Audit Reveals DOJ Unable, Unwilling to Address Mortgage Fraud

In the six years since the housing market crash and subsequent financial crisis, the U.S. Department of Justice has been challenged on its response, which has largely lacked any significant criminal prosecution. balance.jpg

Our Miami foreclosure defense attorneys known that the DOJ’s retort to this has pretty much remained constant: We’re doing all we can. If there were criminal cases to be made, we would have made them. These cases are highly complex matters, and they take time. We’re working overtime on it.

However, a new audit by the department’s Office of the Inspector General appears to suggest otherwise, indicating that the agency is either unequipped or unwilling to take on complex financial crimes.

The reality is, the office has hardly investigated these cases at all.

Covering the response period from 2009 through 2011, the report directly refutes the government’s insistent claims that there were no criminal prosecutions for the financial meltdown because there were no cases to be made.

For example, while public officials with the department’s Financial Fraud Enforcement Task Force repeatedly underscored the importance of pursuing mortgage fraud cases, the Federal Bureau of Investigation’s Criminal Investigation Division ranked complex financial crimes as the lowest of six priorities on its list. And within its subdivisions, mortgage fraud was ranked dead last as a priority. In FBI field offices in Miami, New York, Los Angeles and Baltimore, mortgage fraud wasn’t even listed as a priority at all.

Even in the relatively few cases that investigators did pursue, most were closed after very little effort. For example, in 2011, the FBI shut down some 750 mortgage fraud cases without pursuing prosecution. The IG’s report indicates that these investigations were “minimal.” In some cases, no investigation even took place.

And, while the Justice Department had widely touted the fact that it had staffers assigned to work as mortgage fraud coordinators, the reality was this was not the sole job assigned to these workers. They had numerous other duties as well.

Of course, the DOJ is trying to spin this as a positive, noting that mortgage fraud indictments had nearly doubled and conviction rates rose by more than 100 percent during the study period. Of course, the department spokesperson left out the part that these indictments and convictions virtually non-existent at the beginning of the study period.

And it’s not the first time the DOJ has been caught exaggerating its success in this arena.

Specifically, back in the fall of 2012, Attorney General Eric Holder called the DOJ’s mortgage fraud enforcement a “model success.” He bragged that over the course of a year, some 530 criminal defendants had been charged – more than 170 of those being executives. He said those cases involved more than 70,000 victims who had incurred losses of more than $1 billion.

However, when pressed by multiple news organizations on those figures, it turned out they were grossly inflated. Those 530 criminal defendants that were supposedly charged? Turned out, it was closer to 100. Rather than losses totaling $1 billion, it was closer to $95 million. And as far as the 172 executives facing charges, about 100 of them were listed in error. The ranking of most of the others is unknown, at least to the FBI.

The bottom line is that this report shows us that those who commit financial fraud against homeowners are unlikely to face any significant consequences for it.

This once again underscores the need for distressed homeowners to secure experienced legal representation when going up against these financial powerhouses.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.

Additional Resources:
AUDIT OF THE DEPARTMENT OF JUSTICE’S EFFORTS TO ADDRESS MORTGAGE FRAUD, March 2014, U.S. Department of Justice Office of the Inspector General
A Loan Fraud War That’s Short on Combat, March 15, 2014, By Gretchen Morgenson, The New York Times
More Blog Entries:
Homeowner Loan Complaints On the Increase – Again, Feb. 26, 2014, Miami Foreclosure Lawyer Blog