FBI mortgage fraud probes triple
January 30. 2008
Many facets of the U.S. economy may be in a downturn, but there is one definite new growth industry: investigating mortgage fraud.
The number of investigations into possible mortgage fraud tripled between 2003 and last year, rising from 400 to 1,200, according to James Margolin, an FBI spokesman in New York.
Many of those investigations involve traditional mortgage-type frauds where the creditworthiness of the mortgage-loan applicants is exaggerated by relatively small-time operators defrauding banks or other lending institutions.
But on Tuesday, an FBI official in its Washington headquarters announced that the bureau also has launched significant investigations into 14 companies directly involved in mortgage loans made to numerous borrowers with weak credit, or in the marketing of securities backed by those mortgage loans. Among the possible crimes being investigated are various accounting frauds and insider trading, in which holders of subprime-backed securities may have sold their stake before the public became aware of problems in the industry.
Neil Power, chief of the economic-crimes unit in the FBI's Washington headquarters, said the investigation into the 14 companies was being done in coordination with the Securities and Exchange Commission.
Separately, the SEC, which has only civil jurisdiction, said it has launched about three-dozen investigations into subprime mortgage businesses.
In addition, several state attorneys general, including New York's Andrew Cuomo, have announced their own investigations into mortgage frauds. Neither the FBI or the SEC would identify the businesses they are investigating. And none have been charged with any wrongdoing.
But sources previously have said that Bear Stearns and Co. and the now-defunct American Home Mortgage in Melville are among those under investigation in the metropolitan area. A number of other firms, including Morgan Stanley and Goldman Sachs, have said they have been asked by investigators about their subprime practices.
BY ROBERT E. KESSLER newsday.com
Source
http://www.newsday.com/business/ny-bzmort0131,0,2531533.story |
