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Mortgage Fraud News | Fraud Statistics | Fraud Index | Fraud Blog
Mortgage broker, originator and banker criminal cases. Real estate flipping and appraisal fraud. Mortgage fraud prevention, studies and analysis.



Fraud News Archives 2004

Fugitive Chronicles Mortgage Crimes in 'Fiction' Book
Matthew B. Cox had made the transition from a dead-end insurance sales job to a promising career in the mortgage brokerage business some years ago when he penned a crime novel titled The Associates.
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photo of Matthew B. Cox

L.A. Probing Mayor's Link to Mortgage Scam Defendants
Prosecutors have begun probing $30,000 in campaign contributions made to L.A.'s mayor by a pair of once high-flying developers now accused of mortgage fraud.
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Branch Manager at Former BoA Unit Sentenced for Fraud
A former branch manager of Bank of America's one-time subprime lending subsidiary was sentenced for approving loans he knew were fake while at the unit.
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$13 Million Secondary Fraud
A California mortgage broker made fake loans against homes without the knowledge of the property owners, then sold those loans on the secondary market multiple times.
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String of Murders Hit Mortgage Industry
For the third time in a matter of days a person who worked in the mortgage industry has been murdered. But a history of mortgage fraud and a choice to turn against other members in a fraud ring provide possible clues to the motive in this case.
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Fraud Notes Cost Fannie $7.5 Million
Already on the radar screen of federal authorities when in 1998 he bought a 58-foot Sea Ray yacht for $802,000 in cash, the owner of First Beneficial Mortgage Corp. in Charlotte, N.C., got on Fannie Mae's radar by selling the company millions of dollars of bogus notes. When Fannie demanded he repurchase the notes, he sold the same false notes to Ginnie Mae and used those proceeds to repay Fannie. But Fannie, a government sponsored company, neglected to notify Ginnie, a government owned company, that the loans were fraud -- leading to a $7.5 million settlement this week.
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Famous Figure Fights Fraud
First he wrote bad checks. Then he went to jail. Then he joined the FBI. Then he wrote a biography that became a movie directed by Steven Spielberg where he was portrayed by Leonardo DiCaprio and chased by Tom Hanks. Now he's telling mortgage company executives how they can avoid being looted.
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Mortgage Employees, Evangelist Among Players in Ponzi Scheme
Two California mortgage workers, a homeowner and a traveling evangelist have been arrested in what the Los Angeles County Sheriff's Department has termed a Ponzi scheme.
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Fannie Unloaded, Ginnie Bought Bogus Notes
A federal judge has ordered Fannie Mae to turn over $6.5 million it received as a result of selling fraudulent mortgages back to the originator who in turn sold them to the government.
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CA Mortgage Fund Exposed as Ponzi Scheme
In a little less than three years, a San Diego investment fund manager raised nearly $18 million from 270 investors who were getting a 12 percent return on the money that was purportedly being invested in mortgage transactions. But the government doesn't believe those numbers are true and has filed a lawsuit to prove it.
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Indictment Triggers Suicide
Maybe it was the prospect of going to prison for mortgage fraud that caused Kenneth W. Hudson to snap.
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Insiders Drive Fraud
According to recent FBI testimony, about four in five mortgage fraud cases involve more than one industry insider. But the extent to which fraud has been committed nationally is largely unknown.
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New Jersey Closing Attorney Going to Prison
The former owner of a now defunct New Jersey mortgage company and his brother have found themselves in the middle of a fraud case federal prosecutors have described as a "land-flipping scheme" orchestrated by a closing attorney.
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Family Facing Federal Sentencing for Fraud
In February of 2003, North Carolina-based Oasis Mortgage was profiled in a Greensboro magazine as a fast-growing and successful company that was founded and operated by members of the Penniegraft family.
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IU Star Turned Originator Busted for 21 Bogus Transactions
In 1982 and '83 Duane Gunn was the leading receiver for the Indiana University football team, snagging 85 catches and scoring 11 touchdowns over those two seasons with the Hoosiers.
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Wholesaler Goes After Broker, Appraiser in Court
Who would pay $68,000 for a house with no kitchen, bathroom or furnace? Particularly when it's worth just $23,000?
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10 Steps to Preventing Notary Fraud
The FBI has enlisted the help of a notary public organization to assist fraud investigators in the prevention and identification of mortgage crimes.
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Trio Dupe Advanta, Flagstar & WaMu
Federal authorities in Chicago say they've busted a $27.3 million mortgage fraud scheme that involved a mortgage broker, his associate and a real estate appraiser.
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Fake Mortgage Web Sites
A disturbing new trend of fake Web sites has taken mortgage fraud into the Internet age.
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Mortgage Crimes Catch Congress's Attention
The mortgage industry climbed Capitol Hill Thursday to push for a tougher crackdown on the growing problem of fraud.
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Balloon Flip Scam Targeted Hispanics
The Mortgage Access Center owner Donald Stone has been charged in $1.5 million case.
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Mortgage Gangsters
Think Chicago gangsters and what typically comes to mind is Al Capone, hit men and bootlegging. But the real estate finance industry has found a place in the government's little black book.
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Georgia Tops Latest MARI Fraud Ranking
The prestigious award for the state with the most fraud goes to Georgia. And while no state would be proud to be near the top of this list from mortgage fraud prevention provider Mortgage Asset Research Institute (MARI), the silver state gets the silver medal.
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Billions in Mortgage Fraud, FBI Says
Organized crime has taken on a new face, and it's not that of mobsters with names like "Sammy the Bull."
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Cincinnati Fraud Ring Broken Up
Five people, including a retired teacher, have been snagged by federal authorities in a Cincinnati real estate flipping ring that bled investors of more than $7 million.
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Fraud Used to Obtain Mortgage License
The Arkansas Securities Department recently suspended the license of Mark G. Jackson, a loan officer with Kingridge Financial Mortgage in Little Rock, Ark., for submitting false and misleading criminal history information on his license application, according to an order issued by the department's commissioner Michael B. Johnson.
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Credit Repair Scams Among FTCs Most Common Consumer Fraud
More than one in ten Americans have been touched by fraud, and a government study conducted last summer suggests victims of credit fraud should use extra caution when choosing a credit repair service -- as they are more prone to fall prey to credit repair scams.
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RBC Discloses Massive Mortgage Fraud at U.S. Unit
In documents filed with Canadian securities regulators, Royal Bank of Canada has disclosed that it's American banking subsidiary -- RBC Centura -- recorded a $13 million net loss in the second quarter because of $33 million in "fraudulent" mortgages.
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Fugitive Pair On Mortgage Fraud Spree
Federal agents and police in Georgia and Florida are on the lookout for Matthew Cox and Rebecca Hauck, a couple on a crime spree involving stolen identities, phony mortgage documents and as much as $4.5 million in stolen cash.
click here to read article
photo of Cox, Hauck

