauds, from simple false statements on loan applications to complicated property-flipping schemes. I look forward to working with the new task force to do more of these cases as we seek to make sure that those who perpetrate these frauds are punished.”
The agencies participating in the SCAM Task Force include:
FBI
The United States Attorney’s Office - Central District of California
IRS - Criminal Investigation
The U.S. Postal Inspection Service
The Small Business Administration - Office of Inspector General
The Social Security Administration - Office of Inspector General
The U.S. Trustee Program
U. S. Dept. of Housing & Urban Development - Office of General Inspector
Department of Veterans Affairs
Federal Deposit Insurance Corporation - Office of Inspector General
“The current state of the housing market makes the mortgage industry ripe for fraud targeting American consumers. These scams are devastating to homeowners and our nation’s economy. Postal Inspectors are committed to the SCAM Task Force, the investigation of mortgage fraud schemes and preserving the American dream,” said B. Bernard Ferguson, Inspector in Charge, Los Angeles Division, U.S. Postal Inspection Service.
“Real estate and mortgage fraud crimes create huge losses of tax revenue, and force buyers into foreclosure and leave lenders burdened with bad loans. This type of fraud threatens the integrity of our tax system and erodes the financial health of our communities,” said Debra D. King, Special Agent in Charge, IRS-Criminal Investigation, Los Angeles Field Office. “IRS-Criminal Investigation is proud to be part of a formidable law enforcement team that is focused on investigating real estate and mortgage fraud schemes and we will continue our efforts to investigate the tax evasion and money laundering aspects of these types of crimes.”
Kenneth M. Donohue, Inspector General of the Department of Housing and Urban Development (HUD), stated, “Today is an important milestone in a combined effort by law enforcement and the U.S. Attorneys Office against mortgage fraud. These cases quite often involve individuals driven by greed. Mortgage fraud and white collar crimes - whether aimed at the lender or the borrower - strike at the economic heart of the American system. To the extent that we can uncover and prosecute these activities, it’s to everyone’s benefit. Accordingly, I am happy for the HUD Office of Inspector General to join the FBI, the U.S. Attorneys Office, and other participating agencies in combating the many schemes involving mortgage fraud.”
Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation, said, “The Federal Deposit Insurance Corporation Office of Inspector General welcomes the opportunity to participate on the newly formed Southern California Mortgage Task Force. Through partnerships with our law enforcement and IG community colleagues in California, OIG Special Agents from our Southwest Region can help successfully combat mortgage fraud and preserve the integrity of the financial services industry. We are committed to this collaborative effort and confident that by leveraging our resources, our investigative activities will go a long way toward curbing the growing problem of mortgage fraud.”
The task force will investigate mortgage fraud in two distinct areas known as “fraud for profit,” and “fraud for housing.” Fraud for profit or “industry-insider” fraud involves the skimming of equity, falsely inflating the value of the property, or the issuance of loans based on fictitious properties. Based on existing investigations and mortgage fraud reporting, roughly 80 percent of all reported fraud losses involve collaboration or collusion by industry insiders.
Fraud for Housing schemes involve illegal actions perpetrated solely by the borrower. The motive behind this fraud is to acquire and maintain ownership of a house under false pretenses. The borrower typically makes false representations regarding his income or employment history to qualify for a loan. Fraud for Housing accounts for roughly 20 percent of all fraud losses.
Eric M. Thorson, Inspector General of the Small Business Administration said, “The tentacles of mortgage industry fraud are far reaching. The unscrupulous individuals perpetrating these schemes have also targeted the Small Business Administration, among many other victims, by obtaining SBA loans under false pretenses. One of the goals of this task force is to protect the integrity of SBA loan programs.”
“The Los Angeles Office of the U.S. Trustee Program is pleased to be a part of this coordinated effort to pursue those who commit mortgage fraud, including scam operators who use the bankruptcy system to victimize homeowners in financial distress,” stated Peter C. Anderson, U.S. Trustee for the Central District of California (Region 16). “Our membership on the task force dovetails well with our mission to protect the integrity of the bankruptcy system.”
In order to encourage members of the public to report illegal activity related to mortgages, the SCAM Task Force has established telephonic and online mechanisms accessible to the public. A toll free tip-line has been established in Los Angeles and is currently operational at 1 866 959-SCAM. Online complaints are also encouraged and can be submitted to:
The FBI and its partners recommend that potential and existing homeowners follow the below-listed tips to protect against mortgage fraud.
(1) Get referrals for real estate and mortgage professionals. Check the licenses of the industry professionals with state, county, or city regulatory agencies.
(2) If it sounds too good to be true, it probably is. An outrageous promise of extraordinary profit in a short period of time should signal a problem.
(3) Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques.
(4) Look at written information to include recent comparable sales in the area, and other documents such as tax assessments to verify the value of the property.
(5) Understand what you are signing and, thereby, agreeing to. If you do not understand something, re-read the documents, or seek assistance from an attorney.
(6) Make sure the name on your application matches the name on your identification.
(7) 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.
(8) Know and understand the terms of your mortgage. Check your information against the information in the loan documents to ensure they are accurate and complete.
(9) Never sign any loan documents that contain blanks. This leaves you vulnerable to fraud
mortgage fraud
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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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