Category Archives: Fraud

Where’d They Go? My monies Gone…

Find Them…

I was working with a very close Financial Consultant this last week who shared a story with me.  The story takes place all over the world.  But this is how it began…

Michael was a longtime friend.  He owned an education company that helped educate the handicap and those with disabilities.  In early 2011, he sold his shares in the company and decided he was going to move to the great northwest.

He had waited most of his life to enjoy his retirement and decided to invest into a Fund that was returning yields upwards of 23% monthly.   He invested 2/3 of his considerable savings and was more than satisfied with the initial returns.  Which lasted about six months.  And then…Gone…

The investment group he was working with decided they no longer were going to pay dividends to any of their clients and closed shop!  To Michael’s dismay all contact ceased and no responses from emails.  When Michael flew over to London, he found out the investment group was no longer at the address they were purported to be at.

In fact, while he was there, he went out to RipoffReport.com and found out that this company had scammed many clients and was considered a ponzi scheme.  No one was real in the entire company!  They took investor’s funds and then disappeared with no further trace; as far as the lay person could discern.

At this point, Michael hired a legal firm and began the attempt of recovering his money.  $32,000 later and a lot of travelling, no luck… not one penny recovered… just a lot of headaches and a lot of time wasted… not to mention good money spent on bad money.

This is a scenario that we see again and again; globally!  Before you invest your money find out were the money is actually going.  No matter how big the company seems, do your due diligence correctly.  It is necessary in order to recover funds later, to know where they may have went.

That is one of the many purposes that UNITY ONE, Inc. exists.  We are group of highly specialized investigators who have made a living hunting down criminals around the world who have purloined funds from innocent investors.  Our agents have designed a specialized process for tracking and verifying individuals globally.

The next time you decide to invest… Call us first!  We are here to protect your monies long before they come up missing.  In the event you are reading this and your money has already come up short, call us as soon as you can, in this business time will cost you money.

http://www.UNITYONEINC.com

FBI Report

The FBI Mortgage Fraud Overview

In 2009, the continuing deterioration of the real estate market and the dramatic rise in mortgage delinquencies and foreclosures helped fuel the financial crisis and exposed fraudulent practices that were prevalent throughout the mortgage industry. Weak underwriting standards and unsound risk management practices, which had allowed mortgage fraud perpetrators to exploit lending institutions and avoid detection, became evident once the housing market began declining in 2006.

Mortgage fraud schemes employ some type of material misstatement,
misrepresentation, or omission relating to the property or potential borrower which is relied on by an underwriter or lender to fund, purchase, or insure a loan. These misstatements, misrepresentations, or omissions are indicative of mortgage fraud and include the following:

  • Inflated Appraisals
  • Fictitious/Stolen Identities
  • Nominee/Straw Buyers
  • False Loan Application
  • Fraudulent Supporting Loan Documentation
  • Kickbacks

Although there are many different types of schemes, mortgage fraud can be summarized as a form of bank robbery where the bank is not even aware it has been robbed until months or years later. Mortgage fraud perpetrators often obtain loans based on falsely representing the value of the collateral or their qualifications to receive the loan and steal the proceeds without an intention of repaying the borrowed funds. Lending institutions are subsequently left holding the inflated collateral and incurring significant losses.

Mortgage fraud is a part of the FIF subprogram within the FBI’s WCCP. The FBI investigates mortgage fraud in two distinct areas: Fraud for Profit, and Fraud for Housing. Those who commit mortgage fraud for profit are often industry insiders using their specialized knowledge or authority to commit or facilitate the fraud. Current investigations and widespread reporting indicate a high percentage of mortgage fraud involves collusion by industry insiders, such as appraisers, mortgage brokers, attorneys, loan originators, and other professionals engaged in the industry. Fraud for Housing typically represents illegal actions conducted solely by the borrower, who is motivated to acquire and maintain ownership of a house under false pretenses such as misrepresented income and asset information on a loan application.

One of the ways the FBI becomes aware of mortgage fraud is through the analysis of Suspicious Activity Reports (SARs), which are filed by federally-insured financial institutions. Mortgage fraud SARs have increased from 6,936 in FY 2003 to 67,190 in FY 2009. These SARs provide valuable intelligence in mortgage fraud trends and can lead to the initiation of mortgage fraud cases, as well as the enhancement of current FBI investigations.

In response to the increase in mortgage fraud, the FBI has continued to add investigative resources to combat the mortgage fraud problem. In December 2008, the FBI dedicated resources to create the NMFT at FBI Headquarters in Washington, D.C. The NMFT has the specific responsibility for all management of the mortgage fraud program at both the origination and corporate level. The NMFT assists the field offices in addressing the mortgage fraud problem at all levels. The current financial crisis, however, has required the FBI to move resources from other WCC and criminal programs in order to appropriately address the crime problem. Since January 2007, the FBI has increased its agent and analyst manpower working mortgage fraud investigations. The NMFT provides tools to identify the most egregious mortgage fraud perpetrators, prioritize pending investigations, and provide information to evaluate where additional manpower is needed.

In September 2009, the FBI established the Financial Intelligence Center (FIC) to provide tactical analysis of intelligence datasets and financial databases. The FIC uses evolving technology and data exploitation techniques to create targeting packages to identify the most egregious criminal enterprises and to enhance current criminal investigations. The FIC has worked jointly with the NMFT to assist the field offices by creating mortgage fraud targeting packages.

One of the best tools the FBI has in its arsenal for combating mortgage fraud is its long-standing partnerships with other federal, state, and local law enforcement. This is not a new tool employed by the FBI. Collaboration, communication, and information sharing have long been a proven solution to the nation’s most difficult crimes. In response to a growing gang problem, for example, the FBI formed Safe Streets Task Forces across the country. In response to crimes in Indian Country, the FBI developed the Safe Trails Task Force Program. In response to this new threat, the FBI created Mortgage Fraud Task Forces (MFTF) and Mortgage Fraud Working Groups (MFWG). As of FY 2009, there are 15 MFTFs and 62 MFWGs across the country. With representatives of federal, state, and local law enforcement, these task forces and working groups are strategically placed in locations identified as high-threat areas for mortgage fraud. Partners are varied but typically include representatives of the Federal Deposit Insurance Corporation-OIG, the USPIS, the IRS-CID, FinCEN, and the HUD-OIG, as well as state and local law enforcement officers across the nation.

While the FBI has increased the number of agents around the country who investigate mortgage fraud cases from 120 Special Agents in FY 2007 to 300 Special Agents in FY 2009, this multiagency model serves as a force-multiplier, providing an array of resources to adequately identify the source of the fraud, as well as finding the most effective way to prosecute each case, particularly in active markets where fraud is widespread. We are pleased to report that the model is working.

From the end of January 2009 through October 31, 2009, the FBI and DOJ orchestrated a coordinated mortgage fraud “surge” in the FBI’s Jacksonville and Tampa Divisions. The “surge” specifically targeted industry insiders, including loan brokers, lenders, and real estate agents engaged in a variety of mortgage fraud schemes. This effort resulted in charges against more than 100 defendants. The charges involved more than $400 million in loans on more than 700 properties allegedly procured through fraud. This “surge” was launched in response to the epidemic of mortgage fraud throughout the state of Florida. To address this problem, the FBI divisions in both Tampa and Jacksonville, along with the USAO in the Middle District of Florida, began an intensive effort to identify, investigate, and prosecute mortgage fraud in all of its forms. These efforts were led by an FBI MFTF in Florida and involved the cooperation of multiple federal, state, and local law enforcement and governmental agencies.

These valuable partnerships have been instrumental in orchestrating national mortgage fraud takedowns, or “sweeps,” during the last few years. By coordinating a number of smaller mortgage fraud cases into a nationwide takedown, the FBI and its partners have been able to raise public awareness of its enforcement efforts and send a strong message aimed at deterring future fraud. These takedowns include Operation Malicious Mortgage in 2008, which resulted in charges against more than 400 defendants in cases across the nation; Operation Quick Flip in 2005, resulting in approximately 156 mortgage fraud defendants; and Operation Continued Action in 2004, which was responsible for initiating more than 150 cases in more than 35 states. Each operation was a success because of the coordination between the FBI and all of its federal, state, and local law enforcement partners.

