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Mortgage Fraud Task Force Stats: Did You See This? WOW

Posted by Larry Doyle on August 12, 2013 7:41 AM |

In what has to be one of the greatest indictments to date of the lack of meaningful integrity in Washington, news broke late last week regarding mortgage fraud investigation and enforcement statistics that totally blew me away.

Before we dive into the cesspool that defines this story, let’s set the proper backdrop.

One would think that a government initiative with the name Financial Fraud Enforcement Task Force would have been incredibly busy over the last few years. For those unaware, President Obama established this initiative in November 2009. Its mission?

. . . to hold accountable those who helped bring about the last financial crisis as well as those who would attempt to take advantage of the efforts at economic recovery.

With more than 20 federal agencies, 94 US Attorneys Offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.

One of the specific initiatives under this umbrella is the Residential Mortgage-Backed Securities Working Group launched in late 2011:

. . . co-chaired by Assistant Attorney General for the Criminal Division Lanny Breuer, Principal Deputy Assistant Attorney General for the Civil Division Stuart Delery, U.S. Securities and Exchange Commission Acting Director of Enforcement George Canellos, United States Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman. The coordinator of this working group is Matthew Stegman.

Did you just start to get a queasy feeling seeing Breuer’s name as head of this group? We remember him as the faker within the DOJ who ran interference for Wall Street over the last few years. So how did Lanny and the boys do on this front investigating mortgage fraud? Are you sitting down?

Bloomberg reported the following incredible news late Friday afternoon:

President Barack Obama’s administration significantly overstated statistics from a year-long mortgage-fraud initiative, including total number of victims, their losses suffered and number of individuals criminally charged, according to an FBI memo.

The Federal Bureau of Investigation, in the document sent today, asked members of the administration’s Mortgage Fraud Working Group to correct and update any public materials related to the results released in October of a year-long law enforcement initiative targeting fraud schemes aimed at vulnerable homeowners.

The FBI restated the number of people criminally charged to 107 from 530. Agencies were asked to correct victims’ total losses to $95 million from an estimated $1 billion, and the number of victims found to 17,185 from more than 73,000.

Lies, blatant misrepresentations, and a lack of meaningful integrity are all part and parcel of the pervasive crony capitalism that runs between Washington and Wall Street, but they certainly are not the principles upon which a country tries to recover from the greatest crisis in 70 years.

“This targeted approach resulted in the successful filing of many criminal and civil cases around the country, but regrettably, the statistics reported in October included cases that fell outside the specific parameters of the initiative,” the FBI, which co-chairs the mortgage group, said in the memo.

The corrected statistics come in response to a Bloomberg News story reporting that some cases cited occurred before the initiative began in October 2011, including one filed by prosecutors more than two years before Obama took office.

The Justice Department, after questions were raised about the initiative, conducted an “extensive review” and found that the list included criminal defendants charged before the initiative and in circumstances outside the stated definition of “distressed homeowner” cases, the memo said.

Christopher Allen, an FBI spokesman, declined to comment beyond the memo.

The information used to compile the results came from an FBI survey of the agencies in the Financial Fraud Enforcement Task Force’s Mortgage Fraud Working Group.

“Please be sure to update any online materials posted by your agencies to reflect these changes,” the FBI told the other agencies in the memo.

Would seem that perhaps the greatest fraud being perpetrated here is the one played on the American public by the task force itself.

But, I guess, what are we to expect when all too much evidence indicates that both Washington and our regulators are In Bed with Wall Street.

Navigate accordingly.

Larry Doyle

Please pre-order a copy of my book, In Bed with Wall Street: The Conspiracy Crippling Our Global Economy, that will be published by Palgrave Macmillan on January 7, 2014.

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I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

  • Joe

    The stench runs very deep….clearly the task force knew how pathetic their own numbers looked so they had to try to “put some perfume on the pig.”

  • LD

    Jonathan Weil writes a fabulous commentary on this situation at Bloomberg View:

    The Justice Department made a long-overdue disclosure late Friday: Last year when U.S. Attorney General Eric Holder boasted about the successes that a high-profile task force racked up pursuing mortgage fraud, the numbers he trumpeted were grossly overstated.

