Connecticut residents beware: Charges of financial crime on the rise

Authorities are stepping up prosecution of financial crimes such as mortgage fraud. Allegations of mortgage fraud can range from a single homeowner mistakenly filing false documents when applying for a home loan to large conspiracies spanning over many years and involving dozens of home loans.

The FBI is investigating these crimes at a much higher rate. Two recent cases provide an example of how severe penalties associated with these crimes can be. The first case involved a large scale financial fraud operation. In this case, a homebuilder was sentenced to 14 years imprisonment and ordered to pay over $4 million in restitution. The man was found guilty of selling homes for an inflated price, allowing him to obtain fraudulent mortgage loans.

Another mortgage fraud scheme was discovered in Connecticut. This scheme spanned over many years and involved purchasing and selling homes using straw, or hidden, borrowers who falsified documents to get a loan. The man who ran the scheme is accused of involvement in over 40 fraudulent loans totaling over $10 million.

Mortgage fraud basics

The term mortgage fraud can cover a wide variety of crimes. Illegal activities grouped within this term include:

  • Fraud. This often occurs when individuals falsify the documents used to apply for a mortgage. A common example includes altered pay stubs.
  • Equity skimming. This process uses a hidden buyer, false credit reports and other documentation to obtain a mortgage. The hidden buyer signs all property rights over to an investor who makes no payments on the property but rents it out until the property is foreclosed.
  • Inflated appraisal. An appraiser works with the mortgage broker to provide an unrealistically high appraisal.

These are only a few of the many types of mortgage fraud that can lead to charges.

Mortgage fraud charges on the rise

President Obama created a task force to wage an aggressive effort to both investigate and prosecute those who are accused of financial crimes. The task force, called the Financial Fraud Enforcement Task Force (FFETF), is the largest combination of law enforcement agencies ever assembled to address the issue of financial crimes. This federal effort is also felt locally. In 2009 the Connecticut Mortgage Fraud Task Force was developed. This group focuses on foreclosures and short sale schemes.

According to the FBI, the Justice Department has filed over 10,000 financial fraud cases over the last three years.

Those charged with a financial crime should take the allegations seriously. Contact an experienced Connecticut financial fraud attorney to help determine what resolutions are available and what option is in your best interest.