In addition to the effort placed in creating these task forces and working groups, the FBI is one of the DOJ participants in the national MFWG which meets monthly within Washington, D.C. The national MFWG represents the collaborative effort of multiple federal agencies and facilitates the information-sharing process across the aforementioned agencies, as well as private organizations. Together, we are building on existing FBI intelligence databases to identify large industry insiders and criminal enterprises conducting systemic mortgage fraud.

The FBI has also partnered with a new interagency FFETF to combat financial crime. The FFETF, which is chaired by the Attorney General, is designed to strengthen the collective efforts of federal, state, and local partners to investigate and prosecute significant financial crimes relating to the current financial crisis; to recover ill-gotten gains; and to ensure just and effective punishment for those who perpetrate financial crimes. The mission of the FFETF is not just to hold accountable those who helped bring about the financial meltdown, but to help prevent another meltdown from happening.

In short, the FBI remains committed to its responsibility to aggressively investigate mortgage fraud, as well as engage with the mortgage industry in identifying fraud trends and educating the public. To maximize our current resources, we are relying on intelligence collection and analysis to identify emerging trends and egregious offenders. We will also continue to rely heavily on the strong relationships we have with both our law enforcement and regulatory agency partners to combat mortgage fraud and to target, disrupt, and dismantle the criminal organizations and individuals engaging in these fraud schemes.

Regional analysis of SARs containing mortgage fraud violations indicate the Western region of the United States led the nation with 38 percent of mortgage fraud‑related SARs filed during FY 2009. Southeastern, North Central, Northeastern, and South Central regions had 28, 17, 11, and 6 percent, respectively, of mortgage fraud-related SAR filings. FBI pending cases indicate the Western region also had the majority of mortgage fraud cases, with 29 percent during 2009. The Southeastern, North Central, Northeastern, and South Central regions had 24, 20, 15, and 12 percent, respectively.

Dollar Losses Reported of Mortgage Related Fraud SARs

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Dollar Losses in Millions

Number of Violations of Mortgage Related Fraud SARs Reported

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II. Overall Accomplishments

Through FY 2009, 2,794 cases resulted in 822 indictments and 494 convictions of mortgage fraud criminals. The following notable statistical accomplishments are reflective in FY 2009 for mortgage fraud: $2.5 billion in restitutions, $7.5 million in recoveries, and $58.4 million in fines; 128 seizures valued at $5.06 million and 226 criminal indicted assets valued at $510.1 million. The chart below reflects mortgage fraud pending cases from FY 2005 through FY 2009 as follows: FY 2005—721 cases; FY 2006—818 cases; FY 2007—1,204 cases; FY 2008—1,644 cases; and FY 2009—2,794 cases.

Mortgage Fraud

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III. Significant Cases

Wayne Puff, Affordable Homes Corp. (Newark): From 1998 to 2005, Puff and his coconspirators recruited 1,200 investors from across the country, who poured $123.3 million into New Jersey Affordable Homes Corp. (NJAH). Mr. Puff drew investors by advertising guaranteed annual returns of 15 to 20 percent from his business of buying, renovating, and reselling real estate. The scheme relied on false claims of the company’s profits and phony mortgage documents. Puff’s co-conspirators included John Kurzel, an NJAH mortgage loan processor, who was sentenced to 20 months in prison; Michael Meehan, a former licensed real estate appraiser, and Anthony Natale, a closing attorney, who were both sentenced to 30 months in prison; Mitchell Fishman, an attorney, and Lucesita Santiago, an NJAH account manager, who were both sentenced to 18 months in prison; and Sydney Raposo, a paralegal for Natale, who was sentenced to six months’ home detention. Two defendants are awaiting sentencing. On January 15, 2010, Wayne Puff, the founder of NJAH, a purported real estate investment business, was sentenced to 18 years in prison for defrauding mortgage lenders and investors.

Viktor Kobzar, Kobay Financial (Seattle): Vladislav Baydovskiy, Kobzar and others purchased luxury homes and flipped them to straw buyers, or otherwise unqualified borrowers, using false W-2s, paystubs, bank statements, tax returns, and other fraudulent documents. The loans were brokered through Kobay Financial, which was operated by Baydovskiy and Kobzar. Kobay Financial ceased operations and became Nationwide Home Lending, operated by Alla Sobol, Baydovskiy, and Kobzar. The conspirators closed the loans at Emerald City Escrow, which enabled the subjects to direct loan proceeds to themselves and others. David Sobol (Alla Sobol’s husband) and Donata Baydovskiy, aka Netta Brenner (Vladislav Baydovskiy’s wife), operated Emerald City Escrow. Brenner and David Sobol assisted in the fraud by preparing double and triple HUD-1 forms to conceal the true loan disbursements and acted as a notary for many transactions. Wade Entezar, a builder, also participated in the fraud scheme. The investigation identified $9 million in loan proceeds diverted to the subjects. Approximately 400 loans were brokered by Kobay/Nationwide, and most are pending review. In addition to Kobzar, Vladislav Baydovskiy, a former mortgage broker, was sentenced to five years in prison; Camie Byron, a loan officer, Alla Sobol, a mortgage broker, and David Sobol, a real estate agent, were each sentenced to two years in prison; Sandra Thorpe, an accountant, was sentenced to probation and 200 hours of community service; and Donata Baydovskiy was sentenced to 265 days in prison and two months of home detention. On January 8, 2010, Victor Kobzar was sentenced to five years in prison for his role as a mortgage broker in a mortgage fraud conspiracy involving at least 68 fraudulent loans resulting in $46 million in loan proceeds.

Robert A. Penn; Stephen S. Brown; Tamara E. Scott (Indianapolis):Between November 2003 and August 2005, Penn, with the aid of Stephen Brown and Tamara Scott, solicited and obtained at least 136 loans from various lenders including Argent Mortgage Company, The MoneyStation, and People’s Choice Mortgage/Countrywide Home Loans. Brown was responsible for submitting approximately 43 fraudulent loan applications supported by false documents and inflated appraisals, for which he received between $1,500 and $2,000 per application. Tamara Scott was responsible for attending the mortgage closings, signing fraudulent documents, and receiving checks for loan proceeds. Scott participated in approximately 130 of the fraudulent loans. Brown was sentenced to 37 months in prison and Scott was sentenced to 24 months. In addition, restitution was ordered to be paid by Penn in the amount of $11,411,722; Scott in the amount of $2,793,412; and Brown in the amount of $11,122,891. On January 7, 2010, Robert Penn was sentenced to seven years in prison for his role in brokering approximately $16 million on at least 136 fraudulent mortgages through his various business entities.

IV. Mortgage Fraud Schemes and Trends

Illegal Property Flipping - Property is purchased, falsely appraised at a higher value, and then quickly sold. What makes property flipping illegal is the appraisal information is fraudulent. The schemes typically involve one or more of the following: fraudulent appraisals, falsified loan documentation, inflated buyer income, etc. Kickbacks to buyers, investors, property/loan brokers, appraisers, and title company employees are common in this scheme.

Foreclosure Rescue Schemes—The perpetrators identify homeowners who are in foreclosure or at risk of defaulting on their mortgage loan. The perpetrators then mislead the homeowners into believing they can save their homes by transferring the deed or putting the property in the name of an investor. The perpetrators profit by selling the property to an investor or straw borrower, creating equity using a fraudulent appraisal, and stealing the seller proceeds or fees paid by the homeowners. The homeowners are told they can pay rent for at least a year and repurchase the property once their credit has been reestablished. However, the perpetrators fail to make the mortgage payments and usually the property goes into foreclosure.

