... The Acpo report says corrupt property professionals including surveyors, mortgage brokers and solicitors are facilitating frauds. Common crimes include surveyors deliberately over-valuing properties, applications made on the basis of forged documentation and the use of fraudulent lease contracts to inflate the value of commercial property artificially.
The police report follows a similar warning from the Financial Services Authority last month. The UK's chief City regulator, which has now established a joint intelligence operation with City of London police to investigate mortgage-related crime, said it was increasingly concerned about the problem.
The FSA said it had received more than 200 referrals from lenders suspicious about potentially fraudulent mortgage brokers over the past 18 months. It is currently investigating more than 70 firms and individuals. The regulator believes the average fraud is for £45,000.
See also Gilmore's article on the Times (UK) (March 5, Mortgage fraud is funding terrorism, say police).
Which brings back memories of that "premeditated conspiracy to move covert funds out of the country for use by the U.S. Intelligence Agency", the Savings & Loan scandal of the Reagan/Bush years. From Gary W. Potter, Eastern Kentucky University:
...summarizing the most blatant examples of collaboration between financial institutions, the mob, and the intelligence community.
First National Bank of Maryland: For two years, 1983-1985, the First National Bank of Maryland was used by Associated Traders, a CIA proprietary company, to make payments for covert operations. Associated traders used its accounts at First National to supply $23 million in arms for covert operations in Afghanistan, Angola, Chad, and Nicaragua (Bainerman, 1992; 276-277; Covert Action 35, 1990).
The links between the First National Bank of Maryland and the CIA were exposed in a lawsuit filed in Federal District Court by Robert Maxwell, a high-ranking bank officer. Maxwell charged in that suit that he had been asked to commit crimes on behalf of the CIA. Specifically, he charged that he was asked to conceal Associated Traders' business activities, which by law he was required to specify on all letters of credit. Maxwell alleged that he had been physically threatened and forced to leave his job after asking that his superiors supply him with a letter stating
that the activities he was being asked to engage in were legal. In responding to Maxwell's lawsuit, attorneys for the bank state that "a relationship between
First National and the CIA and Associated Traders was classified information
which could neither be confirmed nor denied (Bainerman, 1992: 276-277; Washington Business Journal, February 5, 1990).
Palmer National Bank: The Washington, D.C.-based Palmer National Bank was founded in 1983 on the basis of a $2.8 million loan from Herman K. Beebe to Harvey D. McLean, Jr. McLean was a Shreveport Louisiana businessman who owned Paris (Texas) Savings and Loan. Herman Beebe played a key role in the savings and loan scandal. Houston Post reporter Pete Brewton linked Beebe to a dozen failed S & L's, and Stephen Pizzo, Mary Fricker, and Paul Muolo, in their investigation of the S & L fiasco, called Beebe's banks "potentially the most powerful and corrupt banking network ever seen in the U.S." Altogether, Herman Beebe controlled, directly or indirectly, at least 55 banks and 29 S & L's in eight states. What is particularly interesting about Beebe's participation in these banks and savings
and loans is his unique background. Herman Beebe had served nine months in federal prison for bank fraud and had impeccable credentials as a financier for New Orleans-based organized crime figures, including Vincent and Carlos Marcello (Bainerman, 1992: 277-278; Brewton, 1993: 170- 179).
Harvey McLean's partner in the Palmer National Bank was Stefan Halper. Halper had served as George Bush's foreign policy director during the 1980 presidential primaries. During the general election campaign, Halper was in charge of a highly secretive operations center, consisting of Halper and several ex- CIA operatives who kept close tabs on Jimmy Carter's foreign policy activities, particularly Carter's attempt to free U.S. hostages in Iran. Halper was later linked both to the "Debategate" scandal, in which it is alleged that Carter's briefing papers for his debates with Ronald Reagan were stolen, and with "The October Surprise," in which it is alleged that representatives of the Reagan campaign tried to thwart U.S. efforts to free the Iranian hostages until after the presidential election. Halper also set up a legal defense fund for Oliver North.
During the Iran-Contra Affair, Palmer National was the bank of record for the National Endowment for the Preservation of Liberty, a front group run by Oliver North and Carl "Spitz" Channell, which was used to send money and weapons to the contras.
