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This column comes straight from the FBI which is boosting its staff and resources to combat mortgage fraud.
This news is especially good, considering the number of scam e-mails I’ve received since President Obama signed the recovery act, all of them offering to “fix” my mortgage “problems” — my home’s paid for — and for a fee. Here’s an edited version of the FBI’s press release:
The company had all the trappings of success—its top officials lived lavish lifestyles, kept a fleet of chauffeur-driven cars, and donated generously to charities. And it used slick marketing to sell its “Dream Homes Program,” which promised to pay homeowners’ mortgages in return for an up-front fee that would be invested in profitable business ventures.
But the dream turned into a $70 million nightmare for more than 1,000 investors (all) victims of mortgage fraud. According to federal jury indictments Monday, the five people behind Metro Dream Homes and the bogus mortgage payment program they were running actually was an elaborate deception.
“The effects of this wide-ranging mortgage fraud scheme are particularly disturbing against the backdrop of today’s economic environment,” said Thomas J. Harrington, Executive Assistant Director of our Criminal, Cyber, Response and Services Branch. The scheme worked like this:
Between 2005 and 2007, victims were persuaded into investing at least $50,000 with Metro Dream Homes, either by refinancing their existing homes or buying new homes at inflated prices.
Investors were told not to worry about high mortgages because Metro Dream Homes would pay their future monthly payments and pay off their mortgages within five to seven years using returns on the homeowner’s original investment. Then the homeowner and Metro Dream Homes would own an equal interest in the home.
Victims were told that their $50,000 — not including an administrative fee of up to $5,000 — would be used to fund investments in automated teller machines, flat-screen TV displays that carried commercial advertisements, and Touch-N-Buy electronic kiosks that sold telephone calling cards and other items.
To make the scam seem more legitimate, the company marketed its program through live presentations at posh hotels in Washington, D.C.; Baltimore; and even Beverly Hills, California.
In the end it was just a “Ponzi” scheme, where proceeds from later investors were used to pay back earlier investors. The ATM machines, flat-screen TVs, and electronic kiosks never generated any meaningful revenue, federal prosecutors contend.
The bulk of the money lined the defendants’ pockets with $200,000-a-year salaries, luxury cars and travel to major sporting events like the 2007 Super Bowl.
By the time law enforcement shut down the company, homeowners had already invested about $70 million. When Metro Dream Homes stopped making the mortgage payments, the homeowners were left holding the bag. The defendants now are facing long prison terms for multiple counts of fraud, conspiracy to commit money laundering, and other charges.
At a press conference Monday to announce the indictments, Harrington said that to combat the recent “exponential rise in mortgage fraud investigations,” the FBI has increased the number of agents who investigate mortgage fraud from 120 in 2007 to more than 250 today. They participate in 18 mortgage fraud task forces and 47 working groups across the country.
“One of the best tools the FBI has in its arsenal for combating mortgage fraud,” he said, “is its long-standing partnerships with other federal, state, and local law enforcement.”
TIP OF THE WEEK: If you have been the victim of a mortgage fraud scheme or have information about one, the FBI wants to know. To do so, call (317) 639-3301. To submit a tip or complaint online, go to tips.fbi.gov. For more information on mortgage fraud, go to fbi.gov/hq/mortgage_fraud.htm.
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