Magazine article Mortgage Banking

'Operation Malicious Mortgage' Sweeps Up More Than 400 Fraudsters

Magazine article Mortgage Banking

'Operation Malicious Mortgage' Sweeps Up More Than 400 Fraudsters

Article excerpt

A nationwide, multi-jurisdictional law-enforcement sweep took a big bite out of financial crime against lenders in June following the takedown of more than 400 mortgage fraud suspects, including senior managers of the failed Bear Stearns & Co. Inc. hedge funds.

As Mortgage Banking reported earlier this year, the Department of Justice's (DOJ's) Operation Malicious Mortgage was in the works as DOJ planned its third such mass prosecution of mortgage fraudsters by law-enforcement agencies at the federal, state and local levels in a concentrated, coordinated effort (see Mortgage Banking, May 2008, p.9).

From March 1 to June 18, 2008, Operation Malicious Mortgage resulted in 144 mortgage fraud cases, in which 406 defendants were charged. The sweep culminated on June 18 with 60 arrests made in mortgage fraud-related cases in 15 districts.

In these cases, charges were brought in every region of the United States and in more than 50 judicial districts by U.S. Attorneys' Offices. The Federal Bureau of Investigation (FBI) estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes employed in these cases, according to FBI Director Robert S. Mueller III.

"Operation Malicious Mortgage is a concerted, joint law-enforcement and prosecutorial effort aimed at disrupting individuals and groups engaged in mortgage fraud," explained Mueller. "This operation is an example of our unified commitment to address this significant crime problem. The FBI will continue to direct investigative and analytic resources toward mortgage fraud that threaten our nation's economy."

Nothing that it sends a strong message "that the authorities are taking this issue seriously," MBA Chairman Kieran P. Quinn, CMB, applauded federal authorities for the crackdown.

"Mortgage fraud, while primarily a crime against lenders, results not only in losses for banks, but also higher costs for all potential borrowers, and has an adverse impact on home prices--thus hurting innocent home-owners in those communities where it is most prevalent," said Quinn. "We will continue to work with the FBI to help them target these types of crimes, and we are again asking Congress to provide the Department of Justice with additional resources to help investigate and prosecute mortgage fraud cases. …

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