Loan Modification Programs—Scammers purport to assist homeowners who are delinquent in their mortgage payments and are on the verge of losing their home by offering to renegotiate the terms of the homeowners’ loan with the lender. The scammers, however, demand large fees up-front and often negotiate unfavorable terms for the clients, or do not negotiate at all. Usually, the homeowners ultimately lose their homes. This scheme is similar to a foreclosure rescue scam.

Builder Bailout/Condo Conversion—Builders facing rising inventory and declining demand for newly constructed homes employ bailout schemes to offset losses. Builders find buyers who obtain loans for the properties. The buyers then allow the properties to go into foreclosure. In a condo-conversion scheme, apartment complexes purchased by developers during a housing boom are converted into condos. When the market declines, developers have excess inventory of units. Developers recruit straw buyers with cash-back incentives and inflate the value of the condos to obtain a larger sales price at closing. In addition to failing to disclose the cash-back incentives to the lender, the straw buyers’ income and asset information are often inflated in order for them to qualify for properties that they otherwise would be ineligible or unqualified to purchase.

Equity Skimming—An investor may use a straw buyer, false income documents, and false credit reports to obtain a mortgage loan in the straw buyer’s name. Subsequent to closing, the straw buyer signs the property over to the investor in a quit claim deed which relinquishes all rights to the property and provides no guaranty to title. The investor does not make any mortgage payments and rents the property until foreclosure takes place several months later.

Silent Second—The buyer of a property borrows the down payment from the seller through the issuance of a nondisclosed second mortgage. The primary lender believes the borrower has invested his own money in the down payment, when in fact, it is borrowed. The second mortgage may not be recorded to further conceal its status from the primary lender.

Home Equity Conversion Mortgage (HECM)- An HECM is a reverse mortgage loan product insured by the Federal Housing Administration (FHA) to borrowers who are 62 years or older, own their own property (or have a small mortgage balance), occupy the property as their primary residence, and participate in HECM counseling. It provides homeowners access to equity in their homes usually in a lump sum payment. Perpetrators recruit seniors through local churches, investment seminars, and television, radio, billboard, and mailer advertisements. The scammers then obtain an HECM in the name of the recruited homeowner to convert equity in the homes into cash. The scammers keep the cash and pay a fee to the senior citizen or take the full amount unbeknownst to the senior citizen. No loan payment or repayment is required until the borrower no longer uses the house as a primary residence. In the scheme, the appraisals on the home are vastly inflated and the lender does not detect the fraud until the homeowner dies and the true value of the property is discovered.

Commercial Real Estate Loans—Owners of distressed commercial real estate obtain financing by creating bogus leases and using these fake leases to exaggerate the building’s profitability, thus inflating their appraisal values using the income method approach. These false leases and appraisals trick lenders into extending loans to the owner. As cash flows are restricted to the borrower, property repairs are neglected. By the time the commercial loans are in default, the lender is oftentimes left with dilapidated and unusable or difficult to rent commercial property. Many of the methods of committing mortgage fraud that are found in residential real estate are also present in commercial loan fraud.

Neighborhood Stabilization Program (NSP)—The NSP is a HUD program in which block grants are paid to states, local governments, and nonprofit organizations to encourage the purchase and redevelopment of foreclosed and abandoned properties. Scammers establish nonprofit organizations using shell companies in order to appear qualified to receive grants through the NSP. Additionally, individuals perpetrate traditional loan origination schemes such as false statements and invoices in order to receive funding. Instead of using the funds for redevelopment, the funds are used to enrich the perpetrators.

First-Time Homebuyer Rebate Scheme—Perpetrators take advantage of the American Recovery and Reinvestment Act of 2009 (Stimulus Plan) authorizing a tax credit of up to $8,000 for qualified first-time homebuyers. Subjects create false first-time homebuyer credit claims using the personal information of others, such as relatives or recruited individuals, and receive a check for $8,000 either in the mail or deposited directly into their accounts. Also, scammers obtain the rebates prior to closing and then cancel the real estate contract.

Air Loans—This is a nonexistent property loan where there is usually no collateral. An example of an air loan would be where a broker invents borrowers and properties, establishes accounts for payments, and maintains custodial accounts for escrows. They may set up an office with a bank of telephones, each one used as the fake employer, appraiser, credit agency, etc., to fraudulently deceive creditors who attempt to verify information on loan applications.

Mortgage Debt Elimination Schemes

  • Be aware of e-mails, or web-based advertisements, that promote the elimination of mortgage loans, credit card, and other debts while requesting an up-front fee to prepare documents to satisfy the debt. The documents are typically entitled Declaration of Voidance, Bond for Discharge of Debt, Bill of Exchange, Due Bill, Redemption Certificate, or other similar variations. These documents do not achieve what they purport.
  • There is no easy method to relieve your debts.
  • Borrowers may end up paying thousands of dollars in fees without the elimination or reduction of any debt.

Foreclosure Fraud Schemes

  • Be aware of offers to “save” homeowners who are at risk of defaulting on loans, or whose houses are already in foreclosure.
  • Seek a qualified credit counselor or attorney to assist.

Predatory Lending Schemes

  • Before purchasing a home, research information about prices of homes in the neighborhood.
  • Shop for a lender and compare costs. Beware of lenders who tell you that they are your only chance of getting a loan or owning your own home.
  • Beware of “No Money Down” loans. This is a gimmick used to entice consumers to purchase property that they likely cannot afford or are not qualified to purchase. Be wary of mortgage professionals who falsely alter information to qualify the consumer for the loan.
  • Do not let anyone convince you to borrow more money than you can afford to repay.
  • Do not let anyone persuade you into making a false statement, such as overstating your income, the source of your down payment, or the nature and length of your employment.
  • Never sign a blank document or a document containing blanks.
  • Read and carefully review all loan documents signed at closing or prior to closing for accuracy, completeness, and omissions.
  • Be aware of cost, or loan terms, at closing that are not what you agreed to.
  • Do not sign anything you do not understand.
  • Be suspicious if the cost of a home improvement goes up in the event you accept the contractor’s financing.
  • If it sounds too good to be true–it probably is!

Mortgage Fraud Prevention Measures
Tips to protect Yourself against Mortgage Fraud

  • Get referrals for real estate and mortgage professionals. Check the licenses of the industry professionals with state, county, or city regulatory agencies.
  • An outrageous promise of extraordinary profit in a short period of time signals a problem.
  • Be wary of strangers and unsolicited contacts, as well as high-pressure sales techniques.
  • Look at written information to include recent comparable sales in the area, and other documents such as tax assessments to verify the value of the property.
  • Understand what you are signing and agreeing to. If you do not understand, re-read the documents or seek assistance from an attorney or third party.
  • Review the title history of the home you are anticipating to purchase to determine if the property has been sold multiple times within a short period. It could mean that this property has been “flipped,” and the value falsely inflated.
  • Know and understand the terms of your mortgage. Check your personal information against the information as listed on the loan documents to ensure it is accurate and complete.
  • Never sign any loan documents that contain “blanks.” This leaves you vulnerable
    to fraud.
  • Check out the tips on the Mortgage Bankers Association’s (MBA) website at http://www.StopMortgageFraud.com for additional advice on avoiding Mortgage Fraud.

Insurance Fraud

I. General Overview

Insurance fraud continues to be an investigative priority for the FBI, due in large part to the insurance industry’s significant role in the U.S. economy. The U.S. insurance industry consists of thousands of companies and collects nearly $1 trillion in premiums each year. The size of the industry, unfortunately, makes it a prime target for criminal activity; the Coalition Against Insurance Fraud (CAIF) estimates that the cost of fraud in the industry is as high as $80 billion each year. This cost is passed on to consumers in the form of higher premiums.

