Mortgage Fraud – FBI Announces 14 Companies Under Investigation – No Great Surprise Says Ethics Speaker Chuck Gallagher

In a CNN report it was announced that the FBI has opened criminal investigations of 14 companies related to sub-prime mortgage loans. The following is quoted from the CNN report:

Neil Power, chief of the FBI economic crimes unit, attributed the increase “to good old-fashioned greed.”

“On insider trading, we’re looking in some cases at whether executives were aware that the value of their holdings would be going down and the executives traded on that information,” said Power.

“On accounting fraud, we’re looking at housing developers who may have reported cash reserve accounts to reflect falsely inflated values.”

Over the past several months, I have been reporting multiple instances of mortgage fraud – convictions and sentences that followed. With the flow of free (or at least it seemed that way) money – it was inevitable the “greed” as Neil Power put it, would kick in. And, kick-in it did.

According to senior officials the number of suspicious activity reports jumped from 35,000 in 2006 to 48,000 in 2007 and for 2008 is on track to exceed 60,000. According to FBI reports (per CNN) 56% of the cases had losses of more than $1 million.

Officials identified the states that are the “top 10 mortgage fraud hot spots” as California, New York, Texas, Florida, Georgia, Utah, Illinois, Indiana, Ohio and Michigan.

Surprise NO! Considering that just this past week a Pennsylvania mortgage broker was sentenced to 3 years for a fraud scheme and a Texas Broker/Real Estate Developer plead guilty to bank fraud for his real estate activities, it is going to be a long time before the issues related to mortgage fraud completely surface.

I would not be surprised if there are multiple restrictions and controls put in place so that this type of greed and the consequences that follow can be avoided in the future.

As a business ethics and white collar crime speaker (www.chuckgallagher.com) , I address groups routinely about the Truth About Consequences. Every choice has a consequence and, today, we are just exposing the tip of the iceberg when it comes to mortgage fraud.

Wesley Snipes – Patriot or Plain Idiot?

How many times did I hear in federal prison, people convicted of tax fraud claiming that they were just patriots imprisoned by a government gone amok. Fact was – they were in prison for their misguided belief. Considering that today the closing arguments were being made in the Wesley Snipes tax fraud case, we will likely see either a conviction (my prediction) or the miracle of the century – Snipes acquittal.

Federal prosecutor M. Scotland Morris portrays Wesley Snipes as a common criminal with worked with idiots like Eddie Ray Kahn to defraud the government of their duties as a citizen to file and pay their taxes. While Robert Barnes, Snipes attorney, portrays Snipes as a patriotic American who was legitimately seeking information about his tax liability. (If the jury buys that one – well, there’s some outstanding property in the Everglades for sale.)

According to Rick Cundiff with the Star-Banner:

Prosecutor Morris went first, telling jurors Snipes conspired with Kahn and Rosile to file a fraudulent refund claim for $7.3 million in taxes on his 1997 return, and sought to illegally deny his ongoing tax liability for 1999 through 2004.

“Nobody likes paying taxes. Nobody,” Morris said. “But paying taxes is the privilege we pay to live in a civilized society … That’s what this case is about – three men who believe they are above the law. They’re not above the law. Tell them that.”

Barnes invoked the Founding Fathers and said the Internal Revenue Service deprived Snipes of his civil rights by not responding to his letters seeking information.

“It may have been protest,” he said of filings by Snipes and by Kahn on Snipes’ behalf. “Protest is not criminal. It may have been disagreement. Disagreement is not criminal. It may have been frivolous. Frivolous is not fraud.”

Barnes urged jurors to acquit Snipes in the name of American freedoms.

In the name of American freedoms? What American freedom is it that allows us to avoid filing tax returns? What American freedom is it that allows us to avoid paying income taxes on the money we earn? What is Barnes talking about?

“The liberty to ask questions … the liberty to challenge your government. The liberty to engage your government. These liberties are American liberties,” Barnes said. “The Liberty Bell may be cracked in Philadelphia, but it can still be heard in Ocala.”

The last time I checked, challenging your government was perfectly legal as long as it was done through the legal legislative or judicial process. Here Snipes is taking the judicial road to challenge something he will lose and ultimately end up paying the price with his freedom. Sorry, but that to me is the mark of a plain idiot.

Every choice has a consequence. Snipes (unless I’m dramatically wrong) will pay the price of his choices with his freedom and while he spends time in federal prison, perhaps will come the knowing that he was duped by the likes of Kahn. But, maybe not, maybe they’ll share a cell together so they can experience the joy of knowing they took a stand for the civil liberties of us all.

For now, I’m going to do my tax return.

Senator Grassley To Ministries – You Better Cooperate! Additional Information Sought from Benny Hinn, Creflo Dollar, Eddie Long and Others

When the Senator from Iowa asks for information over which he has authority – well, let’s put it this way, “Render unto Caesar what is Caesar’s” and in this case – Grassley is Caesar when it comes to the taxing authority of the government.

Sen. Charles Grassley, the top Republican on the Senate Finance Committee, is preparing another round of letters to Christian television ministries, prodding them to answer questions about their spending and the way they are governed, a spokeswoman said back in mid-January.

Jill Gerber, Grassley’s finance committee spokeswoman, said the the follow-up letters would go out in the next few weeks to ministries that have raised concerns or not responded. Gerber said the letters will describe Congress’ authority and duty to investigate and evaluate laws over which it has legislative authority—in this case, tax-exempt policy.

“Customarily, people come to recognize the wisdom of responding to requests by senior members of the Finance Committee, and particularly by Sen. Grassley, before a subpoena becomes necessary,” she said.

Democratic Sen. Max Baucus of Montana, the finance committee chairman, has not commented publicly on Grassley’s investigation. But Carol Guthrie, communications director for the committee’s Democratic staff, said this week Baucus is aware of the investigation, and suggested that the ministries ought to cooperate.

Gaining support of the Democratic chairman would not only give the investigation added heft, it would deflect criticism like that of Dollar, the most outspoken critic among the ministers under scrutiny.

So what’s next: Well, it appears that the next move is in the hands of the ministries in question. It seems that some want to fight, like Creflo Dollar. Dollar commented on the Fox Business Network that he felt is was Grassley, and not the committee, who was pushing the investigation.

Considering the comment from the Democratic Finance Committee Chairman, Max Baucus, it would appear that Creflo needs to rethink his position. One doesn’t want to get into a power play with the powerful Senate Finance Committee. Right now, I don’t think politics are on the side of any of the ministers or their ministries. Thus far the only ministry that has taken the high road (and who I feel will be rewarded for her position) is the Missouri-based Joyce Meyer Ministries. Smart move on her part.

Otherwise, it is reported that Kenneth Copeland ministries is willing to cooperate, but to what extent is not clear. Neither has there been much word from Benny Hinn and his ministries. Eddie Long and Creflo Dollar have both taken a public fighting stand – an unwise move in my opinion.

My guess, as this is written, is that Grassley has signaled, much like Bush before the Iraq war, his intention giving the uncooperative ministries another chance to comply. Lack of compliance by the end of January will result in further investigation and an outcome that many of these folk don’t really want.

I could be wrong, but it seems like the writing is on the wall. What Creflo and Eddie don’t want is Senator Grassley’s version of “Shock and Awe!”

You thoughts?

Business Ethics Speaker, Chuck Gallagher, signing off…