Public documents available at the FBI website paint a picture in dollars of the figurative rape of the American people, with mortgage fraud robbing the U.S. economy of millions. The Associated Press said on Tuesday, “The FBI is investigating 4 major financial institutions whose collapse helped trigger a $700 billion bailout plan…” In a column here at The US Report on July 17, I asked, “How much fraud figures into mortgage disaster…?” In that column I referenced Kimberly M. Davis, 43, of Lee’s Summit (Mo.) who was sentenced to four years in federal prison without parole. Davis tied up more than $1,000,000 in mortgage loans. She used stolen identities, social security numbers and birth dates for fraudulent loans. The woman actually worked as a mortgage broker.
In press release files at just a few FBI field offices, I found hundreds of millions of dollars tied up in fraud cases. How every government official managed to ignore this is impossible to understand. It took me an hour to find information pointing to fraudulent loans totaling millions. I also found a rather incredulous letter from an FBI assistant director who defended his agency after a critical story appeared in the L.A. Times.
FBI to L.A. Times: ‘FBI …not banking regulators.’
Kenneth Kaiser, FBI assistant director of the Criminal Investigative Division, must have had an eye-popping moment when a story in the L.A. Times appeared with the header, “FBI saw threat of mortgage crisis.” Kaiser responded to that article with a letter to the editor, and pulled no punches: “The FBI’s Criminal Division has arrested 1000 suspects and targeted 180 criminal enterprises since 2004. We targeted those lenders and buyers involved in multiple frauds or cases where the profits went to drug crews, gangs or organized crime. More investigations are ongoing. But the FBI is a law enforcement and intelligence agency, we are not banking regulators.” Kaiser rightly recommended a civics and economics lesson for the newspaper.
Kaiser also pointed out that “very aggressive lending practices and too little risk management throughout the financial services industry” also caused the crisis.
These are a small sample of cases, taken from the past 9-12 months at only 3 FBI field offices:
• An Austin area mortgage fraud scheme involving 16 named defendants, at least 33 properties, 19 financial institutions and more than $4.5 million in claimed losses.
• Two former San Antonio area residents charged with carrying out a mortgage fraud scheme involving 3 San Antonio and Spring Branch residential properties, 3 financial institutions, and more than $1 million in foreseeable losses.
• Two San Antonio area home builders and a former Boerne, Texas resident charged with mortgage fraud involving 6 properties, 6 lending institutions and more than $3 million in foreseeable losses.
• In Arizona, Operation Cash Back resulted in 6 mortgage fraud-related cases in Tucson and Phoenix—36 defendants were charged. The FBI estsimated that approximately $100 million in losses were inflicted by the mortgage fraud schemes.
• In Jacksonville (Fla.), a man obtained fraudulent loans on properties totaling approximately $17 million.
Gingrich is right about ‘stupid deal’
Former Speaker of the House New Gingrich said Tuesday the government’s bailout plan is “stupid.” No one from committees in Congress or any US officials have offered even minimal details of the financial assets, illiquid or liquid, the government hopes to purchase. Both Republicans and Democrats have expressed concerns about the size of the bailout and the terms. Gingrich said anyone signing the bill could expect to be voted out of office. Obviously, no government official or committee chairman read the ongoing news releases about mortgage fraud at the FBI website. Besides mortgage fraud, Medicare fraud is also rampant—we’ve written extensively about that here.
Commentary on solutions to the economic problem
If a bailout is needed, a sizable percentage of funding should come from existing programs by way of deep cuts. A moratorium on all but essential spending should be agreed to. I'm serious. Taxpayers need to speak to representatives in Washington because it's time to cut if you want to spend and it looks like we have to spend.
A total bailout is not a good deal for the taxpayer. Problems in federal oversight have a trickle down effect. Obviously, those at the top and at all points in between, down to the lending institutions have not served the American taxpayer well at all. The only officials who have done their jobs are the Dept. of Justice and the FBI and any other law enforcement agencies involved. Give them a raise after you cut somewhere else.
Our government officials, senators and congressmen have been asleep at the wheel. They all stood by as criminals stole from the American people by using fraudulent mortgage schemes.
Who did Freddie Mac and Fannie Mae love most of all? It wasn't Sen. John McCain. Sen. Chris Dodd, who chairs the Senate Banking Committee, was top of the list: