FBI to Target Mortgage Fraud (Hundreds of Arrests!)

By Suzanne Kapner in New York

Published: June 11 2010 02:25 | Last updated: June 11 2010 02:25

The Federal Bureau of Investigation is preparing a nationwide crackdown on mortgage fraud, the latest in a series of efforts to curb lending practices that contributed to the housing meltdown, according to people familiar with the matter.

The FBI is preparing to arrest hundreds of people across the US as early as next week for offences including encouraging borrowers to falsify income on mortgage applications, misleading home owners about foreclosure rescue programmes, and inflating home appraisals, said two people with knowledge of the operation. An FBI spokesman declined to comment.

Read the rest here: http://www.ft.com/cms/s/0/da70fbfa-74e0-11df-aed7-00144feabdc0.html

Thanks again DU and welcome to The Hamlet!

Glad to see some of you folks have joined us!

http://www.foreclosurehamlet.org

http://sacramento.fbi.gov/dojpressrel/pressrel10/sc061610.htm

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Department of Justice Press Release
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For Immediate Release
June 16, 2010 United States Attorney's Office
Eastern District of California
Contact: (916) 554-2700

Owner, Employees, and Customers of Elk Grove’s Liberty Mortgage Company Indicted for Roles in Multi-Million Dollar Mortgage Scam

SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced that last Thursday a federal grand jury returned a 48-count indictment charging 10 defendants with conspiracy to commit mortgage fraud, mail fraud, and making false statements in mortgage applications to federally insured banks. The indictment was unsealed yesterday.

The defendants are as follows:

* Hoda Samuel, 58, of Elk Grove,
* Connie Devers, 40, of Elk Grove,
* Dana Faulkner, 43, of Oakland,
* Charles Robert Maness, 32, of Elk Grove,
* Tracy Painter, 50, of Lodi,
* Sean Patrick Gjerde, 34, of Elk Grove,
* Ronald Burris, 36, of Elk Grove,
* Ygnacia Bradford, 34, of Oakland,
* Nicole Dawson, 40, of Oakland, and
* Daniel Harrison, 40, of San Diego.

This case is the product of an extensive investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. Assistant United States Attorney Philip Ferrari is prosecuting the case.

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http://sacramento.fbi.gov/dojpressrel/pressrel10/sc061610.htm

Thanks again DU for all of your support. We are so happy to have DU Members hop aboard!

I'm still giddy over yesterday's success! ----> http://blogs.palmbeachpost.com/realtime/2010/06/15/foreclosure-case-dismissed-after-judge-finds-he%E2%80%99s-been-misled-by-alleged-lender/

http://www.foreclosurehamlet.org/

Where were they the last several years post repeal of Glass-Steagall?

And they need to bust some CEO's, like Mozillo, as well....

Not the poor blokes who were showing up making a living doing mortgages.

"borrowers to falsify income on mortgage applications," will they also go after the borrowers who heeded that advice? One party is guilty of encouraging fraud (not a crime), the other party is guilty of fraud (very much a crime). Why would they go after the not-a-crime part of that equation and not the actual-crime part?

Prudent "Lenders" (those who actually cared if the loan is paid back) typically require prospective mortgage applicants to sign IRS Form 4506 which is a "Request for Copy or Transcript of Tax Form" as part of the application process.

Along came the age of mortgage backed securities...and agency laws and under-witing/fiduciary responsibilities went the way of the dinosaur.

http://www.foreclosurehamlet.org

to be held more liable that the person who was duped, lulled - or unaware that they are participating? It's an issue of who has the position of power in the fraud.
The cases that the FBI are going after are where the lender, underwriter, pusher of the mortgage holds the power, not the borrower. They're the ones who are "winking" at falsifying the income - ultimately, the fraud is initiated by the lender, not the borrower.
So, like when targeting gang-related drug dealers - the pushers and perhaps runners go to jail, not the small-fry users.
Everyone likes to blame it on the borrower. And I'm sure in some cases- maybe around 1% - a naive lender was tricked into handing out the loan because of the borrower's stealthy fraudulent ways.
But in most cases, without the lender in the position to offer the terms for the money the borrower needed for the loan they wanted, there would be no fraud. Unless the borrower was holding a gun to the lender's head to get approved through escrow for the mortgage on the terms they wanted - in which case you'd have a totally different crime going on.

