Bear Stearns Executives Ralph Cioffi, Matthew Tannin Indicted... FBI Announces "Operation Malicious Mortgage"

Two former Bear Stearns managers have been arrested, federal authorities said Thursday, becoming the first executives to face criminal charges in the wake of the subprime market debacle.

Matthew Tannin was taken into custody outside his New Jersey home on Thursday morning and Ralph Cioffi was arrested at his New York City home, the FBI said.

Read more about the indictments here.

The FBI also announced "Operation Malicious Mortgage":

The Department of Justice and Federal Bureau of Investigation (FBI) announced today a national takedown of mortgage fraud schemes, the culmination of substantial coordinated efforts during the last three and a half months to identify, arrest and prosecute mortgage fraud violators through the United States. Operation Malicious Mortgage highlights the strong enforcement response undertaken by the Department of Justice and its law enforcement partners to combat the threat mortgage fraud poses to the U.S. housing industry and worldwide credit markets.

From March 1 to June 18, 2008, Operation Malicious Mortgage resulted in 144 mortgage fraud cases in which 406 defendants were charged. Yesterday, 60 arrests were made in mortgage fraud-related cases in 15 districts. Charges in Operation Malicious Mortgage cases were brought in every region of the United States and in more than 50 judicial districts by U.S. Attorneys' Offices based upon the law enforcement and investigative efforts of participating law enforcement agencies. The FBI estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes employed in these cases.

Comments

[youknowwhat]

01:01 PM on 06/21/2008

Seems this country is being run by a crime organization.

[youknowwhat]

01:58 AM on 06/21/2008

Seems they always arrest the underlings first. Why not arrest the big shots first, then work your way down from there. The big shots are the low life I want to see go to jail.

[The Hedonistic Pleasureseeker]

09:48 AM on 06/20/2008

Fish rot from the head

[MadAppraiser]

01:40 AM on 06/20/2008

Corporate prevaricators have carefully masked corruption as unnecessary regulation that retards the potential of free market activity. The corporate sectors ability to regulate the federal government is the source of the economic carnage American citizens currently experience!

Federal legislators are searching for anyone to blame for malicious mortgage behavior. The Justice Department might bring charges against 1000’s of mortgage professional for unethical conduct. Federal legislators unwillingness to regulate corporate America is the source of the country’s economic problems. These legislators have buried themselves in the law for decades! The corporate lobbyists have made sorry chumps of legislators, and their revered law! The mortgage industry might have kicked my teeth out, but I saw them coming; the federal legislators turned away, and hid their eyes!

Federal legislators contemplate amending the “Home Ownership and Preservation Act of 2007 (S 2452)” to include provisions for a surety bonding process for appraisal accuracy. If appraisal bonding is necessary then, appraisal education, “USPAP” regulations, professional apprenticeship, error/omissions insurance, professional certifications, and state licenses are meaningless in terms of work product accuracy. This would also indicate that the federal, and state intervention into the real estate appraisal profession was an expensive, ZERO!

Cognizant federal legislators should have seen red flags when mortgage bankers, and Wall Street interests implemented creative secondary market strategies to purchase mortgage debt. Political affiliation does not protect any American citizen from the inescapable debt service that is the result of the deplorable political choices we have made for leadership.

[sowhatdemos]

01:32 AM on 06/20/2008

You may vote for the person but you get the party.
reThugs = rich folk & corporate america
Dems+ for the most part take care of "the little man", the poor & middle class.
Wanna know why your country's in the toilet?

"Poor people voting reThuglican is like chickens voting for Col. Sanders" - Roseane Barr 2007

[The Hedonistic Pleasureseeker]

09:36 PM on 06/21/2008

Sorry, nobody buys that claptrap anymore, not with Pelosi in da House.

[walk0nwalls]

12:59 AM on 06/22/2008

You'd best check your parties before you talk Mr. It's not good and bad no more, it's just bad and worse.

[incontempt]

12:30 AM on 06/20/2008

Next up....Malicious Oil speculators and the congressman who write ENRON loopholes.

I know ...funny right.

[dukeitout]

11:16 PM on 06/19/2008

If only we would let the free unregulated market work, it will prevent all this corruption. The bad will be punished and the good rewarded (handsomely I might add.) Wanna buy a bridge?

