Mortgage Fraud Investigations Finally In the Limelight: Expect to See More Federal Mortgage Fraud Charges in the Future
Mortgage fraud charges are serious felony charges under either federal or state law, and more and more law enforcement efforts are being channeled into investigating financial fraud cases that involve home loans and lenders loaning mortgage money based upon documentation that is later alleged to be fraudulent.
Mortgage fraud targeting isn’t new: the Federal Bureau of Investigation has been working to bust people on felony mortgage fraud charges for awhile now. The FBI has an entire section of its web site dedicated to Mortgage Fraud information. Attorney General Eric Holder’s also interested in mortgage fraud cases: the Department of Justice’s Financial Fraud Enforcement Task Force also provides lots of information regarding fraudulent mortgage lending issues online, where you can read about things like Reverse Mortgage Scams and Mortgage Loan Modification Scams.
The government is also quick to publish news releases to the press when a mortgage fraud case goes to verdict. For example, recently a San Antonio federal judge sentenced a man named Robert Brooks to (1) 135 months in federal prison (that’s 11.25 years) with (2) 5 years of supervised release thereafter and (3) $8,500,000 in restitution in the culmination of a Dallas mortgage fraud investigation.
According to news reports, Mr. Brooks was convicted on charges of bank fraud, mail fraud, and wire fraud (for details on these various kinds of federal charges, click on the phrases shown on our web resource pages) as well as aiding in the filing of false federal income tax returns.
Brooks’ trial was an example of mortgage fraud charges based upon property flipping, and evidence was presented where Mr. Brooks was said to have overseen 20 people (real estate appraisers; title company staff; straw buyers; and more) in an operation where properties were purchased in the Dallas area for their fair market value and then flipped (sold) at an inflated sales price. Banks throughout Texas were said to have been defrauded of over $20,000,000 during a three year time period.
Mortgage Fraud Gets Major National Exposure After Reality TV Stars Charged With Mortgage Fraud, Bankruptcy Fraud, Failure to File Income Tax Returns
However, it’s only this week that the federal focus on mortgage fraud investigations may get the public awareness that all the earlier web site pages and news releases were attempting to generate, and that’s because a Reality TV star has been arrested along with her husband on federal mortgage fraud charges (among other things).
On July 29, 2013, the Department of Justice issued its press release concerning the charges filed against Teresa Giudice and her husband, Giuseppe “Joe” Giudice, who appear on television in the reality show “The Real Housewives of New Jersey.” The couple were each charged with mortgage fraud involving “a conspiracy to defraud lenders and illegally obtain mortgages and other loans” in addition to being charged for bankruptcy fraud (hiding assets and personal income during a pending bankruptcy) and the failure to file federal income tax returns in the tax years 2004 to 2008. Quoting from the official news release:
According to the Indictment:
From September 2001 through September 2008, Giuseppe and Teresa Giudice allegedly engaged in a mail and wire fraud conspiracy in which they submitted to lenders fraudulent mortgage and other loan applications and supporting documents in order to obtain mortgages and other loans. The Giudices falsely represented on loan applications and supporting documents that they were employed and/or receiving substantial salaries when, in fact, they were either not employed or not receiving such salaries.
For example, in September 2001, Teresa Giudice applied for a mortgage loan of $121,500 for which she submitted a loan application that falsely claimed that she was employed as an executive assistant. She also submitted fake W-2 Forms and fake paystubs purportedly issued by her employer. The indictment also charges specific instances where the Giudices committed bank fraud and loan application fraud in the course of obtaining loans from several banks.
On Oct. 29, 2009, the Giudices filed a petition for individual Chapter 7 bankruptcy protection in U.S. Bankruptcy Court in Newark. Over the next few months, they filed several amendments to the bankruptcy petition. As part of the bankruptcy filings, the Giudices were required to disclose to the United States Trustee, among other things, assets, liabilities, income, and any anticipated increase in income. The indictment alleges that the Giudices intentionally concealed businesses they owned, income they received from a rental property, and Teresa Giudice’s true income from the television show “The Real Housewives of New Jersey,” website sales, and personal and magazine appearances. The Giudices concealed their anticipated increase in income from the then-upcoming Season Two of the Bravo television show. The Giudices are charged with multiple counts of bankruptcy fraud for concealing and making false oaths and declarations about the assets and income during their bankruptcy case.
The indictment also alleges that during tax years 2004 through 2008, Giuseppe Giudice received income totaling $996,459, but did not file tax returns for those years.
National Media Swoops In To Cover the Mortgage Fraud Charges Against Reality TV Stars Teresa Giudice and Joe Giudice
In the blink of an eye, all sorts of news media picked up on this news story. Fox News reported on the fraud charges filed against the reality stars along with other news channels. Celebrity sites like TMZ and the National Enquirer also began covering the mortgage fraud case. Overseas, media coverage like Great Britain’s Daily Mail also reported on the mortgage fraud case in detail.
- TMZ, for example, covered the couple on video yesterday as they “surrendered” and then left the federal courthouse after being released on $500,000 bail as “breaking news.”
- Today, England’s Daily Mail gives its readers a photo tour of the Giudice’s New Jersey home along with details on the pending federal charges and the lengthy prison terms that they may face under federal sentencing laws.
All this news coverage of the Guidices’ case will continue in all probability for many months – and with that coverage, more and more people will learn about the felony charge of mortgage fraud and what different kinds of fact patterns can be pulled together by federal investigators (or Texas law enforcement) into a state or federal charge of mortgage fraud felonies. It’s arguable that more people will learn about mortgage fraud under federal law through this single case as it plays out in the news media than from the above-referenced information pages published on government web sites.
Mortgage Fraud Charges Involve Borrowers as Well as Property Flippers, Real Estate Appraisers, and Straw Buyers: Serious Charges Await Others
Here’s something else to consider. The federal interest in finding and charging people who they allege have filed phony tax returns or submitted puffed up loan documents to buy a house (or to refinance a home) or to get an equity loan is real, and it’s out there. Financial fraud investigations are big among law enforcement at state and federal levels, especially mortgage fraud.
One of the lessons from the Reality TV case is how surprising the targets may be — and not everyone who gets charged (or will be charged) will be a multi-millionaire.
For more on mortgage fraud and the defense of mortgage fraud charges under Texas law and federal statute, visit our mortgage fraud resource page and check out the Case Results section which includes Mr. Lowe’s defense in a $7+ million mortgage fraud case where the defendant, after being charged in an 19 count indictment with a potential 20 year sentence, ultimately faced less than one half the federal sentencing guidelines and the real possibility of actually serving less than 24 months behind bars.
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