From industry insiders to straw buyers, nearly 500 people were arrested in a nationwide mortgage fraud takedown in June 2010 that reflected the coordinated efforts of law enforcement to address the growing problem of crime in the housing industry.
FBI Director Robert S. Mueller (right) and Attorney General Eric Holder announce arrests in a national mortgage fraud sweep called Operation Stolen Dreams on June 17, 2010.
“Mortgage fraud ruins lives, destroys families, and devastates whole communities,” Attorney General Eric Holder said at a press conference on June 17, 2010, to announce the results of “Operation Stolen Dreams.”
Launched on March 1, 2010, the multi-agency initiative initially led to a total of 485 arrests. Through the June 17 press conference, more than 330 convictions had been obtained, and nearly $11 million had been recovered. Losses from a variety of fraud schemes were estimated to exceed $2 billion.
Operation Stolen Dreams was billed as the government’s largest mortgage fraud takedown at the time.
“The staggering totals from this sweep highlight the mortgage fraud trends we are seeing around the country,” Attorney General Holder said. “We have seen mortgage fraud take on all shapes and sizes—from schemes that ensnared the elderly to fraudsters who targeted immigrant communities.”
A few examples:
- In Miami, two people were arrested for targeting the Haitian-American community, claiming they would assist them with immigration and housing issues. Instead, they used victims’ personal information to produce false documents to obtain mortgage loans.
- In California, a prominent home builder used straw buyers to sell his houses at inflated prices. The scheme inflated prices on other homes in the area, creating artificially high comparable sales and affecting the overall new-home market.
- And in Detroit, FBI agents arrested several individuals in a $130 million scheme orchestrated by the local chapter of a motorcycle gang. The conspirators posed as mortgage brokers, appraisers, real estate agents, and title agents and used straw buyers to obtain around 500 mortgages on only 180 properties.
To combat the problem, the Bureau’s National Mortgage Fraud Task Force helps identify mortgage frauds such as loan origination schemes, short sales, property flipping, and equity skimming.
In addition, we have mortgage fraud task forces in “hot spots” around the country. Our investigators and analysts also participate in working groups nationwide that share intelligence and industry data to identify emerging threats.
“FBI agents and analysts are using intelligence, enhanced surveillance, and undercover operations to identify emerging trends and to find the key players behind large-scale fraud,” Mueller said.
Unlike previous mortgage fraud sweeps, Operation Stolen Dreams focused not only on federal criminal cases, but also on civil enforcement and restitution for victims. Federal agencies participating included the Department of Housing and Urban Development, the Treasury Department, the Federal Trade Commission, the Internal Revenue Service, the U.S. Postal Inspection Service, and the U.S. Secret Service. Many state and local agencies were also involved in the operation.
“From home buyers to lenders, mortgage fraud has had a resounding impact on the nation’s economy,” Mueller added. “Those who prey on the housing market should know that hundreds of FBI agents on task forces and their law enforcement partners are tracking down your schemes, and you will be brought to justice.”