By John Minnis
Legal News
U.S. Attorney Barbara L. McQuade recently hosted President Obama’s Financial Fraud Enforcement Task Force at the federal courthouse in Detroit. Attendees included a veritable Who’s Who of federal, state and county law enforcement.
“We are pleased to welcome the Financial Fraud Enforcement Task Force,” McQuade said. “The task force members came to Detroit because Michigan has been particularly hard-hit by mortgage fraud.”
She thanked the U.S. Attorney’s office, and especially Assistant U.S. Attorney Karen Reynolds, for putting the summit together.
McQuade said her office is collaborating with other agencies to fight mortgage fraud.
She cited the FBI’s dismantling of a $120 million mortgage fraud scheme in Detroit involving bogus mortgage lenders.
In Macomb County, 14 individuals were convicted of fraud when they posed as “straw buyers” to obtain mortgage loans and then walking away with the money.
“But we want to keep up to date with the latest trends,” McQuade said, referring to the need for a mortgage fraud summit. “The very simple message I want to give here today is mortgage fraud is a serious crime that ought to be punished. The American Dream is that you work hard to own your own home. We don’t want criminals to come along and steal those dreams.”
In introducing Assistant Attorney General Tony West (civil division), co-chair of the task force’s mortgage fraud working group, McQuade complimented his use of civil tools to fight mortgage fraud.
West said the task force is made up of some 15 federal agencies and several states’ attorneys general.
“If there is any one thing we have learned,” he said, “is that this problem is bigger than any one agency.”
Detroit was the third city on the task force’s tour around the country to get local input. Previous cities were Miami and Phoenix.
“You know better than anyone what mortgage fraud does to families,” West said.
Citing some 70,000 vacant homes in Detroit, West said, “The key thing we want to hear today is what is happening here in Detroit and what can be done.”
U.S. Attorney Ben Wagner for the Eastern District of California said that, like Detroit, his communities have been some of the hardest hit.
“It is a bit of a moving target,” he said. “Fraud has shifted from loan origination to loan modification fraud and short-sale fraud. One of our challenges is to figure out what sort of mortgage schemes are emerging.”
Kenneth Donohue, inspector general for HUD, was impressed with the collaboration of federal, state and county agencies.
“I’ve been in this business for a while,” he said. “I have never seen cooperation like this before.”
“We’re not going to run them (defrauders) out of business anytime soon,” said the self-described “shoofly” for HUD.
David Tanay, Criminal Division chief for Michigan Attorney General Mike Cox, agreed that mortgage fraud is a moving target. He said mortgage fraud falls under the larger umbrella of “real estate fraud.”
Sharon Ormsby, section chief of the financial crimes section at FBI Headquarters, headed the morning’s first panel discussion on community impact.
“Loan origination is still our major fraud,” she said, “but we are now seeing more foreclosure fraud.”
She, too, applauded the task force’s collaborative efforts.
“It’s not one agency,” Ormsby said, “but these kinds of partnerships that bring success.”
Robb Adkins, executive director of the Financial Fraud Enforcement Task Force, said his background was as a federal prosecutor. In fact, he participated in some of the Enron prosecutions.
“I was a prosecutor during the last financial crisis,” he said. “This is worse. It is more widespread.”
Florise Neville-Ewell, associate professor at the Thomas M. Cooley Law School, led off the morning panel.
“Let me commend the Obama administration for taking the lead on a problem that is so pervasive,” she said. “Who are the victims? We all are.”
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