The housing market slump translated into brisk business last year for mortgage scammers and the federal agents who pursue them, with the FBI winning 206 convictions, recovering nearly $22 million and still chasing a growing number of securities and commodities fraud cases.
According to an FBI report released Thursday, the 1,204 mortgage fraud cases pursued in fiscal year 2007, which ended last Sept. 30, resulted in 321 indictments and court orders for $595.9 million in restitution.
Results of this year’s financial crimes tally compare with 818 cases of mortgage fraud in fiscal 2006, that yielded 263 indictments, 204 convictions, court orders for $388.9 million in restitution and $1.4 million recovered.
Common types of mortgage fraud are misrepresentation of income or assets, forged documents, misrepresentation of a borrowers’ intent to occupy a property and inflated appraisals. The depressed housing market is an ideal climate for perpetrators of fraud, experts say. Identify theft, especially targeting borrowers with good credit, is prone to spike as are scams promoted as foreclosure rescues.
The FBI, working in conjunction with the Securities and Exchange Commission, is investigating more than 1,300 mortgage-fraud cases and conducting 19 corporate investigations linked to the subprime lending crisis. Federal authorities have formed a task force, headed by prosecutors in New York, to determine if lenders or Wall Street firms participated in fraud.
Thursday’s report also details the FBI’s activities regarding money laundering and fraud in health care, insurance and mass marketing.
The FBI pursued 1,217 cases of securities or commodities fraud in fiscal 2007, up from 1,165 in fiscal 2006.
The cases in 2007 brought $1.7 billion in restitution orders, $24 million recovered and $202.7 million in criminal fines, compared with $1.9 billion in restitution orders, $20.6 million recovered and $80.7 million in fines the previous year.
Some of the corporate fraud cases involved losses to investors exceeding $1 billion, the FBI said. Notable cases involved former executives of Brocade Communications Systems Inc., Qwest Communications, Hollinger International Inc. and Mercury Finance Inc.
“Financial crimes affect the economic security of millions of Americans, and the FBI is dedicated to working with our partners in industry and law enforcement to combat these offenses,” Kenneth W. Kaiser, assistant director of the FBI’s Criminal Investigative Division, said in a statement.
Other key findings:
- In fiscal 2007, the 2,493 health care fraud cases investigated by the FBI resulted in 839 indictments and 635 convictions of individuals.
- The FBI investigated 548 money laundering cases in fiscal 2007, resulting in 141 indictments, 112 convictions, $66.9 million in court orders for restitution, $2.2 million recovered and $11.4 million in criminal fines.