Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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FBI Uses Triage to Shift From Terror to Madoff, Subprime Probes
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By Patricia Hurtado

Dec. 22 (Bloomberg) -- The FBI has engaged in “triage,” taking agents off terror and other crimes to respond to a cascade of financial frauds such as the alleged Bernard Madoff Ponzi scheme, the head of the bureau’s New York criminal division said.

The Federal Bureau of Investigation was forced to reallocate its manpower in New York to deal with recent frauds involving subprime mortgages, auction-rate securities and Madoff, who prosecutors said confessed this month to bilking investors out of $50 billion, FBI official David Cardona said in an interview.

“We have to work those cases which we think pose the greatest threat,” he said. “In this case, it’s a threat to the financial system and Wall Street.”

Special Agent Rachel Rojas, who once worked on tracing terrorist financing and al-Qaeda, now oversees 15 agents investigating mortgage fraud, said Cardona, a career agent with 23 years at the bureau. He declined to say how many other agents he has reassigned from anti-terror work to financial crimes.

Rojas heads one of two such mortgage-fraud squads that work with federal prosecutors in Brooklyn and Manhattan and other federal agencies, Cardona said. The U.S. Justice Department has created more than 40 mortgage-fraud task forces around the country this year.

Some of the FBI’s anti-terror experience has come in handy in investigating financial crime, Cardona said. Agents who were looking at bank-provided “suspicious activity reports” or SARS to track financing of terrorism are now doing so to spot mortgage or other financial fraud, he said.

Cardona’s office still handles multimillion dollar crimes, while referring smaller cases to state prosecutors or New York Attorney General Andrew Cuomo, Cardona said.

Big Case Skipped

Some big cases are left to others. The FBI didn’t get involved in the investigation of Marc Dreier, a New York lawyer charged Dec. 8 with defrauding hedge funds out of more than $100 million. The Dreier case is being handled by investigators in the U.S. Attorney’s Office in Manhattan.

“We don’t chase every case,” he said. “We don’t have the resources.”

To save agents time, the New York office has established Web sites and telephone hotlines for anonymous e-mail complaints and tips about mortgage fraud and the Madoff case, Cardona said.

Since he arrived from Miami in May, 2007, Cardona, 52, has overseen 400 agents who handle criminal cases. The New York office covers New York City, Long Island, Westchester and the five counties north of New York City. In addition to the main office, located just north of Wall Street, Cardona oversees five smaller satellite bureaus in Queens, White Plains, Long Island, John F. Kennedy International Airport and Goshen, New York.

Working With Others

Under Cardona, the FBI’s New York office has also forged new relationships with regulators and other federal agencies as a means of stretching manpower, he said. His agents are working with the Federal Deposit Insurance Corporation and the Federal Housing Administration on mortgage fraud, he said.

“There is tons of stuff out there,” he said. “But we don’t have the resources to chase every collapsed hedge fund or collapsed financial institution.”

According to FBI statistics, the bureau’s budget in fiscal year 2008 was about $6.8 billion. There is no allocation for greater funding in the 2009 budget, he said.

“Realistically, in the era of limited resources, the FBI in New York will strive to use the necessary resources to address the criminal activities we feel are the most important,” he said.

Higher Standard

Criminal conduct involves a higher standard of proof to secure a conviction than the civil allegations the U.S. Securities and Exchange Commission files, so it’s harder for the FBI to make cases, Cardona said. He cites the bank failure at Washington Mutual -- the largest in U.S. history -- as an example of obstacles the FBI faces in proving criminal wrongdoing.

“You can scratch your head and say, ‘Was there criminality that happened there?’” he said. “How can that collapse? Was that mismanagement? My standard is higher than that. I have to show criminal intent.”

The fall in the stock market this year didn’t create the recent surge in financial crimes, Cardona said.

“Mortgage fraud was perpetrated in good times, but no one saw it,” Cardona said. “In bad times, as we are in now, you see the manifestation of the crime problem. It was there, but like the tide going out, you just didn’t see until the margin calls started coming in.”

Madoff, Bear Stearns

The workload of Cardona’s agents this week ran the gamut from an indictment in gangland slayings to working with the SEC to Bernard Madoff’s alleged $50 billion Ponzi scheme. Cardona declined to discuss any details about Madoff, who is under house arrest as the FBI investigates his confession.

Under Cardona, the office had some recent high-profile white-collar prosecutions this year: in June the FBI teamed up with the SEC and prosecutors in the office of Brooklyn U.S. Attorney Benton Campbell to bring indictments against two former Bear Stearns Cos. hedge fund managers in the first prosecution stemming from a U.S. government probe of last year’s mortgage market collapse.

In September, the same group brought indictments in a second case, against two former Credit Suisse traders accused of fraudulently selling corporate clients more than $1 billion of auction-rate securities linked to subprime mortgages. The defendants in both cases have pleaded not guilty and are scheduled to be tried next year.

While counter-terrorism remains a top priority for the office since the terrorist attacks of Sept. 11, 2001, Cardona said he’s also cognizant of the threat white-collar fraud poses to the U.S. economy.

“In New York, No. 1, that is terror but also my area of responsibility is any crime that undermines the confidence in our financial-services industry.” He said. “To me that’s another top threat.”

To contact the reporter on this story: Patricia Hurtado in U.S. District Court in Brooklyn at

Last Updated: December 22, 2008 00:01 EST
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They KNEW about all of this FRAUD, but turned their U.G.L.Y. heads.

