From industry insiders to straw buyers, nearly 500 people have been arrested in a nationwide mortgage fraud takedown that reflects the coordinated efforts of law enforcement to address the growing problem of crime in the housing industry.
“Mortgage fraud ruins lives, destroys families, and devastates whole communities,” Attorney General Eric Holder said this morning at a press conference to announce the results of “Operation Stolen Dreams.” Launched on March 1, 2010, the multi-agency initiative has led to a total of 485 arrests. More than 330 convictions have been obtained, and nearly $11 million has been recovered. Losses from a variety of fraud schemes are estimated to exceed $2 billion.

Operation Stolen Dreams is the government’s largest mortgage fraud takedown to date. But FBI Director Robert S. Mueller cautioned that there is still much work to be done. The Bureau is currently pursuing more than 3,000 mortgage fraud cases, he said, which is almost double the number from the last fiscal year.
“The staggering totals from this sweep highlight the mortgage fraud trends we are seeing around the country,” Attorney General Holder said. “We have seen mortgage fraud take on all shapes and sizes—from schemes that ensnared the elderly to fraudsters who targeted immigrant communities.”
A few examples:
• In Miami yesterday, two people were arrested for targeting the Haitian-American community, claiming they would assist them with immigration and housing issues. Instead, they used victims’ personal information to produce false documents to obtain mortgage loans.
• In California, a prominent home builder used straw buyers to sell his houses at inflated prices. The scheme inflated prices on other homes in the area, creating artificially high comparable sales and affecting the overall new-home market.
• And in Detroit yesterday, FBI agents arrested several individuals in a $130 million scheme orchestrated by the local chapter of a motorcycle gang. The conspirators posed as mortgage brokers, appraisers, real estate agents, and title agents and used straw buyers to obtain around 500 mortgages on only 180 properties.
To combat the problem, the Bureau’s National Mortgage Fraud Task Force helps identify mortgage frauds such as loan origination schemes, short sales, property flipping, and equity skimming.

2009 Mortgage Fraud Report

In addition, we have 23 mortgage fraud task forces in “hot spots” around the country, from California and Texas to Florida and New York. Our investigators and analysts also participate in 67 working groups nationwide that share intelligence and industry data to identify emerging threats.
“FBI agents and analysts are using intelligence, enhanced surveillance, and undercover operations to identify emerging trends and to find the key players behind large-scale fraud,” Mueller said.
Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases, but also on civil enforcement and restitution for victims. Federal agencies participating included the Department of Housing and Urban Development, the Treasury Department, the Federal Trade Commission, the Internal Revenue Service, the U.S. Postal Inspection Service, and the U.S. Secret Service. Many state and local agencies were also involved in the operation.
“From home buyers to lenders, mortgage fraud has had a resounding impact on the nation’s economy,” Mueller added. “Those who prey on the housing market should know that hundreds of FBI agents on task forces and their law enforcement partners are tracking down your schemes, and you will be brought to justice.”

ATLANTA—Mark Anthony McBride, 44, a/k/a “Charles Conley,” “Charles Conley, Jr.,” and “Manuel Evans,” of East Point, Ga., was sentenced today by United States District Court Judge Jack T. Camp on charges of conspiracy to commit bank, mail, wire, and bankruptcy fraud. McBride was also sentenced for violating the terms of his supervised release on a prior federal mortgage fraud conviction.
U.S. Attorney Sally Quillian Yates said, “The lengthy sentence imposed in this case reflects the damage this defendant did to dozens of banks, including the now-failed Omni National Bank, as well as his abuse of U.S. Bankruptcy courts in three states from his fraudulent filings designed to delay property foreclosures.”
McBride was sentenced to 16 years and two months in prison, to be followed by five years of supervised release, and ordered to pay $2,197,929 in restitution on the charges related to his latest mortgage fraud. He was also sentenced to a consecutive two years in prison for violating supervised release on his prior mortgage fraud conviction.
McBride pleaded guilty to the new charges and admitted his supervised release violations on April 24, 2009.
According to U.S. Attorney Yates and the information presented in court: In 2001, immediately upon release from prison on a prior bank fraud conviction, McBride began a mortgage fraud scheme that continued until 2002, when he reported for service of another federal prison sentence. In that scheme, McBride used unqualified borrowers to obtain fraudulently inflated loans. When he was released again from prison in November 2006, McBride was placed in a halfway house. The evidence showed that while under supervision at the halfway house, he was able to attend his own fraudulent loan closings. After his release from the halfway house, McBride continued his scheme of obtaining fraudulent mortgage loans, vehicle loans, lines of credit, credit cards, and other extensions of credit in his name, in his aliases, in the names of numerous stolen identities, and in the identities of other unqualified borrowers. These fraudulent loans continued until McBride was arrested in September 2008 for violating his supervised release. Dozens of banks and other lenders, including the now-failed “Omni National Bank,” funded fraudulent loans for McBride.
McBride generated mortgage loan proceeds for himself using inflated valuations for properties securing the loans, and shared those proceeds with his straw borrowers and other conspirators. He was able to retain fraud proceeds by filing eight fraudulent bankruptcy cases in Georgia, Alabama, and South Carolina. The last such fraudulent filing was a May 2008 petition in Atlanta, filed in a bogus name and stolen Social Security Number. The petition falsely stated he had never filed bankruptcy in the past.
Additional Omni-related prosecutions to date include:
• Jeffrey L. Levine, 68, of Atlanta, who pleaded guilty on January 14, 2010, to causing materially false entries that overvalued bank assets to be made in the books, reports, and statements of Omni, is scheduled to be sentenced on May 25, 2010, at 10:00 a.m. before United States District Judge Jack T. Camp.
• Delroy Oliver Davy, 37, of Lithonia, Ga., was charged in a criminal information on December 18, 2009, with bank fraud and conspiracy to commit bank, mail, and wire fraud in connection with a scheme to fraudulently obtain millions of dollars of mortgage loans from Omni and other lenders. A guilty plea is scheduled for May 11, 2010, at 2 p.m. before United States District Judge Jack T. Camp.
• Brent Merrill, 37, of Atlanta, pleaded guilty to making false statements to the Federal Deposit Insurance Corporation (FDIC) and aggravated identity theft on March 23, 2010. When facing foreclosure on 14 properties, Merrill attempted to arrange “short sales” in the names of people whose identities had been stolen to obtain forgiveness from the FDIC of $2.2 million in Omni loan payoffs. He is scheduled to be sentenced on May 25, 2010, at 10:00 a.m. before United States District Judge Jack T. Camp.
These cases are part of President Barack Obama’s Financial Fraud Enforcement Task Force.
President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
These Omni-related cases are being investigated by a Mortgage Fraud Task Force comprised of the U. S. Postal Inspection Service, Housing and Urban Development Office of Inspector General (OIG), the Federal Deposit Insurance Corporation-Office of Inspector General (FDIC- OIG), Special Inspector General for the Troubled Asset Relief Program, and special agents of the FBI. Assistance in this case has also been provided by the Office of the U.S. Bankruptcy Trustee.
This case was prosecuted by Assistant U.S. Attorneys Gale McKenzie and Chris Bly.
For further information please contact Sally Q. Yates, U.S. Attorney, or Charysse L. Alexander, Executive Assistant United States Attorney, through Patrick Crosby, Public Affairs Officer, U.S. Attorney’s Office, at 404-581-6016. The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia is www.usdoj.gov/usao/gan.