The downturn in the U.S. economy due to the financial crisis has led to an increase in insurance fraud. The FBI continues to identify the most prevalent schemes and the top echelon criminals defrauding the insurance industry in an effort to reduce insurance fraud. The FBI works closely with the National Association of Insurance Commissioners, NICB, CAIF, as well as state fraud bureaus, state insurance regulators, and other federal agencies to combat Insurance Fraud. In addition, the FBI is a member of the International Association of Insurance Fraud Agencies, an international nonprofit organization whose mission is to maintain an international presence to address insurance and insurance-related financial crimes on a global basis. Currently, the FBI is focusing a majority of its resources relating to insurance fraud on the following schemes:

Insurance-Related Corporate Fraud—Although corporate fraud is not unique to any particular industry, there have been instances involving insurance companies caught in the web of these schemes. The temptations for fraud within the corporate industry can be greater during periods of financial downturns. Insurance companies hold customer premiums which are forbidden from operational use by the company. However, when funding is needed, unscrupulous executives invade the premium accounts in order to pay corporate expenses. This leads to financial statement fraud because the company is required to “cover its tracks” to conceal the improper utilization of customer premium funds.

Premium Diversion/Unauthorized Entities- The most common type of fraud involves insurance agents and brokers diverting policyholder premiums for their own benefit. Additionally, there are a growing number of unauthorized and unregistered entities engaged in the sale of insurance-related products. As the insurance industry becomes open to foreign players, regulation becomes more difficult. Additionally, exponentially rising insurance costs in certain areas (i.e., terrorism insurance, directors’/officers’ insurance, and corporations), increase the possibility for this type of fraud.

Viatical Settlement Fraud- A viatical settlement is a discounted, pre-death sale of an existing life insurance policy on the life of a person known to have a terminal condition. The parties to a viatical settlement include the insured party, insurance agent/broker, insurance company, viatical company/broker, and the investor. Viatical settlement fraud occurs when misrepresentations are made on the insurance policy applications, in effect, hiding the fact that the party applying for a policy has already been diagnosed with a terminal condition. On the investor end, the fraud occurs when misrepresentations are made to the investors by the viatical companies about life expectancies of insured parties and guaranteed high rates of return.

Workers’ Compensation Fraud—The Professional Employer Organization (PEO) industry operates chiefly to provide workers’ compensation insurance coverage to small businesses by pooling businesses together to obtain reasonable rates. Workers’ compensation insurance accounts for as much as 46 percent of small business owners’ general operating expenses. Due to this, small business owners have an incentive to shop workers’ compensation insurance on a regular basis. This has made it ripe for entities that purport to provide workers’ compensation insurance to enter the marketplace, offer reduced premium rates, and misappropriate funds without providing insurance. The focus of these investigations is on allegations that numerous entities within the PEO industry are selling unauthorized and non-admitted workers’ compensation coverage to businesses across the United States. This insurance fraud scheme has left injured and deceased victims without workers’ compensation coverage to pay their medical bills.

With the cooperation of the insurance industry, through referrals from industry liaison and other law enforcement agencies, the FBI continues to target the individuals and organizations committing insurance fraud. The FBI continues to initiate and conduct traditional investigations as well as utilize sophisticated techniques, to include undercover investigations, to apprehend the fraudsters.

Disaster Fraud— When a disaster occurs, there are many organizations and individuals soliciting contributions for the victims of this disaster. Most of the organizations and individuals involved are legitimate; however, there are some who are not. Victims may be approached by unsolicited e-mails asking for donations to a legitimate-sounding organization. The schemer will instruct the victim to send a donation via a money transfer. Other types of disaster fraud include false or exaggerated claims by policyholders; misclassification of flood damage as wind, fire, or theft; claims filed by individuals residing hundreds of miles outside the disaster zone; bid-rigging by contractors; falsely inflating the cost of repairs; and contractors requiring up-front payment for services, then failing to perform the agreed upon repairs.

Staged Auto Accidents—Perpetrators of staged auto accidents will either stage an accident with coconspirators, or maneuver innocent motorists into accidents. Although the resulting property damage may be small, the perpetrators make large—and illegal— claims for fake injuries and property damage. This type of fraud results in higher insurance premiums for all drivers.

Property Insurance Fraud—Perpetrators of property insurance fraud seek to obtain payment that is higher than the value of the property damaged or destroyed, or intentionally destroy property that could not be sold. Common examples include arson, scuttling of boats, and the ditching of vehicles in lakes or canals.

II. Overall Accomplishments 

During FY 2009, 152 cases investigated by the FBI resulted in 43 indictments/informations, 22 arrests, and 42 convictions of insurance fraud criminals. The following notable statistical accomplishments reflect FY 2009 for insurance fraud: $22.9 million in restitutions and $31.4 million in recoveries and $618,480 in seizures. The following reflects insurance fraud pending cases from FY 2005 through FY 2009 as follows:FY 2005—270 cases; FY 2006—233 cases; FY 2007—209 cases; FY 2008 -177 cases; and FY 2009 —152 casesAlthough the FBI has focused its efforts on higher priority WCC matters, insurance fraud investigations continue to be addressed utilizing liaison efforts in conjunction with other federal, state, and local law enforcement.

III. Significant Case

John Wayne Goff, dba The Goff Group (Birmingham): On June 2, 2009, a former insurance executive who was convicted of mail fraud, embezzlement, and filing a false report with the state insurance department was sentenced to 12 years in prison. The executive was the former owner of a company that collected workers’ compensation premiums for insurance companies. The executive willfully failed to remit to the insurance companies their fair share of the premiums. The executive unlawfully and illegally withheld approximately $3 million in premiums. The executive instead spent the money for his own personal expenditures, including an exorbitant salary, lavish lifestyle, corporate aircraft, and real estate investments. He was indicted on April 2, 2008, for 26 counts of mail fraud, embezzlement of insurance company funds, conspiracy, and false statements to a state department of insurance. He was convicted on February 18, 2009, on 23 counts of mail fraud, false statements to the state department of insurance, and embezzlement.

Mass Marketing Fraud

I. General Overview 

Mass marketing fraud is a general term for frauds which exploit mass-communication media, such as telemarketing, mass mailings, and the Internet. Since the 1930s, mass marketing has been a widely accepted and exercised practice. Advances in telecommunications and financial services technologies have further served to spur growth in mass marketing, both for legitimate business purposes, as well as for the perpetration of consumer frauds.

While these fraud schemes may take a wide variety of forms, they share a common theme: the use of false and/or deceptive representations to induce potential victims to make advance fee-type payments to fraud perpetrators. Although there are no comprehensive statistics on the subject, it is estimated mass marketing frauds victimize millions of Americans each year and generate losses in the hundreds of millions of dollars. The following is a brief description of some of the key concepts and schemes associated with the mass marketing/ advance fee fraud crime problem.

Advance Fee Fraud—This category of fraud encompasses a broad variety of schemes which are designed to induce their victims into remitting up-front payments in exchange for the promise of goods, services, and/or prizes. Some of the most prevalent schemes being encountered are the following:

Nigerian Letter Fraud—Victims are contacted regarding substantial sums of money held in foreign accounts and are requested to pay various fees to secure their transfer to the United States, in exchange for a portion of the total proceeds. Alternatively, victims are asked to act as a U.S. agent in securing the release of such funds and are provided with counterfeit instruments which are to be cashed in order to pay any required fees, only to discover they must reimburse their financial institution for cashing a counterfeit instrument. A variation of this fraud involves the use of fraudulent websites, which have been created to resemble website pages of legitimate financial institutions, to enhance the scheme’s credibility and swindle greater amounts of money from victims. The victims are directed to open accounts at the fictitious banks’ websites into which the perpetrators transfer the victims’ funds. Victims cannot withdraw or transfer the funds when they log onto the fictitious bank websites and are prompted to pay additional taxes or fees before the funds can be released. The funds are never released.

Foreign Lottery/Sweepstakes Fraud—Victims are informed they have won a substantial prize in a foreign drawing, but must remit payment for various taxes/fees to receive their winnings. Alternatively, victims are provided with counterfeit instruments, representing a portion of the winnings, which are to be cashed in order to pay the required fees, only to discover they must reimburse their financial institution for cashing a counterfeit instrument.

Overpayment Fraud—Victims who have advertised some item for sale are contacted by buyers who remit counterfeit instruments, in excess of the purchase price, for payment. The victims are told to cash the payments, deduct any expenses, and return or forward the excess funds to an individual identified by the buyer, only to discover they must reimburse their financial institution for cashing a counterfeit instrument.