Indian Springs Bank: Another bank with clear connections to the CIA was the Indian Springs Bank of Kansas City, Kansas (Bainerman, 1992: 279-280; Brewton, 1993: 197-200). The fourth largest stockholder in Indian Springs was Iranian expatriate Farhad Azima, who was also the owner of an air charter company called Global International Air. The Indian Springs bank had made several unsecured loans to Global International Air, totaling $600,000 in violation of the bank's $349,00 borrower limit. In 1983 Global International filed for bankruptcy, and Indian Springs followed suit in 1984. The president of Indiana Springs was killed in 1983 in a car fire that started in the vehicle's back seat and was regarded by law enforcement officials as of suspicious origins.
Global International Air was part of Oliver North's logistical network which shipped arms for the U.S. government on several occasions, including a shipment of 23 tons of TOW missiles to Iran by Race Aviation, another company owned by Azima. Pete Brewton, in his investigation of the Indian Springs bank collapse was told that FBI had not followed up on Indian Springs because the CIA informed them that Azima was "off limits" (Houston Post, February 8, 1990). Similarly the assistant U.S. Attorney handling the Indian Springs investigation was told to "back off from a key
figure in the collapse because he had ties to the CIA."
Azima did indeed have ties to the CIA. His relationship with the agency goes back to the late 1970s when he supplied air and logistical support to EATSCO (Egyptian American Transport and Services Corporation), a company owned by former CIA agents Thomas Clines, Theodore Shackley, and Richard Secord. EATSCO was prominently involved in the activities of former CIA agent Edwin Wilson, who shipped arms illegally to Libya. Azima was also closely tied to the Republican party. He had contributed $81,000 to the Reagan campaign.
Global International also had other unsavory connections. In 1981, Global International made a payment to organized crime figure Anthony Russo, a convicted felon with a record that included conspiracy, bribery, and prostitution charges. Russo was the lawyer of Kansas City organized crime figures, an employee of Indian Springs, and a member of the board of Global International. Russo later explained that the money had been used to escort Liberian dictator Samuel Doe on a "goodwill trip" to the U.S.
Global International's planes based in Miami were maintained by Southern Air Transport, another CIA proprietary company. According to Franck Van Geyso, an employee of Global International, pilots for Global International ferried arms into South and Central America and returned to Florida with drugs. Indian Springs also made a loan of $400,000 to Morris Shenker, owner of the Dunes Hotel in Las Vegas, former attorney for Jimmy Hoffa, and close associate of Nick Civella and other
Kansas City organized crime figures. At the time the loan to Shenker was made,
he, Civella, and other Kansas City mobsters were under indictment for skimming $280,000 from Las Vegas' Tropicana Casino.
Vision Banc Savings: In March, 1986, Robert L. Corson purchased the Kleberg County Savings and Loan of Kingsville, Texas, for $6 million, and changed its name to Vision Banc Savings (Bainerman, 1992: 280-281; Brewton, 1993: 333-351). Harris County, Texas, judge Jon Lindsey vouched for Corson's character in order to gain permission from state regulators for the bank purchase. Lindsey was the chairman of the Bush campaign in 1988 in Harris County and later received a $10,000 campaign contribution and a free trip to Las Vegas from Corson (Houston Post, February 11, 1990).
Corson was well-known to federal law enforcement agents as a "known money launderer" and a "mule for the agency," meaning that he moved large amounts of cash from country to country. When Corson purchased Vision Banc, it had assets in excess of $70 million. Within four months it was bankrupt. Vision Banc engaged in a number of questionable deals under Corson leadership, but none more so that its $20 million loan to Miami Lawyer Lawrence Freeman to finance a real estate deal (Houston Post, February 4, 1990). Freeman was a convicted money launderer who had cleaned dirty money for Jack Devoe's Bahamas-to-Florida cocaine smuggling syndicate and for Santo Trafficante's Florida- based organized crime syndicate. Freeman was a law partner of CIA-operative and Bay of Pigs paymaster Paul
Helliwell. Corson, in a separate Florida real estate venture costing $200 million, was indicted on a series of charges.
Hill Financial Savings: Vision Banc was not the only financial institution involved in Freeman's Florida land deals. Hill Financial Savings of Red Hill, Pennsylvania, put in an additional $80 million (Brewton, 1993: 346-348) . The Florida land deals were only one of a series of bad investments by Hill Financial which led to collapse. The failure of Hill Financial, alone, cost the U.S. treasury $1.9 billion.