Fraud in West Lower at Midwest's Expense
The precipitous drop in refinancing activity has put tremendous pressure on originators to be more aggressive in order to keep making their numbers. As a result, some mortgage professionals have crossed the line and are already involved in fraudulent practices.
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FHA Loan Fraud
Federal prosecutors in Philadelphia have cracked a mortgage fraud ring that preyed on buyers who couldn't afford the homes they were sold. Mortgage broker Judy Gemmill and James Ballantyne, a loan officer, have been indicted in the Garland Homes scandal.
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Flips & Sales & Puppy Dog Tails
Mortgage broker John Graziano has been charged with 7 others -- including a lawyer, appraiser, real estate investors and phony buyers -- in an elaborate New York flip scheme
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More Choices for Fraud Prevention
Two companies have teamed up to help lenders do a better job of preventing fraud. The new fraud detection service isn't the only antidote for fake forms -- as a host of services claim to help reduce mortgage crimes.
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Detecting Fraud in Secondary Market
When mortgage fraud occurs, there are always clues left behind. But like in the popular television forensic thrilled CSI -- the clues aren't always easy to find.
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Peoples Bank Execs Facing Up to 11 Years in Prison
John Finnan, who was president of the defunct Peoples Bank of Northern Kentucky, and Marc Menne, an executive vice president who oversaw commercial lending, have pleaded guilty to federal bank fraud charges for their roll in the case against a builder who stole $34 million in home closing checks.
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Service Identifies Problem Brokers, Originators
Most fraud is reportedly committed by an insider, and at a time when plunging production is expected industrywide, brokerages are more susceptible to fraud. But, a new tool designed to detect fraudulent activity in a broker's history can possibly prevent a company from losing business and millions of dollars, according to one fraud prevention company.
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Appraisers Blame Brokers, Licensing for Fraud
Representatives of the nations appraisers testified before Congress that inadequate appraiser licensing and pressure from mortgage brokers enable criminals to commit mortgage crimes.
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Fraud Costs CEO, Company $52 Million
A federal grand jury in Florida has returned a verdict of more than $52 million against now defunct CFI Mortgage Inc., former CEO and chairman Stephen E. Williams, and former director James Kowalcyzk.
click here to read article

7 Sentences for Seven Women
Sentences have been handed down in a major mortgage fraud ring that federal authorities cracked in the South Carolina town of Anderson. Among the defendants who defrauded National City Mortgage were one of the company's loan officers, a former mortgage broker with Service First Mortgage Co., and a former loan officer with Kelly Group Inc.
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$38 Million Scam Ends in Tragedy
Ben Stewart, a prominent member of a well known family in a southern small town, took horrific steps to end the humiliation of being exposed as a Ponzi scheme operator. Among the companies used in the $38 million scam was his mortgage brokerage.
click here to read article

Top Ten Ways for Originators to Prevent Fraud
Knowing about fraud but doing nothing about it can jeopardize your reputation -- and even your freedom. However, there are a number of steps an originator can take to ensure that fraudulent loan files don't land him or her in jail.
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Nevada Tops Subprime Fraud Report
Risk-management services provider Mortgage Asset Research Institute Inc., or MARI, reported that Nevada lead all states in subprime mortgage fraud, while Georgia reigned in fraud within the prime market.
click here to read article