Recovery Schemes—Victims are contacted by perpetrators posing as law enforcement officers, government employees, or lawyers to inform victims that the persons responsible for the original fraud schemes have been arrested or successfully sued and their bank accounts have been seized. The victims are told the seized money is going to be returned to the victims, but the victims must first pay fees for processing and administrative services. Recovery pitches often target victims many months or years after the original fraud schemes.

The predominantly transnational nature of the mass marketing fraud crime problem presents significant impediments to effective investigation by any single agency or national jurisdiction. Typically, victims will reside in one or more countries, perpetrators will operate from another, and the financial/money services infrastructure of numerous additional countries are utilized for the rapid movement and laundering of funds. For these reasons, the FBI is uniquely positioned to assist in the investigation of these frauds through its network of Legal Attache (Legat) Offices located in over 60 U.S. embassies around the world. By leveraging its global presence and network of liaison contacts, the FBI has successfully cooperated with other domestic and foreign law enforcement agencies to combat, disrupt, and dismantle international Mass Marketing Fraud groups. The FBI participates in the International Mass Marketing Fraud Working Group (IMMFWG), a multiagency working group established to facilitate the multinational exchange of information and intelligence, the coordination of cross-border operational matters, and the enhancement of public awareness of international mass marketing fraud schemes. The current membership of the IMMFWG consists of law enforcement, regulatory, and consumer protection agencies from seven countries, including Australia, Belgium, Canada, the Netherlands, Nigeria, the United Kingdom, and the United States.

Despite the best interagency enforcement efforts to combat mass marketing fraud, the FBI remains cognizant of the fact the only enduring remedy for this crime problem lies in consumer education and fraud prevention programs. Towards this end, the FBI has not only produced its own mass marketing fraud prevention pamphlet, but coordinates on other public information efforts with the DOJ, FTC, and the USPIS. The FBI also supports a consumer fraud prevention website in conjunction with the USPIS which can be located on the web at:

II. Overall Accomplishments

As of the end of FY 2009, the FBI was investigating 89 cases of mass marketing fraud and had already recorded multiple indictments and convictions. The following reflects mass marketing fraud pending cases from FY 2005 through FY 2009 as follows: FY 2005—161 cases; FY 2006—147 cases; FY 2007—127 cases; FY 2008—100 cases; and FY 2009—89 cases. Although the FBI has focused its efforts on higher priority WCC matters, mass marketing fraud investigations continue to be addressed utilizing liaison efforts in conjunction with other federal, state, and local law enforcement agencies and the IMMFWG.

III. Significant Cases

Israeli-Based Telemarketing Fraud (New York): This investigation centered on the activities of an Israeli-based boiler room. The perpetrators, all residents of Israel, contacted hundreds of elderly victims in the United States to inform them they had won substantial cash prizes in an international sweepstakes lottery, but in order to claim these prizes, they first needed to pay several thousand dollars in fees. Victims who had already sent money were often contacted again by the managers to send additional money in order to claim their prizes. The total fraud proceeds are estimated to be in excess of $2 million. During 2009, a total of eight subjects were arrested as a result of this investigation. This investigation was worked by FBI New York, in cooperation with the Tel Aviv Fraud Division of the Israel National Police. This case involves the largest number of Israeli citizens ever to be provisionally arrested by Israel in anticipation of extradition.

Vancouver-Based Telemarketing Fraud (Los Angeles): This investigation centered on the activities of a Vancouver-based fraudulent telemarketing and money transfer operation. The perpetrators, residents of Vancouver, British Columbia, mailed letters to thousands of elderly U.S. victims that falsely represented they were winners of a monetary prize, such as a lottery or sweepstakes. Included with the letters was a fraudulent check, which the perpetrators claimed was sent to help them pay some required fees. The victims were instructed to utilize a money transfer service, such as MoneyGram, to pay these fees. Many victims wired these fees before realizing that the checks they received were fraudulent. As a result of this scheme, victims lost in excess of $10 million in money transfer payments. During 2009, two subjects were arrested as a result of this investigation.

This investigation was worked by FBI Los Angeles, in cooperation with the Royal Canadian Mounted Police Project Emptor Task Force, the USPIS, and FTC.

Tips to Protect Yourself from Mass Marketing Fraud

Things you should do:

  • Insist on learning the full name, address, and contact information for any company soliciting your business, personal information, or assistance.
  • Insist that all solicitors send materials to you in writing so that you are able to study the full details of the offer, as well as any guarantees, and/or refund policies.
  • Research all solicitors through the Better Business Bureau, state Attorney General’s Office, and/or consumer protection service in the state or city where the company is located.
  • Prior to making any significant financial decisions, consult a family member, friend, your attorney, accountant, and/or other trusted advisor for an objective opinion.
  • To stop receiving telephone solicitations, instruct solicitors to delete your contact information from all call lists and register with the FTC’s “Do Not Call” Registry.
  • Report suspicious telemarketing calls, mail solicitations, or advertisements to the FTC at 1-877-FTC-HELP or online at http://www.ftc.gov.

Things you should NOT do:

  • Do not make any payments to either secure a prize or improve your chances of winning a prize.
  • Do not be intimidated into making hasty financial decisions by high-pressure sales tactics.
  • Do not provide anyone with your sensitive personal or financial information unless:
    a) it is to an entity whose legitimacy is personally known to you, and
    b) you personally initiated the contact with the entity.
  • Do not send funds via wire or electronic money transfer services unless:
    a) it is to an entity whose legitimacy is personally known to you, and
    b) you personally initiated the contact with the entity.
  • Do not be lured by offers that are simply too good to be true…they almost certainly are.

Asset Forfeiture/Money Laundering

I. General Overview

The mission of the AF/MLU is to promote the strategic use of the asset forfeiture and to ensure field offices employ the money laundering violation in all investigations, where appropriate, to disrupt and/or dismantle criminal enterprises. The asset forfeiture and money laundering process identifies targets, disrupts, and dismantles criminal and terrorist organizations and individuals engaged in fraud schemes which target our nation’s financial infrastructure.

The implementation of the asset forfeiture process to criminal investigation provides law enforcement with opportunity to remove the tools of crime from criminal organizations, deprives wrongdoers of the proceeds of their crimes, recovers property that may be used to compensate victims, and deters crimes. The asset forfeiture process can destroy the financial infrastructure of criminal enterprises, return funds to victims of large-scale fraud, and share forfeiture property with state and local law enforcement agencies.

The AF Program and the ML Program provide support to all FBI investigative programs, to include International and Domestic Terrorism.

Money Laundering

The DOJ defines money laundering in the following manner:

“Money laundering is the process by which criminals conceal or disguise the proceeds of their crimes or convert those proceeds into goods and services. It allows criminals to infuse their illegal money into the stream of commerce, thus corrupting financial institutions and the money supply, thereby giving criminal’s unwarranted economic power.”

The FBI maintains a proactive approach when investigating money
laundering. After identifying a Specified Unlawful Activity that generates illicit proceeds, a parallel financial investigation is conducted in order to locate the proceeds and prove their connection to the underlying crime.

Asset Forfeiture

The FBI’s AF Program is one of the most successful in all of law enforcement. In the WCCP, the bulk of the monies seized are returned to victims of the frauds that generated them. This is unique to the FBI and some other agencies. Most people associate the seizure and forfeiture of assets with narcotics trafficking. Although the FBI does seize assets from drug dealers and other criminals, the WCCP is the largest contributor to the FBI’s forfeiture program.

II. Overall Accomplishments: 

Through FY 2009, 350 cases investigated by the FBI resulted in 43 indictments and 84 convictions of ML fraud criminals. For FY 2009, the following ML most notable accomplishments were achieved for the WCCP: $81.9 million in restitutions, $643,000 in recoveries, and $1.5 million in fines. The chart below reflects ML pending cases from FY 2005 through FY 2009 as follows: FY 2005—507 cases; FY 2006— 473 cases; FY 2007—548 cases; FY 2008—402 cases; and FY 2009—350 cases.