Sunshine State Bank: The cast of characters surrounding the Sunshine State Bank of Miami also included spies, White House operatives, and organized criminals (Bainermann, 1992: 281; Brewton, 1993: 310- 312, 320-323). The owner of the Sunshine State Bank, Ray Corona, was convicted in 1987 of racketeering, conspiracy, and mail fraud. Corona purchased Sunshine in 1978 with $1.1 million in drug trafficking profits supplied by Jose Antonio "Tony" Fernandez, who was subsequently indicted on charges of smuggling 1.5 million pounds of marijuana into the U.S.
Among Corona's customers and business associates were Leonard Pelullo, Steve Samos, and Guillermo Hernandez-Cartaya. Pelullo was a well-known associate of organized crime figures in Philadelphia, who had attempted to use S & L money to broker a major purchase of an Atlantic City Casino as a mob frontman. Pelullo was charged with fraud for his activities at American Savings in California. Steve Samos was a convicted drug trafficker who helped Corona to set up Sunshine State Bank as a drug money laundry. Samos also helped set up front companies that funneled money and weapons to the Contras. Guillermo Hernandez-Cartaya was a veteran CIA operative who had played a key role in the Bay of Pigs of invasion. He also had a long career as a money launderer in the Caribbean and in Texas on behalf of both the CIA and major drug trafficking syndicates.
Mario Renda, Lender to the Mob: Mario Renda was a Long Island money broker who brokered deposits to various savings and loans in return for their agreement to loan money to phony companies (Brewton, 1993: 45-47; 188-190; Pizzo et al. 1989: 466-471). Renda and his associates received finders fees of 2 to 6 percent on the loans, most of which went to individuals with strong organized crime connections who subsequently defaulted on them. Renda brokered deals to 160 Savings and Loans throughout the country, 104 of which eventually failed. Renda was convicted of $16 million from an S & L and for tax fraud.
Renda also served CIA and National Security Council interests as a money broker helping arrange for the laundering of drug money through various savings and loans on behalf of the CIA. He then obtained loans from the same S & L's, which were funneled to the Contras. An organized crime-related stockbroker, a drug pilot, and Renda were all convicted in the drug money laundering case.
Full-Service Banking: All told at least twenty-two of the failed S & L's can be tied to joint money laundering ventures by the CIA and organized crime figures (Glassman, 1990: 16-21; Farnham, 1990: 90-108; Weinberg, 1990: 33; Pizzo, et al., 1989: 466-471). If the savings and loan scandals of the 1980s reveal anything, they demonstrate what has often been stated as a maxim in organized crime research: that corruption linking government, business, and syndicates is the reality of the
day-to-day organization of crime.
Looking at The Mortgage Graveyard, I can't help but wonder, if thorough investigations were done on these companies, as was done on the Savings & Loans, what nepharious players would emerge? What connections to organized crime and the intelligence community would emerge from company to company?
Given that IranContra is being run again (see David Rose's The Gaza Bombshell, Vanity Fair, April 2008 edition) .... what are the odds that Junior exhumed yet another one of daddy's schemes? My guess - better odds than the sun rising tomorrow morning.
....Vanity Fair has obtained confidential documents, since corroborated by sources in the U.S. and Palestine, which lay bare a covert initiative, approved by Bush and implemented by Secretary of State Condoleezza Rice and Deputy National Security Adviser Elliott Abrams, to provoke a Palestinian civil war. The plan was for forces led by Dahlan, and armed with new weapons supplied at America’s behest, to give Fatah the muscle it needed to remove the democratically elected Hamas-led government from power. (The State Department declined to comment.)
But the secret plan backfired, resulting in a further setback for American foreign policy under Bush. Instead of driving its enemies out of power, the U.S.-backed Fatah fighters inadvertently provoked Hamas to seize total control of Gaza.
Some sources call the scheme “Iran-contra 2.0,” recalling that Abrams was convicted (and later pardoned) for withholding information from Congress during the original Iran-contra scandal under President Reagan. There are echoes of other past misadventures as well: the C.I.A.’s 1953 ouster of an elected prime minister in Iran, which set the stage for the 1979 Islamic revolution there; the aborted 1961 Bay of Pigs invasion, which gave Fidel Castro an excuse to solidify his hold on Cuba; and the contemporary tragedy in Iraq....
Ask and find: Broderick Perkins on The Realty Times (December 20, 2005, Organized Crime In Mortgage Industry Worsens In 2005) reported:
The pandemic of mortgage fraud, which last year reached organized-crime levels of collusion and conspiracy, worsened in 2005 and, along with the easy-money lure of rising home prices, real estate and banking officials are getting some of the blame.
