08/17/2011 04:03 pm ET | Updated Oct 17, 2011

Bryan Gardner Charged With 'Using' Treasury Secretary's Account To Pay Off Mortgage

The housing boom and bust brought forth many accounts of mortgage fraud — but it's only recently that the absurdity of some schemes is coming to light.

A 35 year-old Maryland man, Bryan Gardner, has been charged with successfully paying his $353,000 Citibank mortgage with a false money order backed from then Secretary of the Treasury Henry M. Paulson, Jr. in 2009, Fox News reports. Law enforcement and fraud experts alike are stunned that the scam worked for Gardner who signed the order simply as Paulson's "Authorized Representative."

After fraudulently purchasing the Bowie, Maryland home with the money order, Gardner reportedly sold it for $254,900 within a matter of months before he "distributed the proceeds to others," according to the Secret Service affadavit. Perhaps more absurd than the ruse itself, is that it was Gardner's second time attempting it. He found success on his second try by slightly raising the amount of the money order, court documents say.

"I've never heard of a case where a mortgage for such a large amount was satisfied with a fraudulent instrument -- an instrument that's so on-its-face fraudulent," Paul Pelletier, a former top-ranking official in the Fraud division of the Justice Department, told Fox News. "You'd be amazed at how many people try and pass off [fraudulent] stuff. But does it ever work? No, it rarely works."

Indeed, Gardner's case, which now awaits grand jury indictment on the charge of one count of mail fraud, is a twist on the many mortgage fraud cases that are now surfacing. The majority of mortgage fraud occurs on the side of the banks, with lenders often embellishing the financial statuses of customers so that they qualify for a loan. According to the Treasury bureau dedicated to illegal financial activity, Financial Crimes Enforcement Network, mortgage fraud reports are up 31 percent in the 1st quarter this year, most of which are incidents that were perpetrated at the height of the housing boom, as far back as 2006.

With an $156 million mortgage fraud settlement by JPMorgan and one worth $8.5 billion by Bank of America this year, mortgage fraud, and how to deal with it, remains an ongoing concern. The FBI is confident in recent anti-mortgage measures but others say they've disproportionately targeted low-level employees and anomalies like Bryan Gardner rather than punishing the banks themselves.

According to real estate firm CoreLogic, more than $10 billion in loans were given using false application data in 2010.