Money Laundering Pending Cases

rpt2publicfy09_6.gif

III. Significant Cases

Cashtrica (New York): FBI New York Agents participated in a joint investigation with Rockland County, NY, law enforcement, targeting La Cosa Nostra (LCN) subjects that were running a multimillion-dollar Internet gambling operation out of Costa Rica. Based on experience garnered in that investigation, agents formulated a plan to attack the entire internet gambling industry by targeting all facets to include; online gaming companies, banks, money transfer businesses, and the owners of same. Significant targets included: Neteller PLC, Partygaming PLC, Sportingbet PLC, Fireone Group PLC, HSBC, Dresdner Bank, and Canaccord Capital, to name a few. As a result of investigation to date, the targets listed above, as well as several others, are fully cooperating with the FBI. Key cooperators have recently been tasked to identify companies, individuals, assets, and to conduct consensual recordings. Liaison with Legats in Canada, Europe, South America, and the Bahamas has been necessary to the success of this ongoing investigation into what has become a virtually worldwide criminal industry. This investigation thus far has obtained evidence of money laundering, mail fraud, wire fraud, bank fraud, securities fraud, credit card fraud, and illegal gambling. There has also been clear indication of an expertise in moving vast sums of money around the world while effectively masking the associated transactions. Forfeiture to date: $364,265,995.86.

Hassan Nemazee (New York): Hassan Nemazee is a multimillionaire Iranian-American investment banker. Nemazee is one of the top political donors in the United States. Nemazee obtained approximately $230,000,000 in loans from Bank of America (BoA), HSBC, and other banks. It was determined that the collateral securing the loans was based on false and misleading information. Nemazee was arrested as he was attempting to flee to Italy. A meeting was held with Daylight FAs, retained by BoA to trace the flow of illegal proceeds. Numerous seizure warrants were executed against various accounts owned/controlled by Nemazee. Having learned that they were in possession of illegal proceeds, Citibank wired $75,000,000 to the U.S. Marshals Asset Forfeiture Account for forfeiture. Plea negotiations with Nemazee’s partner are continuing, which could lead to the receipt of another $40 million.

Bernard Madoff (New York): On December 10, 2008, Bernard L. Madoff was arrested for perpetrating the largest Ponzi scheme in history, $64 billion, through the Madoff Investment Advisory (MIA). The fraud involved thousands of victims and numerous targets. The Madoff office space contained approximately 3,000 banking boxes of potential evidence; additionally, a warehouse contained approximately 9,000 more banking boxes of evidence. Madoff conspired with two computer programmers who created a proprietary software system which was used to document false trades and issue bogus statements. The system was the foundation for the Ponzi scheme. The fraudulent documents were so effective the fraud went on for decades and cleared audits by the SEC as well as major financial institutions. Various institutions and individual funds invested their clients’ funds into the Madoff Ponzi scheme. These entities are referred to as “feeder funds” because they “fed” the MIA Ponzi fraud. Without this consistent injection of capital the fraud could not have been maintained for the length of time that it was. As many as 50 funds fed the MIA. Many of the feeder fund managers appear to have been excessively compensated. Finally, Madoff used an elaborate flow of funds from domestic banks to offshore banks to cloak the fraudulent activity in the MIA.

Forensic Accountant Program

I. General Overview

In March 2009, the FBI created the Forensic Accountant Program (FAP) and instituted the Forensic Accountant Unit (FAU) within the CID, FCS. The Forensic Accountant position was developed in an effort to attract and retain top-tier accounting professionals who possess the ability to conduct complex, thorough forensic financial investigations.

The FAP is the culmination of years of effort to advance and professionalize the FBI’s financial investigative capabilities. The FBI’s FoAs will be expected to testify as expert witnesses in judicial proceedings and essentially retain ownership of the financial investigative portion of complex investigations with little guidance from the respective Case Agent(s).

The mission of the FAU is to support all FBI investigative matters requiring a forensic financial investigation and to ensure the FBI’s financial investigative priorities are continually addressed.  The FAU seeks to provide the highest caliber of financial investigative work-product and support as well as contributing to the FBI’s Intelligence Cycle. The FAU is developing and implementing a rigorous training curriculum and partnering with an array of public and private organizations in an effort to cultivate a workforce that provides superior results both in the field offices and at FBIHQ.

II. Initiatives

Forensic Accountant Core Training Session Training Course

In FY 2009, the FAU initiated development of a rigorous training curriculum titled the Forensic Accountant Core Training Session (“FACTS”). FACTS is a comprehensive introductory program of instruction designed to increase an FoA’s proficiency in the critical areas necessary to conduct a financial investigation. This extensive course will develop the FoAs aptitude and knowledge in handling a financial investigation according to pertinent rules and regulations across a wide variety of subject matters. The FAU developed the FACTS training curriculum and will be responsible for administering the training. The material covered will focus primarily on providing an overview of FBI programs and systems, financial investigative topics and techniques, resources available to develop an investigation, legal training, and expert witness-testifying techniques.

BankScan Initiative

BankScan is an in-house-created software application which translates physical bank and credit card statements into an electronic medium, thus dramatically decreasing the time-consuming data-entry process. In FY 2009, FAU deployed the BankScan training initiative, “Train the Trainer” with the goal of full field office deployment by the end of FY 2010. The Train the Trainer Initiative was completed, and each field office “Trainer” received the requisite training and was supplied with the necessary software and equipment to implement the BankScan Project. Since its implementation, the FBI has benefited through an exponential increase in financial investigative efficiency and productivity.

Electronic Subpoena Production

The Electronic Subpoena Production initiative represents a joint undertaking of the FBI’s CID, DOJ’s Criminal Division Fraud Section, and the IRS. Electronic Subpoena Production requires financial institutions to digitally produce account data stored electronically by relying on existing Rule 17 of the Federal Rules of Criminal Procedure. When used in conjunction with BankScan, the introduction of this new process will substantially increase the efficiency and effectiveness of FBI forensic financial investigations.

Financial Analyst Conversion

In FY 2009, the FAU developed a selective conversion process to transition qualified FAs to the FoAP to provide the FBI’s investigative programs with the highest caliber of financial investigative work-product and support. This effort will ensure only those individuals who meet the FoA requirements are selectively converted to the FoAP.

III. Significant Cases

The FAU has provided substantial support to major cases such as the Madoff, Stanford, and Bad Medicine (health care fraud) investigations.

Madoff Investigation: The FAU provided substantial support to the New York Field Office to address the Madoff investigation. The FAU coordinated with several field offices to provide three Forensic Accountants, equipment, and resources to support this investigation over a five-month period. The critical work performed by the FoAs significantly advanced the investigation and the respective statistical accomplishments.

Stanford Financial Group: The FAU supported Houston Field Office by providing an FA to support the Stanford Financial Group investigation. This $7 billion Ponzi scheme has resulted in numerous indictments and guilty pleas. The financial investigation performed by the FA was a key contribution in furthering this investigation.

Bad Medicine:The FAU coordinated with multiple field offices to provide three FAs to expedite this financial investigation. To date, 168 indictments charging 107 individuals have been returned. The forensic financial analysis performed by the FAs was critical to the investigation and the resulting indictments.

Scott Rothstein: The FAU augmented the Miami Field Office providing Forensic Accountants and FAs in the ongoing Scott Rothstein financial investigation. The investigation into this $1 billion Ponzi scheme was advanced by the contributions of the FAs and FoAs and contributed to the five-count indictment and the subsequent guilty plea entered by the defendant.

