Mortgage fraudsters – 200 down, 20,000 to go

Late last week the US Attorney for the Northern District of Illinois announced the indictment of seven individuals on mortgage fraud charges. According to a news release (pdf):

The indictment alleges that most of the mortgages were obtained to finance the purchase of condominium units in a building located at 4725 South Michigan Ave., Chicago, by straw buyers, including a Chicago police officer, John Welch, and others. Defendant Yaseen Ahmed, who co-owned the Michigan Avenue condominium building, and co-defendant Eliot Higueros, who allegedly recruited straw buyers, caused proceeds of the fraud to be disbursed to themselves and multiple companies they owned or controlled, the charges allege.

As an example of the pattern alleged throughout the indictment, Higueros recruited Welch to purchase four condominium units in the 4725 South Michigan Ave., building, knowing that he would obtain financing by making false statements to mortgage lenders, the indictment alleges. Higueros paid Welch for each unit that Welch bought, knowing that the payments would not be disclosed to the lenders, it adds.

Since 2008, close to 200 defendants have been charged in Federal Court in Chicago and Rockford with engaging in various mortgage fraud schemes involving more than 1,000 properties and more than $280 million in potential losses, signifying the high priority that federal law enforcement officials give mortgage fraud in an effort to deter others from engaging in crimes relating to residential and commercial real estate.

That’s 200 defendants down or on their way down and, given the likely scale of mortgage fraud in the Chicago metro area, another 20,000 to go.

Don’t expect to see 20,000 indictments when we’ve seen only 200 in the past 4 years. The feds don’t have the resources, and local law enforcement authorities appear to lack the will.

Do expect to see more mortgage fraud. When a payday is certain and the odds of paying a penalty are only 1 in 100, the bad guys go with the odds.

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