...Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Ann Fulmer March 2010 Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Mortgage fraud is bank robbery without a gun. 1 It is a high-yield, 2 low risk enterprise that has been reported in all 50 states, Puerto Rico, Guam, American Samoa, 3 Canada, 4 New Zealand, 5 Australia, 6 and England. 7 In the United States, it is committed by organized international and domestic rings, 8 street gangs, 9 terrorists, 10 drug traffickers, 11 real estate agents, 12 closing attorneys, 13 appraisers, 14 mortgage brokers, 15 The targeted victims distinguish mortgage fraud from predatory lending. In predatory lending cases the borrower is victimized by the illegal practices of the lender or its agents with respect to fees and disclosures relating to the cost of the loan. It is unfortunate that the media, consumer activists, legislators and law enforcement personnel frequently conflate mortgage fraud with predatory lending since it adds unnecessary confusion to an already complex issue and diverts attention and badly needed resources from the fight against true mortgage fraud. 2 The average “take” on a bank robbery is approximately $3,000.00. By contrast, the average straw borrower receives a “cut” of at least $10,000 and the orchestrator’s “take” in a mortgage fraud transaction frequently exceeds $100,000. In a few cases the orchestrator’s take was in excess of $1...
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...Beginning in 2008, mortgage companies had begun to start making loans to individuals as a way to promote home ownership. With the help of Fannie Mae and Freddie Mac, there was increased pressure on these mortgage companies to loan to individuals who did not meet certain requirements that would qualify them. For obvious reasons, these qualifications were in place so that a crisis like this would have never happened. Additionally, the mortgage backed securities and collateralized debt obligations attracted investors due to their high return on investment because of the higher interest rates charged to the mortgagor. When these subprime mortgages had defaulted, both the mortgage/lending and the investing sector crashed which led to the nations recession. As a result of the subprime mortgage crisis, mortgage loan originations have been at their lowest level since 2001. This is due to the tighter requirements needed to qualify individuals for mortgage loans. However on the other hand, foreclosure and delinquencies have increased enormously which, as an extension, has resulted in an increase in mortgage fraud aimed at distressed homeowners. However, as of 2010 the majority of the prevalent schemes per FBI Cases open were Loan Origination Schemes, followed by Title Escrow Settlement fraud, then Real Estate Investment, Short Sale, Commercial Real Estate Loan Fraud, and a few other categories. Loan Origination Schemes are divided into two main categories: fraud for property/housing...
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...• What type of lease would you require if you were to lease a commercial building? Explain why. • The type of lease required for commercial building will be dictated by the type of service, location, or business rendered by your company. If your intention is to open up an automobile repair shop, Home Depot, Best Buy, CVS, etc…, and you have outstanding credit, then triple net lease would benefit you well. In the case of a small business, say an automobile repair shop, my preference is still the triple net lease (NNN). The NNN lease is based on your credit, and the work required in bringing the facility up to a workable standard or building code. The basic office building might require paint and a signs while an auto repair shop requires the modification of wiring, foundation, hazardous chemical and so on. However, if you’re an established fortune 500 company with AAA rating, the NNN should fit the bill. Home Depot or CVS are usually built from the ground up. Then reason triple net lease is best for an industrial business or service is the necessary amounts of work in bring that facility up to the current building code. Business like the Home Depot or Best Buy is generally built from the ground up and usually does not accept reconditioned buildings. In the case off small business man with good credit, opening an automobile repair shop could be expensive. The associated cost of putting in body lift, acid cleaner, heavy equipment, hazardous material disposal, etc… could...