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12 years ago I walked into main FBI office in my state with a carton of documentation on EMC's mortgage service fraud against me along with docs on lender's predatory loan origination.  They said they would review it all and get back to me.  Weeks later I returned, only to be told that they saw no merit in investigating it.  THIS, knowing full well as also documented by me that there were thousands of other similar victims in the state and around the country. 

You say BULLSHIT?  The word I have for it is COMPLICITY.  

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Well, I've had the opposite experience with the FBI.  The FBI has been warning publicly for years that mortgage fraud was "Epidemic", calling the mortgage industry, "Organized Crime" and "The New Mafia".

Actually, the FBI is the only Federal agency that HAS attacked the problem.

The FBI does not deal with fraud against individuals, only Federal institutions.

I went to them with an armfull of names, dates and places I personally observed mortgage fraud taking place in San Diego and they ate it up, taking copious notes, interviewing me several times and telling me I was the first insider in California to blow the whistle.  Shortly thereafter, I received an offer from Money magazine to do a whistleblower profile on me.

No, frankly folks, the FBI was the first and only agency to stand up and slap the mortgage industry's face, knowing that the industry owns Washington.
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The FBI has had significant documents, interviews,and complaints against Litton Loan, yet they still walk the street! and still engage in the same practices!
The IRS CID is working on MGIC, Why so many years?  They need a flashlight to find their way out of the closet?
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They are going after these "folks" now because it has become the latest sexy crime, and the best way to assure continued and increasing funding for the agency. The damages is already done and prosecuting now will do little to aid those who have been defrauded.

Protecting people doesn't seem to be the main objective of law enforcement, as demonstrated by this article:

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It's not necessarily that simple, law enforcement often has both jurisdictional as well as inter-agency disputes. I'm sure there are many state, federal, and local agents that would like to take action but for all practical purposes the lenders, investors, and insurance companies have had political influence that overrules both the letter of the law and spirit of the law and assumes the form of the color of law. Stephen is just trying to be optimistic but it's to late for the guys in the white hat to ride in and save the day due to bailout agreement.

We can see that  the Supreme courts ruling on eminent domain allowing private entities to use government agents as hired guns to strip the assets of other private citizens, under the premise of increasing tax revenues.

The bailout isn't even cleverly disguised it effectively installs a financial dictatorship for the purposed of having the taxpayers cover the debt created by bad loans and speculative lending.

I have visited many FBI offices coast to coast and a field agent in Denver came flat out and stated the FBI is not here to protect you from the banks were here to protect the banks from you.

The most belligerent law enforcement agents in my experience were the Dallas secret service and the Dallas Federal marshals who flowed my into an elevator at a Federal building and attempted to intimidate me.
The Secret services primary responsibility is to protect the nations money so it was an egregious violation by the Dallas secret service to ignore my allegations of the President sponsoring Ameriquest lending fraud. Roland Arnall not only set up 53 shell corporations to funnel 12 million in donations to the President in 2004 to skirt Federal election laws but funded the President inaugural ball in 2004 and had the Rangers stadium renamed Ameriquest stadium right in Dallas-Ft. Worth. Later the President rigged the nomination process to get Roland Arnall out of the country to evade prosecution, investigation and restitution. In 2003 the Secret service jurisdiction was transferred to the department of homeland security, well it's certainly a security risk to get the lending criminal most responsible for looting to country out of it to evade prosecution and investigation, especially when it the President facilitating the fraud to protect his largest campaign donor at the expense of throwing the U.S. into a recession and creating global economic ripples which created much anti-U.S. backlash.

Foreign investors have substantial exposure to the bad loans created by financial fraud and recklessness and the bailout agreement has transferred substantial control of U.S. assets and government to foreign entities that hold our debt such as China, the oil rich countries, and the E.U. particularly England and Germany. Effectively the bailout agreement is a reparations agreement to foreign interests which were harmed by our massive financial fraud. A shot was never fired in WWIII it was our crooked politicians and lenders that sold us out from within. Global power has been re-aligned on the level of WWI and WWII perhaps even more so and our own financial services executives and politicians were the enemy while we were distracted by the war on terror.

The most beligerant and hostile government official in the enitre country I warned and attempted to work with was Mark Kirk  my Illinois 10th district representative who got loans though both Countrywide and GMAC, ans who's top contributor was Kirland & Ellis law-firm which is a major sponser of lending fraud and corporate crime.

"Kirkland has been privileged to represent a wide array of corporate, individual and governmental interests in complicated litigation, corporate and tax, intellectual property, restructuring and counseling matters for major national and international clients.

In every year since 1995, Kirkland has ranked as one of the most frequently used firms by Fortune 100 companies in The National Law Journal survey, "Who Represents Corporate America."

Things are not all doom and gloom we still have the opportunity to restore the Constitution and sound money but we need to wake up soon, set aside our differences and do what it takes to restore a government of the people especially due process, property rights, and sound money which is really the anchor of freedom.

I would encourage working with law enforcement especially local law enforcement as the economic meltdown has caused loss of tax revenue to pay for police and fire,
increased crime with more jobless and homelessness as well as empty homes to host criminal activity, police and fireman have lost home value just like all of as as well a investments for their retirement and of course personal investments. By refusing to enforce the law law enforcement has put a noose around its own necks. Perhaps law enforcement thought the issue was exaggerated, wouldn't affect them, were intimidated or lied to by supervisors, whatever the reason they are all in the same stew we are in so they should have had a wake up call.

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