Acronyms

AF/MLU Asset Forfeiture/Money Laundering Unit
BCBSA Blue Cross and Blue Shield Association
BLMIS Bernard L. Madoff Investment Services, LLC
BoA Bank of America
CAIF Coalition Against Insurance Fraud
CFO Chief Financial Officer
CFTC Commodities Futures Trading Commission
CID Criminal Investigative Division
CMS Centers for Medicare and Medicaid Services
DBA Doing Business As
DEA Drug Enforcement Administration
DME Durable Medical Equipment
DOJ Department of Justice
EBRI Electronic Bank Records Initiative
ECU Economic Crimes Unit
FA Financial Analyst
FACTS Forensic Accountant Core Training Session
FAP Forensic Accountant Program
FAU Forensic Accountant Unit
FBI Federal Bureau of Investigation
FCIU Financial Crimes Intelligence Unit
FCS Financial Crimes Section
FDA Food and Drug Administration
FFETF Financial Fraud Enforcement Task Force
FHA Federal Housing Administration
FIC Financial Intelligence Center
FIF Financial Institution Fraud
FIFU Financial Institution Fraud Unit
FinCEN Financial Crimes Enforcement Network
FINRA Financial Industry Regulation Authority
FoA Forensic Accountant
FSP Forfeiture Support Project
FTC Federal Trade Commission
FY Fiscal Year
GDP Gross Domestic Product
HCF Health Care Fraud
HCFU Health Care Fraud Unit
HECM Home Equity Conversion Mortgage
HHA Home Health Agency
HHCFI Home Health Care Fraud Initiative
HHS Health and Human Services
HUD Housing and Urban Development
HYIF High Yield Investment Fraud
ICE Immigration and Customs Enforcement
IMMFWG International Mass Marketing Fraud Working Group
IPofA Investment Properties of America
IRS Internal Revenue Service
LCN La Cosa Nostra
LEGAT Legal Attache
MBA Mortgage Bankers Association
MFTF Mortgage Fraud Task Force
MFWG Mortgage Fraud Working Group
MIA Madoff Investment Advisory
NJAH New Jersey Affordable Homes
NMFT National Mortgage Fraud Team
NHCAA National Health Care Anti‑Fraud Association
NICB National Insurance Crime Bureau
NSP Neighborhood Stabilization Program
OIG Office of Inspector General
PEO Professional Employer Organization
SAR Suspicious Activity Reports
SEC Securities and Exchange Commission
SIGTARP Special Inspector General for the Trouble Asset Relief Program
STM ST Microelectronics
USAO U.S. Attorney’s Office
USPIS U.S. Postal Inspection Service
WCC White Collar Crime
WCCP White Collar Crime Program

http://www.fbi.gov/stats-services/publications/financial-crimes-report-2009/financial-crimes-report-2009#mortgage

Mortgage Fraud #2 in the series

 

Next in the story:

After the loan was secured,  Ms. Doe attempted to make payments on her mortgage for three years.   Now, can you imagine, having $2700 a month mortgage payments on a home that is, at best, worth only $121,000?

Several times, throughout the years, Ms. Doe attempted to have her loans modified so that they were reasonable and at a reasonable rate and monthly payment. The banks and loan institutions were well aware that the house was overpriced. The advice given to Ms. Doe through her loan servicer was to allow the House to go into default and at that point they would help her modify loan.

When she attempted to do this, the loan servicer immediately placed her house in foreclosure and began the threatening letters and truly domestic terrorism with an individual who is not well versed in the mortgage industry. Now, understanding that most of the homebuyers in the United States are not real estate agents nor are they banking officials.

If your servicer tells you to allow the House to go into default so that they can assist you, most individuals would allow the House to go into default.   Especially, since they’re watching the entire market crash around them.

In this case, the loan servicer actually did attempt to re-mod the loan. However, they did not take into consideration the current market value nor did they have an appraisal done on the house. The comparables in the neighborhood were substantially lower by over $200,000 then what the bank was willing to do.

Now keep this in mind as we progress throughout the story. The servicer’s realize that the value of the home is overpriced. They also realized that the tenants inside the home have owned it since it was brand-new and they take very good care of the home. However, the servicer is unwilling to work with the homeowners. They actually tell the homeowners that their placing the house into foreclosure.

At this point, Ms. Doe takes action. She engages the help of a local law firm and then has the house pulled out of foreclosure. Currently, no payments are being made on the home. The home stands empty as Ms. Doe does not wish to have her family relocated in the middle of the school year. However, her friends have advised her to short sell the house even though that would destroy her credit. While the state takes no action at all to assist.

Stay tuned for the next iteration…

Mortgage Fraud #1 in the Series

In the beginning…

In an attempt to educate the populace on Mortgage Fraud, Unity One, Inc. (UOI) will begin a series on mortgage fraud and the industry surrounding fraudulent activities involving the loan system and lending institutions.

Over the last five years, we have seen what the banking industry has done to our economy.  The mortgage crisis has become a fraud pandemic.  Sadly, the majority of the investigative agencies around the world are ignorant or incapable of investigating these types of crimes correctly.

Can you imagine that the largest financial institutions in the world and some of the greatest minds money can buy have come together to create one of the largest scams of our time period?  So large, that it has affected economies around the world.  Not the rich…it has affected the groups that couldn’t and haven’t done anything about it.  Not because they don’t want to…because no one is listening.

According to the Collins English Dictionary 10th Edition, fraud can be defined as: “deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage.” In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent.  The specific legal definition varies by legal jurisdiction.  Fraud is a crime and also a civil law violation.  Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent “discoveries”, e.g. in science, to gain prestige rather than immediate monetary gain.

Now take the definition above and imagine what would motivate an entire industry to take advantage the masses.  You guessed it…greed, at every level.

So let’s start at the beginning…where did the fraud start, for those who have lost everything?  For the purposes of this article, we will start at the street level.

The Application

Lets start here…out of the 1275 applications UOI has reviewed so far, none were without major errors and/or outright fraudulent points of fact.  We will use one example to help explain the issues we are frequently seeing.

Jane Doe (single mother, single income) made approximately $33,500.00 per year.  Found a home that she loved and wanted to buy it.  The home was $365,000.00 and in a new community.  It had 1788 square feet of space and was a 3 bedroom, 2.5-bath home on a fractional acreage lot.

Obviously, to any experienced mortgage lender/broker, this was well outside of her financial abilities.  It was also known to all involved, very overpriced.  But whose fault is it?  How did she get approved?  Was it her fault?  Who is to blame?  Lets look…

From the start, Ms. Doe didn’t stand a chance.  The inflated market was against her.  The sales people…the appraisers…the loan officers…the banks.  No one was on her side.  Everyone involved were looking at ways to secure her loan on her good credit and steal it from her…and they did.

Step 1

Identify an individual that has good credit and a down payment

Step 2

Get the individuals to apply and sell them

Step 3

Secure the loan

Step 4

Get paid and watch to see if the victim was able to make the mortgage payment.

All of this meets the definition of fraud.  The industry knew what it was doing…predatory loans…this is the first step of creating the housing bubble and the first step of the lie.

Stay tuned…we will go farther into this story.

If you have comments or an experience to share please contact UOI at http://www.unityoneinc.com.

PROTECTIVE SERVICES AND BUSINESS DEVELOPMENT

Corporation EXECUTIVES AND BUSINESS OWNER’S

 

Often business owners look at protective services as “Bodyguards or Security Patrols”.  From this myopic standpoint the full scope of Protective Services (PS) is not entirely encompassed.

As both physical and intellectual protection are certainly parts of Protective Services.  It goes much farther than that.  It touches the very basis of the business.

Owning a business is a full spectrum occupation. From accounting and bookkeeping to schedule management. Its multi-faceted requirements often are more than one person or one group can handle. Understanding this is a large part of our Protective Services division.

Imagine, having a third-party Corporation whose sole purpose is to report accurately and develop protocols to assist and profitability and business management.   While still having the latitude do provide both internal and physical security.

UNITY ONE, Inc. (UOI) a company.  We at UOI are business owners just like you.   we understand the intricacies of running a business from top to bottom. “ It’s all in the processes” by developing the correct infrastructure and identifying the correct leaders and management. UOI is able to come into any corporation or business and develop a protocol that helps check and balance both management and accounting.

