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 ( , 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.

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

  1. Mitchell says:

    I need to know is Wm Specialty Mortgage llc one of them under FBI investigation ???

    And is some dedt collectors also under investigation ???

  2. They have gone unnamed thus far.

  3. Jan Varnes says:

    Hi Chuck,
    Lost in the muck! It has been a gruelling few months. I believe I blogged about the begining of fraud for us. You have to find the thread it seems to me. Feels odd to not trust the public any longer as the initial needle in the haystack might see and the thread be broken tied off and stuck underneath the covers. The covers, being strawbuyers, credit repair information informants, that is right. Inform all your creditors just in time for the payments you make to no longer make it to the mortgage company and they report you thirty days late and now you are trapped and believe me prison would be better at this time for those of us that want to find the end of this thread and take care of it ourselves. Just find them and line them up for the time spent on your project and all of the people that have helped you (or put up with you) get a full bucket of paintballs (close range of course) and let us shot our fraudsters for eight hours a day for each day and night they have stolen. They do not care they have their money and are gone , the broker, metaphorically of course gone and we could not be broker by the emotional thread being pulled and the unraveled senario is in our laps on the kitchen table, in the living room floor, into fax machines taken to bedrooms to figure out what in the **** could have happpened that I did not see this coming.

    It is my advise as a new expert on mortgage fraud and human behavior, that you can no longer trust a sales pitch. Especially the ones that have won our trust first and usually the second incounter is where you feel it is being taken care of like the last thing you entrusted with them.

    So, in reply unnamed is better at this point. It is all of them everywhere and do your homework, have more eyes look at documents before signing, take that three days it takes to read and decipher the contents of your biggest investment you will ever make.

    If anyone is a parent out there. Tell your children exactly what has happened instead of keeping the secrets. Talk to everyone, you are not stupid, these criminals are really good at what they do. Why they have not required all lenders be certified and have proper papers to have something taken for them if they part take in this rediculous negligence our country has allowed. It is not new and for at least twelve years that I know of this is the order of the day not just sub prime, or poor credit people, it is your lifes work at stake each time you sign at a title company errors can be made or criminal acts can be in place until you have nothing and no where to go to get help.

    Example: My spouse is now out of work with congestive heart failure, and other stress symptoms that did not take place until this started. I have maintained the paper train and now he is depressed, I am angry that I can not feel joy for my sons high school graduation properly because of this last year I could barely take care of his graduation cap and gown, and announcements. There will be no party and no big present to congradulate this kid who was doing poorly last year and turned it all around with his own tenacity.

    Hey, but is that not the real gift. Without mine, I would have mailed the keys like most. Just like in a marriage fight until there is no fight left in you because that is when regret sets in.

    NO regrets,
    Thanks for providing the forum to get this off my heart.
    I will be more informative as things move on.

    Be very well and good to you!!!!!

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