Mortgage Fraud Crackdown Results in Arrests Nationwide
Federal prosecutors in Florida made headlines with the arrest of Joseph Daniele, a property developer accused of participating in a mortgage fraud scam affecting approximated 400 homes between 2004 and 2008.
On June 14, 2010, federal prosecutors in Florida made headlines with the arrest of Joseph Daniele, a property developer accused of participating in a mortgage fraud scam affecting approximated 400 homes between 2004 and 2008. Authorities claim that Daniele, along with alleged conspirators, made misrepresentations on loan applications to lenders and underwriters. Daniele is charged with conspiracy and wire fraud affecting a financial institution.
Two days after Daniele's arrest, on June 16, federal prosecutors were in the Florida news again with the arrest of Sang-Min Kim, a man who made a fortune flipping homes at the peak of the real estate boom. According to the indictment, Kim flipped about 100 homes between 2005 and 2008; allegedly about 80 of these transactions involved fraud, ultimately costing investors $6.4 billion.
The same day, federal prosecutors in Virginia made national news when they charged Lee Farkas, former head of one of the nationís largest mortgage lenders, with 16 counts of fraud. Authorities claim that the fraudulent scheme he operated resulted in multibillion-dollar losses.
On June 17, the Justice Department revealed that, as part of an ongoing effort titled Operation Stolen Dreams, it has arrested almost 500 people and recovered more than $147 million since March of this year.
The message is clear: the Justice Department is focused on mortgage fraud, and every aspect of any transactions related to a mortgage is subject to scrutiny. The National Mortgage Task Force is looking closely for evidence of loan origination schemes, short sales, property flipping and equity skimming; once evidence is obtained, the Justice Department is aggressively pursuing cases against the alleged perpetrators of fraud.
However, unlike prior mortgage fraud investigations, the Justice Department is focused on more than just criminal convictions. According to the Federal Bureau of Investigation, Operation Stolen Dreams is also seeking civil enforcement and restitution for victims of mortgage fraud.
These widespread arrests are likely just the beginning of things to come. As property fraud expert Richard Hagar told the St. Petersburg Times, mortgage fraud cases generally take two years to investigate. "The states and FBI are starting to train a lot of people for this crime," he said. "You are going to see an acceleration in the number of mortgage cases filed."
If you have been accused of mortgage fraud or if you are concerned about potential investigations related to mortgage fraud, speak to an experienced criminal defense attorney. A knowledgeable lawyer can help to ensure that you understand your options and that your rights are fully protected.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.