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...Colleen Colombo and Colleagues Resist Mortgage Fraud Synopsis In 2005, Colleen Colombo and five other female employees filed a harassment and wrongful termination lawsuit in the California Superior Court on Concord branch of BNC, a small office in California that funded over a billion dollars in loans per month. Colleen was hired as a senior underwriter for BNC in 2003 and was an exceptional employee even receiving a “exceeds expectations” rating in a performance review according to court records. (Hellriegel, pg. 250) A male employee and wholesaler for BNC began bribing Colleen in 2005 by bringing her loans that were questionable. Most of the loans her brought to her had occupations, home values, and salaries that were false. The wholesaler tried to payoff Colleen in order for her to allow the fraudulent information to pass through the system. (Hellriegel, pg. 250) Bribes, or spiffs, were typical at BNC and happened on a day-to-day basis according to Sylvia Vega-Sutfin, one of the females and wholesalers for BNC that filed the lawsuit with Colleen. Sylvia claimed that a quite a few underwriters wanted spiffs of $1,000 to $2,500 even if they didn’t approve the mortgages. Her commission checks suffered when she refused to pay off the underwriters and her loan files went missing. Sylvia claimed that her supervisors wanted to make an example of her to others if she complained about not paying off the bribes. (Hellriegel, pg. 250) Colleen claimed that the regional...
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...Coleen Colombo And Colleagues Resist Mortgage Fraud Columbia College Coleen Colombo and Colleagues Resist Mortgage Fraud Synopsis In 2003, Coleen Colombo joined the California branch of BNC, where she worked as a senior underwriter. The BNC office in which Colombo worked was part of the regional group that offered a considerable amount of loan to its customers. The performance of Colombo in her work was outstanding. This is according to a wrongful termination and harassment suit filed in California Superior Court on her behalf and on behalf of five other BNC employees. The suit states that the work environment began to become hostile for Colombo in 2005 after one of her fellow employees, a male wholesaler, began bringing her loans with questionable attributes such as incorrect salaries and home values. The male wholesaler even tried to bribe her to allow a loan with incorrect information to be approved. According to Sylvia Vega-Sutfin, a former employee of BNC, the bribes were common in the company. Vega-Sutfin stated that most of the underwriters in the company demanded bribes so that they can approve the loans. When she refused to pay them, her life in the company began to become unbearable to her; sometimes her loan files could disappear mysteriously and the size of her commission checks dropped significantly. She claimed in the filed suit that her bosses said would make her an example to others who might want to complain regarding the issue...
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...Coleen Colombo and Colleagues Resist Mortgage Fraud Synopsis In 2003, Coleen Colombo joined the California branch of BNC, where she worked as a senior underwriter. The BNC office in which Colombo worked was part of the regional group that offered a considerable amount of loan to its customers. The performance of Colombo in her work was outstanding. This is according to a wrongful termination and harassment suit filed in California Superior Court on her behalf and on behalf of five other BNC employees. The suit states that the work environment began to become hostile for Colombo in 2005 after one of her fellow employees, a male wholesaler, began bringing her loans with questionable attributes such as incorrect salaries and home values. The male wholesaler even tried to bribe her to allow a loan with incorrect information to be approved. According to Sylvia Vega-Sutfin, a former employee of BNC, the bribes were common in the company. Vega-Sutfin stated that most of the underwriters in the company demanded bribes so that they can approve the loans. When she refused to pay them, her life in the company began to become unbearable to her; sometimes her loan files could disappear mysteriously and the size of her commission checks dropped significantly. She claimed in the filed suit that her bosses said would make her an example to others who might want to complain regarding the issue of bribery. The same thing happened to Colombo; in her suit, she states that she informed the regional...
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...Synopsis In 2003, Coleen Colombo joined the California branch of BNC, where she worked as a senior underwriter. The BNC office in which Colombo worked was part of the regional group that offered a considerable amount of loan to its customers. The performance of Colombo in her work was outstanding. This is according to a wrongful termination and harassment suit filed in California Superior Court on her behalf and on behalf of five other BNC employees. The suit states that the work environment began to become hostile for Colombo in 2005 after one of her fellow employees, a male wholesaler, began bringing her loans with questionable attributes such as incorrect salaries and home values. The male wholesaler even tried to bribe her to allow a loan with incorrect information to be approved. According to Sylvia Vega-Sutfin, a former employee of BNC, the bribes were common in the company. Vega-Sutfin stated that most of the underwriters in the company demanded bribes so that they can approve the loans. When she refused to pay them, her life in the company began to become unbearable to her; sometimes her loan files could disappear mysteriously and the size of her commission checks dropped significantly. She claimed in the filed suit that her bosses said would make her an example to others who might want to complain regarding the issue of bribery. The same thing happened to Colombo; in her suit, she states that she informed the regional vice president of BNC about the wholesale who wanted...
