36 Charged in Mortgage Fraud Schemes

PHOENIX The U.S. Attorneys Office and the Federal Bureau of Investigation (FBI) have announced a takedown of mortgage fraud schemes, the culmination of substantial coordinated efforts during the last three and a half months to identify, arrest and prosecute mortgage fraud violators in Arizona. Operation Cash Back highlights the strong enforcement response undertaken by the U.S. Department of Justice and its law enforcement partners to combat the threat that mortgage fraud poses to the housing industry and credit markets. From March 1 to June 18, 2008, Operation Cash Back in Arizona resulted in six mortgage fraud cases in which 36 defendants were charged. In the past two days, 30 arrests were made in mortgage fraud-related cases in the Tucson and Phoenix areas. The FBI estimates that approximately $100 million in losses were inflicted by the mortgage fraud schemes employed in these cases. In Arizona Operation Cash Back represents the collaborative efforts of the U.S. Attorneys Office, FBI, Internal Revenue Service-Criminal Investigation Division, U.S. Immigration and Customs Enforcement, Department of Housing and Urban Development Office of the Inspector General, U.S. Marshals Service, Arizona Department of Financial Institutions, and the Scottsdale Police Department. United States Attorney Diane J. Humetewa stated that The individuals charged in these Arizona indictments are responsible for more than $100 million dollars in fraudulently obtained loans in Arizona. The investigation & prosecution of mortgage fraud is a top law enforcement priority & we are jointly committed to aggressively pursuing those involved in these crimes. Operation Cash Back in Arizona is part of the nationwide Operation Malicious Mortgage fraud law enforcement effort. Nationally the Operation resulted in 144 mortgage fraud cases in which 406 defendants were charged. 60 arrests were made in mortgage fraud-related cases in 15 districts. Nationally, the FBI estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes. Mortgage frauds employ a variety of tactics including misrepresentations, deceit and other criminal abuses to fund, purchase or insure mortgage loans. Operation Malicious Mortgage addresses primarily three types of mortgage fraud schemes: lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes. Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrowers financial status, such as overstating the borrowers income or assets, using false or fictitious employment records or inflating property values. Foreclosure rescue scams involve criminals who target legitimate homeowners in dire financial circumstances and fraudulently collect fees for foreclosure prevention services or obtain ownership interests in residential properties. Both of these fraudulent mortgage schemes may be furthered by filing bankruptcy petitions that automatically stay foreclosure. An indictment is not evidence of guilt. All persons charged with a crime are presumed innocent until proven guilty beyond a reasonable doubt. The prosecution is being handled by Kevin Rapp, Assistant U.S. Attorney, District of Arizona, Phoenix.