    We’re not talking small differences here. Originally the Justice Department said 530 people were charged criminally as part of a year-long initiative by the multi-agency Mortgage Fraud Working Group. It now says the actual figure was 107 — or 80 percent less. Holder originally said the defendants had victimized more than 73,000 American homeowners. That number was revised to 17,185, while estimates of homeowner losses associated with the frauds dropped to $95 million from $1 billion.

    The Obama administration has been on the defensive for years over its lack of decisive, high-profile prosecutions related to the financial crisis. So it leads one to believe that might help explain why the feds have occasionally inflated their fraud statistics: to persuade the public that they were being tough on financial crimes.

    Eric Holder Owes the American People an Apology

  • Jack

    Fish always stink from the head . . . Breuer, Holder, and the man to whom they ultimately report/reported.

    These misrepresentations were clearly intentional.

    Lies, lies, and damn lies.

  • EA

    so Holder DOESN”T prosecute wall street bankers, and then LIES about prosecuting mortgage fraud…

  • Tim Favero

    Since we are talking about our government and the information that they are feeding us, I have begun to not trust the veracity of the BLS numbers when they come out.

    Zerohedge has uncovered a component on the JOLTS (Job Openings and Labor Turnover Survey), suggesting that the number of NFP (non-farm paroll) report has incorrect numbers, stating the BLS official numbers are actually much less than what the real job creation numbers are, according to JOLTS, which is compiled by the BLS.

    According to Zerohedge, Jolts has a component within it’s survey that takes “Hires and the Separations foots with the actual reported number of job additions, which intuitively makes sense – the net number of added jobs per month is the Hires over the Separations. No rocket surgery there.”

    However, what the JOLTS data reveals is that April 2013 shows 108K jobs created while the BLS states the April 2013 job created is 199K. and the May 2013 JOLTS data claims 118K new jobs created, while the BLS May 2013 reports shows 195K new jobs created?

    Is the BLS cooking the books in terms of these numbers? It has been speculated on this blog about the veracity about government numbers in the past, but how can these numbers be so far different coming from the same BLS? Does anyone think it has to do for political gain? I think we all know the answer to that question. The JOLTS survey never gets media play, while the NFP is usually on the 6 PM news.

    And here is another article by Zerohedge on 8/6/2013, that contains a “tweet” by PIMCO’s Bill Gross questioning the veracity of the BLS NFP hires:

    • LD

      Shall we ever forget Jack Welch making a similar allegation during the election last year?

  • Van



  • Tim Favero

    Yes, I remember Welch mentioning that the BLS numbers were manipulated and no one paid any attention. Selective reporting of the facts by the mainstream media.

  • fred


    I continue to think the greatest story never told has been the underfunding of public pension plans. A recent Bloomberg story highlights the fact that public pensions were up over 12% in FY12 with an average asset allocation of 45% in U.S. Equities. NYC tops the allocation in equities with 70% (the max allowed by policy, although that seems quite high to me).

    Interesting that private corporate pension plans underperformed their public counterparts significantly because of more conservative asset allocation percentages.

    Three questions:

    1. Why were public pensions so underfunded? 2. Why are public pensions so overweight in equities when compared to their private counterparts? 3. When will pension reform receive the attention it deserves, surely margin manipulation can only take us so far.

    • LD


      In regard to the questions:

      1. Why were public pensions so underfunded?
      Two reasons.
      a)The money was being directed elsewhere because there was immediate needs and/or payoffs/kickbacks to be had.
      b) The expected returns were so far beyond the realm of reality but these returns allowed those managing the funds to get away with underfunding.

      Both a and b spell mismanagement and racket.

      2. Why are public pensions so overweight equities?
      Because their consultants tell them to do that and the fees paid are typically higher and allow for some of the $$ to come back to the consultants.

      3. When will pension reform receive the attention?
      When more cities go bankrupt like Detroit and courts rule that those holding the pensions are forced to take a significant haircut. Then and only then may the pols and their cronies running the pension rackets get thrown out and the rackets might be exposed for what they truly are.

      And you are right. This issue is today’s problem not tomorrow’s.

  • doug

    I’m a lawyer and had a civil case against Breuer about 20 years ago when he was at Covington and Burling. He was a nasty bully then and presumably still is.

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