Massive Scheme Duped Builders, Lands Mortgage Banker in Jail
Former New York mortgage banker Avram "Avi" Lebor, president of MKD Capital Corp., will spend more than seven years in prison and must repay nearly $8.4 million for his role in what federal prosecutors have described as a "massive scheme" to defraud investors.
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Former Christian Coalition Organizer Jailed for Fraud
Former talk show host and Christian Coalition activist Martin Andrew Nalitz Jr., through his company Merit Funding Group L.L.C., is suspected of fabricating 15 mortgage transactions.
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Jail Predicted for Psychic Accused of Mortgage Fraud
Barber Clark, a one time radio psychic in Lexington, Ky., has been indicted on five felony counts of stealing more than $700,000 from an escrow account at the now closed Consolidated Mortgage Inc. mortgage company she and her husband operated.
click here to read article

Equity Stripping Robs Delinquent Borrowers of Title
Minnesota state lawmakers and law enforcement are cracking down on a scam involving the reconveyance of foreclosed property known as "equity stripping." Home Funding Corp., or HFC, and HJE settled a suit filed by Minnesota's Attorney General where they were accused of "stripping" the equity from several Minnesota homeowners.
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Buyers Deceived With Promises of Cash
An alleged operator of a Minnesota scam has only been identified as a man from Arkansas who, according to a state senator, convinced 24 people from the Minneapolis area that an organization known as The St. Paul Foundation had hundreds of thousands of dollars in grant money available for home ownership.
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Warehouse Lenders, Wholesalers Deceived by Network of Companies
Gerald P. Small, III, owner of Amerifunding, is among the defendants indicted this week on charges they used the personal information of job applicants and loan applicants, along with fake bank and tax documents, to obtain fundings from wholesalers and warehouse lenders.
click here to read article

Southern Calif Scam Used Identities of Dead Real Estate Brokers
$30 million scheme lands Alberto Mordoki, Mirella Mordoki and Alejandro Sady-Kennedy in jail; James Douglas Lus on run.
click here to read article

Preventing Mortgage Fraud
Mortgage fraud can cost a company millions. It happens before the loan is closed, and it happens on mortgages that were funded years ago. And while all mortgage crimes cannot be prevented, a few companies say their services help reduce the fallout from fraud.
click here to read article

Owner, Loan Officers Banned from Mortgage Industry
The Washington Department of Financial Institutions said a two-year investigation uncovered a pattern at Century Mortgage of employees and owners overvaluing properties and falsifying papers to defraud lenders and borrowers with inflated property values, phantom second mortgages and false down payments.
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Law Firm Settles in VA, HUD Overcharging Case
Fisher and Fisher P.C. of Chicago has settled a federal lawsuit that accused the law firm of overcharging federal agencies that hired the firm to foreclose on property. The suit was originally filed by a whistle-blowing mortgage broker.
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SEC Accuses Former Conseco Finance Execs of $400 Mil Fraud
Rollin Dick, former chief financial officer of Conseco Finance Corp., and James Adams, the unit's former chief accounting officer, have been accused of inflating earnings at its former mobile home lending unit by nearly $400 million. During the year of the alleged fraud, the combined bonuses of two were in excess of $5 million.
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Mortgage Firm Squanders $1 Mil of Investors' Money on Gambling
Rose Fund accused by SEC of lying to investors.
click here to read article

Lenders Don't Look to Brokers to Prevent Fraud
Mortgage lenders are pretty much on their own when it comes to fraud -- i.e., identifying perpetrators, preventing exposure and chasing culprits into jail.
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Convicted Fraudster Does It Again
Police in Tampa and Clearwater, the FBI and the Florida Office of Financial Regulation are investigating how Matthew B. Cox, who had already been convicted of federal and state charges for mortgage fraud, was able to pull off a whole new scam that involved at least 21 properties and $2.7 million in mortgage loans.
click here to read article

Equity Skimming Fraud
While fraud cases usually involve a conspiring originator or a bribed appraiser, one government special agent recently talked about another kind of mortgage fraud.
click here to read article

Trouble, Alaskan Style
Jim Crawford, former owner of bankrupt City Mortgage, has settled for thousands of dollars with the Alaska consumer protection office over allegations of unfair business practices and fraud claims.
click here to read article

Sister Pressured to Take Fall for Brother in Fraud Case
Cincinnati builder Bill Erpenbeck thought about killing sister Lori, father told her.
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Notary Fraud Leads to Foreclosures
Todd Verk has been accused by state prosecutors of illegally notarizing mortgage documents in a scheme to dupe low-income homeowners into securing inflated home loans.
click here to read article

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News stories about fraud committed against home lenders.



Mortgage Fraud Blog
Actions in mortgage fraud criminal and civil cases.



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