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...perceived ethical or legal mandate (Halbert, Ingulli, & Frey, 2015). The key characteristic of a whistleblower is the willingness to sacrifice both professionally and personally to expose wrongdoing such as wastefulness, fraudulent practices and corruption in an organization. Persistence and the ability to assume personal risk are also characteristics of a whistleblower (Heumann, Friedes, Cassak, Wright & Joshi 2013). JPMorgan Chase & Co. was charged with defrauding the government into insuring flawed home loans which was reported by Keith Edwards (whistleblower). The whistleblower provided tips that led to JPMorgan Chase & Co.’s agreement to pay $614 million when the company admitted that it had submitted thousands of mortgages for insurance that did not qualify for government guarantees by the Federal Housing Administration and the...
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... Kaplan University School of Business MT460 Management Policy and Strategy Author: Edna McEwen Professor: Dr. Strouble Date: June 29, 2015 LENNAR CORPORATION’S JOINT VENTURE INVESTMENTS Company Name: The Lennar Company Topic of the Week: Create a case study analysis focusing on the company’s abuse and fraudulent activities relative to CSR and business ethics. Synopsis of the Situation The Lennar Company faces the damage caused by the Fraud Discovery Institute’s claims, the financial crisis, mortgage defaults, and dramatic fall in house prices, particularly in some of their active markets. The country is in the midst of an economic recession that began in 2007, and on top of that, the company has been accused of operating a ponzi scheme and profiting while allowing investors to lose money. On the day of the announcement by the Fraud Discovery Institute, the company’s stock price took a dramatic fall. The problem is, the person that founded the Fraud Discovery Institute is a ‘reformed’ crook who has made it his mission to expose fraudulent behavior of others as a way of redeeming himself from some of the negative things he has done. The question is, is he really reformed, or is this just another scheme he has plotted to gain access to company’s information so he can pounce when the company is most vulnerable. Alternative Solutions Since Lennar’s mission statement states, "Lennar builds affordable, move-up and retirement homes...
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...policing tactic is really the best way to explain the majority of success in white collar crime cases. Although there are only three types of agencies that go after white collar crime, those types have a large number of agencies within them. The first agency that I want to talk about is the Federal Bureau of Investigation. The FBI is probably the most known about or heard of agency around. Most people associate the FBI with tracking down the world’s dangerous criminals and terrorist but the FBI handles a lot of white collar crime as well. In the Criminal Investigations Division the FBI has a program called the Financial Crimes Section. The FCS is broken up into several different units. There is the Economic Crime Unit, the Health Care Fraud...
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...integrated seafood producer which includes activities encompass trawling, aquaculture of fish and prawns and seafood processing. It is also an investment holding company. This company advantageously located in the Federal Territory of Labuan, Malaysia in order to provide easy access to deliver the products. In addition, more than 70% of the sales are exported to US, EU countries, Japan and others. Scandle 1 Problem Malaysia, just like other developing countries, is unable to run away from the corporate scandals that have been emphasized by the media. After all the recommendation and efforts contributed by the various parties to eliminate these scandals, however it is still happening and there is no sign of stopping or reduction of the fraud in the future. Though GP Ocean Food Sdn Bhd is a well-known company, but the former company directors of seafood exporter have been acquitted of charges of submitting misleading information to the Securities Commission (SC) in 2006. Some even were charged with bribing case in order for their company to get listed in Bursa Malaysia. The company was highly involved with various allegations of corruption and irregularities. Besides, GP Ocean was scheduled to be listed in July 2006, but the company announced a rescheduling of that event in early June which was two weeks before its pamphlet was to be launched. After the approval of the list by the Securities Commission (SC) in early April 2006, the Securities Commission began to...
