Huffpost Business
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

The Center for Public Integrity Headshot

FBI Brags About Chasing Down Mortgage Fraudsters But Big Banks Are Left Untouched

Posted: Updated:
FBI MORTGAGE FRAUD
Getty

By and ,


In a new report , the Federal Bureau of Investigation pats itself on the back for using "sophisticated investigative techniques" to target mortgage fraudsters. The FBI's 2010 "Year in Review" mortgage fraud report says the agency has used wiretaps, undercover operatives and "tactical analysis coupled with advanced statistical correlations and computer technologies."

Not everyone is impressed.

Consumer advocates say the FBI is missing the big picture, focusing its investigative muscle on small-time crooks and turning a blind eye to misconduct by big banks.

While millions of homeowners have been put at risk by dishonest tactics used by the mortgage industry, these advocates say, the FBI has targeted low-level lender employees and street-level fraudsters.

Richard Eskow, a senior fellow with the Campaign for America's Future, a progressive think tank, calls the new report the latest example of the "pseudo-investigatory approach" of the FBI, the Justice Department and the Obama administration in the aftermath of the mortgage meltdown.

"The only thing worse than doing nothing is to do what they've done―try to hoodwink the public into thinking they're doing something," Eskow told iWatch News.

The Obama administration, Eskow claims, has taken the view that the nation's largest banks are too important to the economy to be threatened by criminal investigations and indictments. "Too Big to Fail," he says, also means "Too Big to Jail."

A telephone call to the White House press office Monday afternoon wasn't immediately returned.

The FBI did not immediately respond to a request for comment from iWatch, but said in its report that it has "continued to dedicate significant resources" to the threat of mortgage fraud.

"The FBI continues to enhance liaison partnerships within the mortgage industry and law enforcement," the report says. "As part of the effort to address mortgage fraud, the FBI continues to support 25 mortgage fraud task forces and 67 working groups."

There were 3,129 pending mortgage fraud investigations in fiscal year 2010, a 12 percent increase from 2009 and a 90 percent increase from 2008. According to FBI data, 71 percent of all pending investigations involved dollar losses of more than $1 million.

The FBI offices most active in investigating mortgage fraud were Las Vegas, Los Angeles, New York, Tampa, Detroit, Washington, Miami, San Francisco, Chicago, and Salt Lake City, the agency said.

The report says mortgage fraudsters "recruit people who have access to tools that enable them to falsify bank statements, produce deposit verifications on bank letterhead, originate loans by falsifying income levels, engage in the illegal transfer of property, produce fraudulent tax return documents, and engage in various other forms of fraudulent activities."

Suspicious Activities

One source of information that the FBI uses to launch investigations are Suspicious Activity Reports, or SARs, filed when a financial institution sees suspicious behavior or patterns of questionable transactions. The Financial Crimes Enforcement Network, or FinCEN, an arm of the Treasury Department, tallies the reports. While SARs are far from a guarantee that a crime has taken place, their numbers are considered important indicators of trends. As iWatch News previously reported , the increase in SARs could be leading to more mortgage fraud investigations.

Continue this story and read more investigations at iWatch News