Last November, President Obama created the Financial Fraud Enforcement Task Force year to wage an aggressive, coordinated fight against financial crimes. One of the prime focuses we identified at the outset was combating mortgage fraud, and I am joined by several key partners in that fight today: IRS’s Criminal Investigation Deputy Director Sallie Cooper, Special Agent in Charge of the U.S. Secret Service Criminal Investigative Division Ken Jenkins, FTC Commissioner Edith Ramirez, Housing and Urban Development Inspector General Ken Donohue, FBI Director Bob Mueller, Illinois Attorney General Lisa Madigan, Chief Postal Inspector Bill Gilligan and Director of the Treasury Department’s Financial Crimes Enforcement Network Jim Freis.
We are here to announce the results of Operation Stolen Dreams – a three and a half month takedown of mortgage fraud schemes throughout the country.
This operation began on March 1, and to date involved 1,215 criminal defendants nationwide, defendants who were allegedly responsible for more than $2.3 billion in losses. In addition, the operation involved 191 civil enforcement actions through which more than $147 million has been ordered recovered, with still millions more pending court approval. This represents the largest collective enforcement effort ever brought to bear in confronting mortgage fraud. The success of this operation is a direct result of our unprecedented focus not just on federal criminal cases, but also on civil enforcement, recovering funds for victims and increasing cooperation with state and local partners.
The staggering totals from this sweep highlight the mortgage fraud trends we are seeing around the country. We have seen mortgage fraud take on all shapes and sizes – from schemes that ensnared the elderly to fraudsters who targeted immigrant communities. We have seen cases that have resulted in dozens of foreclosures and millions in losses, as well as fraudsters who have bankrupted entire companies and national lenders who were not playing by the rules.
In Miami, just yesterday we unsealed an indictment and arrested two defendants who allegedly targeted the Haitian-American community, often claiming they would assist them with immigration and housing issues, but then instead using victims’ personal information to produce false documents to obtain mortgage loans.
In Chico, California, a prominent home builder, caught with a significant amount of unsold new homes as the housing market cooled, allegedly used straw buyers to sell his houses at inflated prices with undisclosed sales rebates. This scheme inflated prices on other homes in the area, creating artificially high comparable sales and affecting the overall new-home market. To date, thirty-eight of the homes have fallen into foreclosure and ten more have been the subject of short sales – all in one city.
In Detroit, just yesterday we charged several individuals who are part of a more than $100 million, 70-plus person “ghost loans” scheme. The conspirators posed as mortgage brokers, appraisers, real estate agents and title agents and used straw buyers to obtain around 500 mortgages on only 180 properties.
The list goes on and on. The breadth of the fraud is truly astonishing, which is why we launched an unmatched effort to fight it. The President’s Financial Fraud Enforcement Task Force is the broadest coalition of law enforcement, investigatory and regulatory agencies ever established to combat fraud. All of these partner agencies, as well as state and local partners, are working together to ensure that no stone is left unturned when it comes to fighting this kind of crime.
In the past few months, task force members have traveled to cities heavily affected by mortgage fraud to hear from industry insiders and community members on how mortgage fraud has impacted their region. In Phoenix, I listened to the concerns of citizens, and heard first hand about attempts to take advantage of homeowners’ desperation following the collapse of the housing market.
We know that mortgage fraud ruins lives, destroys families and devastates whole communities, so attacking the problem from every possible angle is vital. These schemes are despicable, they are dangerous to our economy and they will not be tolerated.
This takedown is just the latest effort in our ongoing fight. Looking toward the future, the Department of Justice has requested $178 million in our FY2011 budget to fight mortgage fraud, an increase of over $18.4 million. The FBI has over 3,000 pending mortgage fraud cases, almost double the figure from FY08, and those numbers will only continue to grow. Additionally, the task force is working with consumer groups to increase financial literacy and better educate homeowners about warning signs of scams.
Finally, I end with two important messages. First, to homeowners who are struggling to make payments or looking to refinance your homes – there are legitimate government programs out there to help you. Visit StopFraud.gov for resources, and if you suspect suspicious activity, report it. An educated public is one of our most important partners in the fight against mortgage fraud.
Secondly, let today’s takedown send a strong message to any would-be fraudsters: If you prey on vulnerable homeowners or engage in fraudulent conduct, we will find you and we will bring you to justice. You will pay for your schemes.