Quite often the hostility or lack of productivity is due to internal structuring of a company.  From the initial evaluation to the implementation of new processes the change can be felt immediately.

Consider using a third party company such as ours the next time you are looking at a way to develop your business. You may be surprised to find that Protective Services is considerably broader than originally thought.

CONTACT:

UNITY ONE, Inc.

info@unity-one.us
http://www.unityoneinc.com
888.407.7009

Winning the fraud game, the criminals already have a head start on you!

The following excerpt was taken from the IFC Website and is paraphrased for our readers:

“Fraud, financial fraud in particular, in the history of economic development (the theft of an individuals) corporate’s or government funds has a more detrimental effect on all involved.  Nothing has exposed more of the vulnerability of systems, the weaknesses of inefficiently applied know your customer rules, the lack of diligence in corresponding banking and the severe lack of information sharing between different sectors and institutions. Organized crime and sophisticated terrorist networks exploit the weak systems, personnel and inferior technology. In addition, ineffective regulation and toothless legislation have impeded governments and regulations alike and only now are institutions beginning to look much more closely together and help to create a common and effective collaborative framework.”

It is incumbent upon the individual investor and investment groups to conduct the majority of the due diligence ahead of time before presenting it as an investment. Contrary to popular belief most investments that are presented are fraudulent. Often, the intermediaries, the brokers, and those who are doing nothing more than introductions are unaware that the end state is a lie.

Most of our government regulatory agencies are not educated to the level of the criminals who are conducting the crimes.

It makes sense; the criminals or masterminds behind the financial scheme are usually well educated and very well versed in the details of the financial scheme that they are creating. They are also financially motivated (much better paid than the investigators who are hunting them). Often, the scheme is so complex and uses the international banking system in a way that is next to impossible to track monies wired outside the United States. You, as the investor, need to be aware of where your money is going and how you have access to it.  Once money is wired you can’t get it back.

Understanding this, there is a large need to educate the public on investigative organizations that are private in nature. Private financial investigative units such as UNITY ONE, Inc. take advantage of years of training and international relationships with both governments and financial institutions to assist with clarification and identification of transactions and those involved inside those transactions. Sadly, the majority of investors believe that their gut instinct is enough to determine if a private transaction is correct or not.

75% of the clients that walk through the door are reactive in nature. Which means, they’ve already lost the majority of their funds and the funds of those who invested with them and are trying to recover all or a portion of the money spent. This percentage should be much lower. The savvy investor, banker or fund manager should be using a due diligence company that physically makes contact with all parties involved before any money is transacted. Understanding this, we should have a percentage that is closer to 80% proactive. In the long run it would save all involved, including governments, financial institutions, and individuals, money and assets.

Being proactive takes very little. First, you have to identify an agency that is able, licensed and trained in the financial industry to conduct the due diligence from a third-party perspective. Often financial institutions claim that they’ve conducted their own due diligence for the benefit of their clients. This is a misconception, any time due diligence is run from the same institution that is causing the transaction to take place they will be biased for the benefit of that institution. All investors understand this as do the bankers.

Bringing in, a third-party investigative team to conduct due diligence on behalf of the investor and or the broker (whether it is a bank or brokerage firm) is just good business and certainly ads to the professionalism of the investment group.

“Advance Fee Fraud” Schemes

Advance Fee Fraud

One of the most  prolific forms of fraud in the world.   often, the novice investor believes that a contract will suffice as an instrument to protect their hard earned money. Those who have been in  the industry for a long time, know very well, that unless the person who is offering you the deal is willing to put up collateral that belongs to them,  then the contract they are giving you is worth less than  the paper it is written on.

Quite often, those who are attempting to put these deals together are not aware of the consequences surrounding this type of financial endeavor. It is highly advised that legal counsel and second opinions are taken into consideration when determining the type of financial plan that is best for you.

The following excerpt was written by the US securities and exchange commission and it can be found at http://www.sec.gov/answers/advancedfeefraud.htm

Advance fee fraud gets its name from the fact that an investor is asked to pay a fee up front or in advance of receiving any proceeds, money, stock or warrants in order for the deal to go through.  The fee may be in the form of a commission, regulatory fee or tax, or some other incidental expense. These secondary “advance fee” schemes work very similarly to boiler room operations, the difference being that an advance fee scheme generally targets investors who already purchased underperforming securities, perhaps through an affiliated boiler room, offering to arrange a lucrative sale of those securities, but first requiring the payment of an “advance fee.”

Characteristic of some advance fee fraud solicitations and other fraudulent schemes to deceive and defraud unwary investors is the use of websites and e-mail addresses ending in “.us” or “.org” and containing “.gov” as part of the domain address. We are not aware of any U.S. government agency that has a website or e-mail address that ENDS in anything other than “.gov”, “.mil”, or “fed.us”. Accordingly, investors should beware any website or correspondence purporting to be from a U.S. government agency bearing an e-mail address that does not end in “.gov”, “.mil”, or “fed.us”.

there are organizations such as UNITY ONE, Inc.  that were designed to help those who are not familiar with this type of financial environment. We are here to help!

It’s your Money…

Money seems to be the root of all evil… Perhaps… Perhaps not… Often it is just the excuse criminals use to rationalize their behavior.

The finance industry is one that should be fairly straight forward to those educated in it.  Recently UNITY ONE, Inc. Investigations has run several very complex investigations involving different levels of criminals and intelligence.

The following is a true story that involved several groups in late 2009.

Four investment groups were introduced to a, seemingly profitable, financial venture.  The person introducing them, Joe, was unlicensed and had only a basic grasp of the overall opportunity. However, his great people skills out shined his blatant ignorance.

  • Joe is also known as a front man, fall guy, referral or often the village idiot. Usually believing that the transaction they are trying to make money from is real.

Mr. Pink, the “Trader”, collected the monies brought in by Joe and placed them into his “Escrow” or other type of account until “enough” money was collected  to actually go into trade.

  • Mr. Pink “the Trader” is nothing more than a middle man.  Although, usually more intelligent than the Joe’s, he is still just a village idiot. However, this is were it begins to get tricky and money starts to disappear.

From this point on it becomes necessary to understand that fraud schemes have no definite shape.  The more complicated they are, the more the are likely to succeed…

After enough money was collected the money was sent outside the United States for the “Trade”.  From this point on the investors are fed a line of crap until they become so disgusted that they try to find legal assistance or they just accept that they were ignorant and lost their money.

What is most amazing about the story above is that it happens again and again throughout the United States and world.  About every four years we see an upsurge in the amount of fraud cases as new thieves enter the arena and truly believe they have invented a new get rich fast scheme that will steal from those that have earned their money honestly.

We have seen bank officers, contract officers and many others engage in illegal activity all in the hopes of making themselves get rich fast.

Understand that you are the only one that controls your money… It is yours.  Do what you will with it. but do it smart and find out who you are dealing with first.

Know who they are… And their past!!

As the story goes…

The financier had known his new friend for over two years.  The families had become very close and it seemed at first glance the they were very well known to one another.  As you can imagine (I won’t bore you with the details) when money started to flow it became apparent that very little was known of the new friend’s past. Continue reading

INVESTORS – Trust, But Verify!

UNITY ONE, Inc. – Investigations

Six months ago, an investment group we know decided they were going to begin the process of getting into the commodities business.  Little did they know that they were about to enter a nightmare; one that would cost them dearly.

With almost no due diligence conducted by the group, they signed the contracts presented to them and wired money to the offshore mining company.  Fast-forward six months… no money and no commodities.  When asked if they had conducted any type of background on the mining group, they stated “just the normal”.

It is very difficult to ascertain the validity of a transaction without visiting the offices of those you are about to conduct business with.  Talking with past clients is a must and contacting the local government and authorities to verify the history of the company is basic backgrounding.

UNITY ONE, Inc. is here to help.  Our processes are set in place to help prevent your money from being taken.  We also provide 360-degree coverage through out the course of the transaction.  From your personal security to your financial transaction, we are there for you.

Check us out at http://www.unityoneinc.com