No matter who ultimately goes down for the crime, consumers are advised to be on the look out suspicious mortgage activity including pressure tactics, failed disclosures, unsubstantiated home values, homes recently purchased and sold again, and other red flags that fraud may be packaged with the deal.
The Federal Bureau of Investigation announced 21,994 reports of "suspicious" real estate activity, including mortgage fraud, in fiscal 2005, up from 17,127 the previous year. The 2004 number was nearly two a half times 2003's levels.
The FBI statistics also reveal 721 pending mortgage fraud investigations in numerous states, up from 534 in 2004 and more than three times the number in 2003. The 2003 numbers, at the time, was the agency's largest ever nationwide enforcement operation directed at financial institution fraud, including mortgage fraud.
As the effort has grown, more suspects are walking.
There were 170 related convictions in 2005, down from 172 in 2004 and 206 indictments in 2005, down from 241 in 2004.
Fewer convictions contribute to the growth in costs related to the crime -- $429 million in 2004 to $1.014 billion in 2005.
Along with the FBI and Department of Justice, the Secret Service, U.S. Postal Inspection Service, Office of the Inspector General, Internal Revenue Service, Department of Housing and Urban Development, state attorneys general, and other law enforcement agencies are investigating the crime from street-beat level to task force efforts.
FBI investigators said lenders must be more diligent about checking Social Security numbers and signatures on loan applications to make sure they are legitimate. FBI investigators also continued to hammer banking officials about verifying appraisals. Some types of mortgage fraud would be impossible without over-inflated appraisals.
Chris Swecker, assistant director of the FBI, said while the hot real estate market is attracting legitimate buyers and investors, they are being duped by a growing number of "industry insiders" who comprise 80 percent of all reported fraud losses by using collaboration or collusion to siphon cash from rising home values.
Earlier this year Grant D. Ashley, assistant director of FBI law enforcement services, said the criminal actions can strip borrowers of their cash, homes and favorable credit standing. Lenders are victims too as bad loans end up in foreclosure. With real estate as a cornerstone of the national economy, the economy suffers too.
A first-cousin to predatory lending, mortgage fraud, according to the FBI, is defined as "a material misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase, or insure a loan."
"Typically, their M.O. (method of operation) is revolving equity, falsely inflating property values, or issuing loans based on fictitious properties," Ashley said.
Ashley also said property flipping is a hot mortgage fraud tactic. It's legal to buy a property and sell it soon after for a profit based on real market forces. Illegal flippers, however, buy properties and then conspire with appraisers to artificially
inflate their value before reselling. Ashley said flipped properties are repurchased for 50 percent to 100 percent of their original value.
Equity skimming is another trend -- insiders persuade unaware borrowers to repeatedly refinance their mortgages every few months. With each refinance, the rate may be slightly lower but the come-on includes a higher loan amount necessary to cover the origination fees and other costs of refinancing. After the perps repeatedly skim equity in the form of origination fees, the loans become too large for the borrower and he or she defaults.
"Many people want to believe their homes are worth more than they are, and the recent housing booms across the U.S. have attracted criminals who want to exploit the situation to make a quick profit," Ashley said.
On the MortgageFraudBlog (07/22/05, Two Charged with Violation of Colorado Organized Crime Control Act):
A grand jury in Denver, Colorado indicted Luis Vagle, former head First Financial Corp., and Lawrence M. Rosenberg, on charges they violated the Colorado Organized Crime Control Act in an alleged mortgage fraud scheme that resulted in foreclosures. Losses to home sellers and lenders are estimated at $1 million....
There's also this post (January 2, 2008, Mortgage Meltdown: Defending Your Property: Strategies) on the LivingLies Blog ... scroll down to read Stephen G. Bishop's analysis in the comments. And lots more ... just google "mortgage industry" "organized crime".
How many BILLIONS have now been lost? Where are our little FBI friends? Especially given the sheer numbers of perps that have been walking away from their crimes. Surely, it can't take the ENTIRE FBI to make excuses before Congress for having "improperly accessed Americans' telephone records, credit reports and Internet traffic in 2006, the fourth straight year of privacy abuses resulting from investigations aimed at tracking terrorists and spies." Surely, it can't take the ENTIRE FBI to track my internet postings, especially, given that the NSA has had its supercomputers doing that for four years, with the help of AT&T.
Perhaps they're - again - covering for their BFFs in the White House and those a bit down the George Washington Parkway ... at Langley ... in the George H. W. Bush Center for Intelligence?
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