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FBI's LARGEST EVER Mortgage Fraud case, right in my local ma

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USPAP Compliant

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Elite Member
Joined
Jan 15, 2002
Professional Status
Certified Residential Appraiser
State
North Carolina
Posted on Sat, May. 11, 2002



Mortgage fraud case called FBI's largest

GARY L. WRIGHT
Staff Writer

In what is being called the largest mortgage fraud case ever investigated by the FBI, the owners of a Charlotte mortgage company and another couple have been accused of using a sophisticated scheme to swindle the federal government out of more than $21 million.

James and Macy McLean and Paul and Debbie Zimmerman were indicted Friday and accused of obtaining millions of dollars from the secondary mortgage market by making and selling fraudulent and fictitious mortgage notes in the names of false borrowers.

They are accused of recruiting family members and friends to sign false notes in their names, purportedly for the purchase of property.

About a year ago, federal authorities identified the McLeans as the owners of First Beneficial Mortgage Corp. and accused them of using a "phantom mortgage" scheme to swindle the federal government. The Zimmermans are identified as employees of the mortgage company and partners in First Beneficial Homes, a subsidiary of the mortgage company.

Chris Swecker, who heads the FBI in North Carolina, said he knows of no larger mortgage fraud case investigated by the FBI nationwide.

"It's a staggering amount of loss," Swecker told reporters at a news conference.

"If you commit mortgage fraud of this size, you're going to see the inside of a federal penitentiary."

Federal authorities have said the nation's slumping economy is fueling an increase in mortgage fraud. Analysts have said the fraud is rising in Charlotte and other cities as the economy shriveled the healthy profit margins mortgage brokers enjoyed in the late 1990s.

Some estimate mortgage fraud accounts for about $30 billion in losses annually.

Swecker said last year that the FBI and the U.S. Department of Housing and Urban Development are making mortgage fraud a national priority.

Last month, former Charlotte mortgage broker Eric Scott Solheim was sentenced to six years in prison in connection with a real estate scheme that bilked victims out of more than $1 million.

Following Friday's indictment, James Edward McLean Jr., 35, and his wife, Macy McLean, 32, and Paul Zimmerman, 43, and his wife, Debbie Zimmerman, 41, were not arrested. Authorities said the couples will be summoned to appear in court within 10 days.

Neither the McLeans nor the Zimmermans could be reached for comment Friday.

Charlotte defense attorney Larry Hewitt, who represents James McLean, said: "Mr. McLean is going to plead not guilty. He contends he has done nothing illegal."

The McLeans are charged with conspiracy, wire fraud, bank fraud, money laundering and making false statements. The Zimmermans are charged with conspiracy, wire fraud and making false statements.

The charges carry maximum penalties ranging from two years to 30 years in prison and maximum fines from $250,000 to $1 million.

The McLeans are accused of selling false mortgage notes on the secondary mortgage market by falsely representing that they were actual mortgage loans insured by the Federal Housing Administration, an agency of HUD.

Federal authorities said the homes did not exist and the lots were usually vacant.

The indictment says the McLeans pooled false mortgages and sold them to investors in the form of mortgage-backed securities guaranteed by the Government National Mortgage Association, also known as Ginnie Mae. Ginnie Mae is administered by HUD.

U.S. Attorney Bob Conrad told reporters Friday that programs such as Ginnie Mae exist to make home ownership more affordable for low- and middle-income Americans.

The indictment alleges the conspirators solicited their employees, relatives, neighbors and friends to participate in real estate investments and that those who participated would be paid for the use of their names and Social Security numbers.

The indictment alleges the McLeans, in order to conceal the scheme from securities investors and Ginnie Mae, used money received from the sale of the pooled false mortgages to make monthly payments to investors as if the money were regular payments of principal and interest received from actual mortgage loans.

The conspirators received more than $21 million through their placement of false mortgages in mortgage-backed securities sold by First Beneficial Mortgage Corp. and guaranteed by the United States, according to the indictment.

The 18-month investigation, conducted by the FBI, the Internal Revenue Service and HUD, is continuing.

At Friday's news conference, Kenneth Donohue, HUD's inspector general, warned: "This indictment sends a clear message that those entities and individuals who devise schemes to benefit personally by abusing and defrauding HUD's housing programs will be dealt with severely."






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© 2001 observer and wire service sources. All Rights Reserved.
http://www.charlotte
 
A

Anonymous

Guest
Maybe HUD should establish a fee panel and select appraisers instead of letting crooks, I mean mortgage brokers, determine who sets the value on their non-existant properties. No that would be too simple.
 
A

Anonymous

Guest
Gee, how could that happen ? We have been griping about deals and inflated appraisals for a few years now, to anyone that would listen. In particular, our "elected" members of Congress, House and Senate Banking committees, etc..

They have obviously chose to ignore us as "gripers", and continue doing things for the Lender lobbyists. These people should all be thrown out in the next election, regardless of political party.

It wouldnt be a bad idea for us individually, and our organizations, that have any backbone, to start telling them that. I will personally have literature, information like this, and questions for anyone that campaigns for my vote in the coming months.

AS for FHA, they could have many appraisers listed as approved, based on "improved" qualifications. Not like today, completing a form and submitting it, and getting approved. Not a limited panel either. Then, either rotate the appraisers by computer selection, or tell the lenders, you can use any of these "approved" appraisers.
 

Verne Hebert

Senior Member
Joined
Feb 25, 2002
Professional Status
Certified General Appraiser
State
Montana
This is interesting. The government is overtly swindled of money and we have a "big case". However when the mortgage companies brow-beat appraisers for inflated value and "two eyes blind" inspections and make nice profits............and eventually the tax payers are swindled; we continue to have the same case we have had for some time-----------------NO CASE.
 
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