I mean, come on. Why would financial businessperson with half a brain just write up a mortgage and push it through the system for me without some sort of verification because I said on walking in their office - "Hey, I make 6 figures a year and my spouse makes half again that. We've got great credit. So, just give us the $600K for that house we really want..."

The lenders were perpetrating a scam on both the borrowers and investors of these mortgage instruments for fees and other profits off the derivatives.

Haele

Great post!

Everybody got scammed!

The homeowner: http://www.foreclosurehamlet.org/profiles/blogs/how-main-street-has-destroyed?xg_source=activity

The investor: http://4closurefraud.org/2010/06/15/kaboom-david-j-stern-djsp-enterprises-inc-under-investor-investigations-for-violations-of-federal-securities-laws/

The taxpayer: http://bailout.propublica.org/main/list/index

Ha Ha!

http://www.dailyfinance.com/story/investing/want-to-protest-wall-streets-bonus-bonanza-good-luck/19318252/

:dem:

-Laelth

Goppers have always thought sheep only exist to be shorn.
Maybe this initiative will change a few minds from behind bars.

:kick: & R

and other companies that produced these frauds and made an entire country default. Halliburton would be on the list to for domestic terrorism.

Michael Snyder | Jun. 9, 2010, 2:43 PM | 226,740 | comment 50

So just how bad is the U.S. economy? Well, the truth is that sometimes it is hard to put into words. We have squandered the great wealth left to us by our forefathers, we have almost totally dismantled the world's greatest manufacturing base, we have shipped millions of good jobs overseas and we have piled up the biggest mountain of debt in the history of mankind.

We have taken the greatest free enterprise economy that was ever created and have turned it into a gigantic house of cards delicately balanced on a never-ending spiral of paper money and debt. For decades, all of this paper money and debt has enabled us to enjoy the greatest party in the history of the world, but now the bills are coming due and the party is nearly over.

In fact, things are already so bad that you can pick almost every number and find a corresponding statistic that shows just how bad the economy is getting.

You doubt it? Well, check this out....

Read more: http://www.businessinsider.com/the-us-economic-collapse-top-20-countdown-2010-6

June 16 (Bloomberg) — Lee Farkas, the former chairman of Taylor, Bean & Whitaker Mortgage Corp., was accused by the U.S. of helping run a more than $1.9 billion fraud scheme that unsuccessfully attempted to steal money from the government’s Troubled Asset Relief Program.

An indictment unsealed today in federal court in Alexandria, Virginia, alleges that Farkas, 57, sought to deceive financial firms and TARP by covering up shortfalls at his closely held mortgage lending company based in Ocala, Florida.

The scheme contributed to the failures of Colonial Bank, one of the 50 largest U.S. banks in 2009, and closely held Taylor, Bean & Whitaker, once one of the largest privately held mortgage companies in the U.S., the Justice Department said in a statement.

Farkas was arrested yesterday by the Federal Bureau of Investigation in Ocala after he finished a workout at a gym he owns, said Shawn Henry, an assistant FBI director in charge of the Washington field office. Farkas faces the possibility of spending the rest of his life in prison, according to court papers.

“The fraud alleged here is truly stunning in its scale and complexity,” said Lanny Breuer, the assistant U.S. attorney general in charge of the Justice Department’s criminal division, at a news conference in Washington. “This arrest and these charges send a strong message to corporations and corporate executives alike that financial fraud will be found, and it will be prosecuted.”

http://4closurefraud.org/2010/06/17/and-it-has-begun-former-taylor-bean-chief-lee-farkas-charged-with-16-counts-of-fraud/

The original Bloomberg link:

http://www.businessweek.com/news/2010-06-16/former-taylor-bean-chief-farkas-charged-with-fraud-update3-.html