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...Wells Fargo & Company was founded by Henry Wells and William G. Fargo on March, 1852 and is headquartered in San Francisco. Wells Fargo is a community-based financial services company with $1.9 trillion in assets. The company provides banking, insurance, investment, mortgage, and customers and commercial finance through more than 8,600 locations (See Exhibit 1) Traditionally, banking industry is a very high risky area, since the nature of the banking industry will create the incentives for people to commit the fraud. If there is a poor banking system, people will rationalize their actions by doing the wrong things. In order to ensure a fair and safety access to financial services to all Americans, maintaining the integrity of the federal banking...
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...13, 2010 Melisa Schellhamer, April 13, 2010 SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems The Goldman Sachs fraud case opened by the Securities and Exchange is one of the items that were highlighted by the down turn of the economy in the last few years. Goldman Sachs has vigorously denied any wrongdoing, but the case against them seems fairly tight if the information currently provided is accurate. At the center of all of this Fabrice Tourre. Tourre is an employee of Goldman Sachs that has been charged with fraud. The nature of the charge is that as an employee of Goldman Sachs he helped create a Collateralized Debt Obligation (CDO) that was not disclosed to potential investors. More damning than anything however that seized email correspondence is seems to point to the fact that he was fully aware of what he was doing. How this all ties in is that a CDO is an investment vehicle whose performance is directly related to a set of assets. In regards to this case the CDO was a family of securities that were backed by subprime residential mortgages. As this is considered risky - especially when the figures...
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...Cyber Crime has become a top priority for law enforcement on a local, state and federal level. We are becoming increasingly concerned about cyber threats, most particularly on computer intrusions and network attacks. Computer intrusions are becoming more commonplace, more dangerous and more sophisticated. Our nation’s critical infrastructure and our military’s command and control networks are most certainly being targeted by our enemies and other potential adversaries alike. Our companies are being targeted for insider information and our colleges and universities for their valuable research and development. All of that being said, cyber crime is hitting us at home as we are being targeted for fraud and identity theft and our children are often targeted by online predators. No one is immune to these cyber risks, individuals, countries, Fortune 500 companies and the neighborhood “Mom and Pop” store. These threats are evolving and expanding every day. It is important to be wary and safeguard information and cyber access by these fraudsters and predators. I am using the law enforcement perspective, one I am most familiar with, in this paper. Computer intrusions and network attacks can affect many different facets of national security and organizational information. It is clear that terrorists and their organizations are using the internet to recruit and maintain their strength. For example, in the Arabian Peninsula, Al Qaeda has produced a full-color, English language...
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...Business Fraud By: Accounting Information Systems Professor Broderick Martinez September 14, 2014 In Pittsburg, Pennsylvania, an office manager of an Upper St. Clair accounting firm pleaded guilty to last Wednesday to wire fraud and embezzlement of about $270,000 from Cybergenetics Corp. in Oakland, California. Mary Schneir admitted to shuffling money into and out of accounts of three clients when she was working as an office manager of Karna C. Goldsmith CPA firm. She used many of those funds to pay her mortgage and credit card debt. This is not the first time that Mary Schneir stole money, she was recently sentenced to 30 days in jail for stealing $19,000 from Bethel Park cheerleaders organization. The three victims included A.L. Brourman Associates, a Downtown public relations firm; its owner, Audrey Brourman; and Cybergenetics, a forensic crime scene and DNA business in Oakland. Ms. Schneir basically pilfered money from accounts and then maneuvered the money from other accounts when the bills came so that there wasn’t any gaps. Currently Ms. Schneir is free on bail until her sentencing on February 19, 2015 (Ove, 2014). Mary Schneir does not really fit the profile of an average fraud perpetrator, she is active in her local community and served as President of the Bethel Park Junior Cheerleaders. She is a mother of two and it seems that more and more things are coming to light after she was charged in connection with stealing money from the Bethel Park Junior Cheerleaders...
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