[LuckyBlessed]

10:57 PM on 06/19/2008

From having been in the belly of the beast, the best news story on this was on This American Life. About minute 15, a bartender gets hired with no experience, minute 25 another guy is making millions and buying thousand dollar bottles of champagne. (I was in the conforming market and thought hundreds on dinners was excessive.) And all the while, investors wanted more securities.

http://www.thislife.org/Radio_Episode.aspx?sched=1242

[wrabbitt]

10:39 PM on 06/19/2008

So what we all know they will get minimum sentences, our crooked legal system only protects the crooks, and criminals. Know what the difference between a crook and a criminal? one has a law degree.

[skepticalindenver]

10:17 PM on 06/19/2008

Bear Stearns has become the focus of the investigation because they committed the mortal sin of going belly up. However, the colusion involved goes much much deeper. The Realtors that put together deals for unqualified buyers, the appraisers that put whatever value on a home was requested, the mortgage brokers that verified nothing, and probably the worst culprit in this saga is Standard and Poors who allowed investment banks like Bear Stearns to package these subprime mortgages into portfolios which S & P then put excellent ratings on. Beacuse of the Standard & Poors cooperation in this scam, they were able to export our fiasco to the rest of the world, and create further demand to feed the cycle. There are plenty of indictments to go round if they REALLY investigate, but we shall see if they throw a few token people at the failed investment banker to the wolves and call it success.

[LuckyBlessed]

10:40 PM on 06/19/2008

Very true SkepticalinDenver. What killed me is the comment from a link above in the article.
"That alleged fraud includes misstatement of income or assets, forged documents, inflated appraisals and misrepresentation of a buyer's intent to occupy a property as a primary residence."

The prisons could be full tomorrow, if the above were truly the reason the BS execs were going to jail. I can't tell you how much I saw, went to my boss, got chastized, everyone turned a blind eye for the money and anyone who spoke out better be so dam- good that they won't get rid of you. And if you go to the feds? The depths of my experiences in the mortgage biz, I don't even know how to explain it, it has been like going through Dantes Inferno. I don't know if I will ever be able to trust working for a corporation again.

My boss loved the line that the mortgage business isn't black and white, it's gray.

This BS thing, just a crumb thrown to the angry masses.

[sowhatdemos]

01:15 AM on 06/20/2008

Makes you sick after a while doesn't it?
You're right not to trust anything corporate. You probably have too much soul to work for corporate america. Walk away my friend and don't look back. That's what I did and I'm happy for it.

[speakeasy]

09:54 AM on 06/20/2008

The only error in your post is that Realtors cannot put together deals for byers, as a matter of fact, they needed to be pre-quailified from a mortgage co before looking at a home or even making an offer. This is not to say that Realtors weren't culpable for assisting in the drive up of home prices, but that is a different subject than this article, which may or may not lead to regulation for that aspect of the home sale.

[skepticalindenver]

02:15 PM on 06/20/2008

Sorry, but that just isn't true. Very rarely does anyone need to be prequalified to look at a home. Beyond that, Realtors pushed this debacle as much as anyone. Ask appraisers and mortgage brokers, realtors would steer their business to people that would make the deals work no matter how bad they were. I know what I'm talking about here. Not olny have I bought and sold enough real estate to know, I have been a licensed Realtor as well.

[olgraydawg]

09:51 PM on 06/19/2008

The Reagan Revoulution has given us so much to be thankful for. The oil companies will rule the world when they, thru whichever fronts they use buy the mortgage companies, then banks. Oh Lord, won't it be grand.

[reunionpi]

09:50 PM on 06/19/2008

Bears Stearns overdue New York State Tax Warrant from 1991

http://webofdeception.com/bearstearnstaxwarrant.html

[CTtransplant]

09:32 PM on 06/19/2008

http://www.progressivehistorians.com/2007/11/bill-clintons-role-in-mortgage-crisis.html

[Dadoodaman]

09:26 PM on 06/19/2008

If this had been a violent crime and the perp was black, no way would he be left to get himself to jail.

Serious white collar crime needs to be treated like the violent crime it is: financial rape and murder; unnamed people are financially raped and in some cases murdered (i.e., no financial life remaining) by these corrupt con artists. They should be treated like any other thug gangsta.

[nighthawk808]

03:59 AM on 06/20/2008

In the US, if you steal $200, you're a criminal. If you steal $200,000,000, you're a CEO.

[Vinca]

07:42 AM on 06/20/2008

To nighthawk808: YOU GOT IT RIGHT!

[Ron]

09:26 PM on 06/19/2008

Now if they would start a "Operation Malicious War" and round up the criminals involed in starting a war based on fraud, and hold them finnancually accountable for their intentional waste of our resources, and misleading the amrican people. They are no different then the mortgage scam artist telling people lies.