Suspects may find themselves behind bars living rent free thanks to nationwide mortgage fraud arrests.

Members of the Financial Fraud Enforcement Task Force released the results of a nationwide dragnet, “Operation Stolen Dreams,” which targeted mortgage fraudsters throughout the country and is the largest collective enforcement effort ever brought to bear in confronting mortgage fraud. The White Collar Crime Committee of the National Association of Chiefs of Police obtained relevant documents describing this enormous operation.

The sweep was organized by President Barack Obama’s interagency Financial Fraud Enforcement Task Force, which was established “to lead an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.”

Starting on March 1 through June 17, Operation Stolen Dreams has involved 1,215 criminal defendants nationwide, including 485 arrests, who are allegedly responsible for more than $2.3 billion in losses. Additionally, to date the operation has resulted in 191 civil enforcement actions, which have resulted in the recovery of more than $147 million, according to the Federal Bureau of Investigation.

“From home buyers to lenders, mortgage fraud has had a resounding impact on the nation’s economy,” said FBI Director Robert S. Mueller, III. “Those who prey on the housing market should know that hundreds of FBI agents on task forces and their law enforcement partners are tracking down your schemes and you will be brought to justice.”

Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases, but also on civil enforcement, recovering money for victims and increasing cooperation with state and local partners.

The operation was conducted in conjunction with the Department of Justice — including the FBI, U.S. Attorneys Offices, the U.S. Trustee Program, and other components — as well as the Department of Housing and Urban Development, the Department of the Treasury, the Federal Trade Commission, the Internal Revenue Service, the U.S. Postal Inspection Service, the U.S. Secret Service, the National Association of Attorneys General, and the National District Attorneys Association.

The President’s Financial Fraud Enforcement Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources, according to officials.

MORTGAGE FRAUD REPORT

According to the Federal Bureau of Investigation’s 2009 Mortgage Fraud Report, released today, mortgage fraud suspicious activity reports referred to law enforcement increased 5 percent to 67,190 during fiscal year 2009.

It’s estimated that $14 billion in fraudulent loans originated in 2009. The total dollar loss attributed to mortgage fraud is unknown.

Other key findings presented in the report include:

There are more than 2.8 million properties with foreclosure filings, a 120 percent increase from 2007 to 2009. The Las Vegas area reported the most significant rate of foreclosures, with more than 12 percent of housing units there receiving a foreclosure notice.

The top 10 states ranked by the number of foreclosure filings per housing unit were California, Florida, Arizona, Michigan, Nevada, Georgia, Ohio, Texas, and New Jersey. In April 2010, one in every 386 housing units received a foreclosure filing.

Prevalent mortgage fraud schemes in fiscal year 2009 include loan origination, foreclosure rescue, builder bailout, equity skimming, short sale, illegal property flipping, reverse mortgage fraud and loan modifications. Emerging trends include fraud involving economic stimulus plans/programs, property theft/fraudulent leasing of foreclosed properties and tax-related fraud.