Mr. Johnson. Recall
that Hurricane Charley was in this area on 8/13/04 and this was a week later before this
matter was resolved.) It is unacceptable that this problem was undetected by Mr.
Holzberg, or others acting at his direction or under contract to provide service, on a
timely basis. I do not believe this should go on for days when this is an issue of public
health. Talking with several other neighbors at the time (including a couple members of
the homeowners’ association board), was no help; none of them knew how to contact the operator of the sewer system.
Since that time, there have been several occasions, usually after there are heavy rainfalls,
that I noticed (when I walked my dog) there is odorous water and bubbles that come out
at the sewer covers in the street. This has the appearance of a neglected, sub-standard
operation. This, combined with the experience last year with the hurricane, causes me to be concerned that the applicant does not have adequate operating experience, does not have adequate staffing available to perform regular monitoring of he operations, and
apparently does not have an adequate (or effective) emergency or disaster plan in place
for this business.
Further, since January 2005, there have been occasions where the lift station across the street from 1 1560 Red Hibiscus has had a door to the pit area(?) left up/open, and/or, electrical cords may be strung around. If the owner, or those acting at his direction, have not done this, then they have let vandals access this equipment. There is no fencing or
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other manner of limiting access at this station, which is of concern, especially when the
metal door to the pit area is open. This could be potentially hazardous to children or
animals, as well as provide an easy opportunity for sabotage of the facility. In addition to
considering such a careless manner of managing this equipment, I
would expect that your review of this application has considered whether both the liability and property insurance coverage held by the applicant is sufficient. I am concerned that if the insurance carrier knew how this property is sometimes left, such insurance coverage might be cancelled.
This inability to manage the existing facilities, or to provide adequate customer service,
should provide evidence of the inability of Mr. Holzberg, or the corporate entity under his
directiodmanagement, to provide adequate utility sewer service for he is seeking
authorization. I am concerned that there may not have been necessary maintenance of the existing plant and equipment, and that the applicant, instead of maintaining these assets on a timely basis, may seek to rectify that, and cover the past neglect through a special assessment or rate increase once the authority is granted
For the specific reasons set forth above, I ask that the application of Gistro, Inc. be
denied. For the record, please note that
I have anecdotal evidence that, in the past, Mr. Holzberg,
when he has had reason to be upset with an individual property owner in this
development, has tried to retaliate. I do not know the facts of each such instance, but his actions appear to indicate an arbitrary and capricious nature rather than that of one
experienced in a service or utility business. I have been told that Mr. Holzberg has made threats to withhold utility service. I have no idea if this is possible, as I
am not familiar with the manner in which the sewer lines are connected to a property,
but such actions by Mi.
Holzberg certainly could be intimidating and expensive to contend with should one
need to employ legal counsel. Note that I am concerned that by filing this letter,
I may become a target for similar actions by Mr. Holzberg, or others acting at his direction.
Sincerely,
Swan R. Fritze
cc: Kathryn G.W. Cowdery
Ruden, McClosky
215 South Monroe Street, Ste. 815
Tallahassee, FL 32301
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Why doesn’t Obama do something to Dobbs and Barney Franks that was pushing mortgage companies to allow stated loans. They were making money on all these bad loans going through. Let’s start at the top and clean house in the government first.
You read about it but you just don’t know if it’s at all true. I’ve been filing fraud with every department I can think of going on a year now. I was surprised to get a cell phone message from my broker asking if I could do some work on his rental properties. Are you serious! He hasn’t gotten word yet? Not even a letter to address or explain my fraudulent loan.
I work for an Investigation firm in GA. We currently do Mortgage Fraud Investigations throughout the US and work hundreds of cases a month. The company has been handling mortgage fraud cases since 1983. At this point there is no end in site and we would love to partner in the fight to combat mortgage fraud in our region. Its hard to swallow when we have evidence of fraud and the criminals walk away free. I noticed that Georgia was not listed as part of the Operation Stolen Dreams.
For every one they arrest there are 100 breathing a sigh of relief thinking “I still got away with it.”
The reality is that 500 arrests is “nothing.” There are many more to be made that will never happen. Too many for the goverment to go after. What I find interesting is that Fl is number one for mortgage fraud for the past 4 years, but very few arrests ever happen there. Seems like the bad guys have a “safe haven.”