Quick Claim Deed Fraud; FBI Investigates! (2024)

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By Jessica Scipio

July 15, 2024

11:12 AM EST

Operation Quick Flip: A Comprehensive Examination

Federal Law Enforcement's Stand Against Mortgage Fraud

Operation Quick Flip, launched in December 2005, stands as a testament to federal law enforcement's cognizance of the burgeoning menace of mortgage fraud. This initiative saw the collaboration of the Federal Bureau of Investigation’s Criminal Investigative Division (CID), the Department of Housing and Urban Development (HUD) Office of the Inspector General (OIG), the United States Postal Inspection Service (USPS), the Internal Revenue Service (IRS), and the Department of Justice (DOJ). These agencies coalesced to disseminate information to the public about the federal government's rigorous efforts to eradicate mortgage fraud. Their aim is to irrevocably dismantle mortgage fraud syndicates, a white-collar crime proliferating at an alarming rate across the United States.

Unveiling Mortgage Fraud: Definitions and Dichotomies

Mortgage fraud encompasses a gamut of illicit activities characterized by material misstatements, misrepresentations, or omissions that underwriters or lenders rely upon to fund, purchase, or insure a loan. It bifurcates into two primary categories: fraud for property and fraud for profit. Fraud for Property, also referred to as Fraud for Housing, typically involves borrowers who, driven by the desire to acquire property, manipulate income declarations, personal debt disclosures, and property valuations. Industry professionals sometimes abet these borrowers to help them qualify for loans. This type accounts for approximately 20% of all mortgage fraud cases.

Conversely, Fraud for Profit is more intricate, involving industry professionals orchestrating multiple loan transactions across various financial institutions. These schemes are rife with gross misrepresentations, including inflated income and assets, fictitious employment, and understated debts. Often, borrowers assume another's identity (straw buyer) and misrepresent the intended use of the property. Fraudulent appraisals are common, inflating property values to cover non-existent down payments and generate illicit cash proceeds.

Deconstructing Fraudulent Schemes

Numerous schemes proliferate within the realm of mortgage fraud:

• Backward Applications: Borrowers tailor their income to fit loan criteria post property identification.

• Air Loans: Non-existent property loans, with fabricated borrowers and properties.

• Silent Seconds: Undisclosed second mortgages that deceive primary lenders regarding the borrower's investment.

• Nominee Loans: Concealment of borrower identity via nominees’ names and credit histories.

• Property Flips: Rapid reselling of properties with inflated appraisals to fabricate value.
  

Federal Efforts and Collaborative Investigations

Federal authorities are in concert with state and local law enforcement, regulatory bodies, and financial institutions to combat this insidious problem. The Office of Federal Housing Enterprise Oversight (OFHEO) mandates Freddie Mac and Fannie Mae to report suspicious activities, a move mirrored by the FBI and FinCEN's efforts to create a reporting mechanism akin to the banking industry’s Suspicious Activity Report.

From July 5, 2005, to October 27, 2005, a coordinated crackdown by the FBI, HUD-OIG, USPS, IRS, and DOJ resulted in the indictment of 156 individuals, 81 arrests, 89 convictions, and 60 sentences. The financial repercussions of these activities amount to losses exceeding $606 million.

Geographic Hotspots and Statistical Data

The top ten hotspots for mortgage fraud per capita in 2003 included California, Nevada, Utah, Colorado, Missouri, Illinois, Michigan, South Carolina, Georgia, and Florida. In 2004, the list saw the inclusion of Arizona and Maryland, with a significant escalation in fraudulent activities.

High-Profile Cases and Operations

Operation Broken Loan (Detroit): An undercover operation targeting five criminal mortgage fraud syndicates resulted in 18 arrest warrants, several search and seizure warrants, and the indictment of mortgage brokers involved in fraudulent activities.

Chalana McFarland (Atlanta): McFarland, an attorney, orchestrated a scheme using stolen identities and fraudulent appraisals to secure over 100 fraudulent loans, leading to her 30-year prison sentence, the most severe for mortgage fraud to date.

Thomas Fauntleroy/David Bowie (Newark): This case involved inducing the FHA to insure over $1 million in loans using falsified documentation, leading to multiple federal and state convictions.

Mark Young (Nevada): Young masterminded the creation of 233 fraudulent FHA loans, predominantly for illegal immigrants, resulting in significant losses and his conviction on multiple counts.

Randall Davidson (Cincinnati): Utilizing falsified documents and unsuspecting buyers, Davidson orchestrated a scheme involving depressed properties, leading to significant financial losses.

Robert A. Amico (Buffalo): Engaged in a large-scale conspiracy involving fraudulent mortgage applications and inflated property values, resulting in numerous convictions and significant financial losses.

Operation Clean Deed (Charlotte): A scheme involving promoters, attorneys, and mortgage brokers who inflated property values and falsified loan applications, leading to substantial financial losses and multiple convictions.

AmeriFunding (Denver): A $200 million scheme involving stolen identities and fraudulent loans, resulting in significant financial losses and multiple indictments.

Dotty Pierre (Boston): An identity theft and bank fraud scheme involving mortgage loans totaling over $800,000, leading to several indictments and convictions.

Conclusion

Operation Quick Flip and its resultant investigations underscore the federal government’s unwavering commitment to combating mortgage fraud. Through concerted efforts, law enforcement agencies aim to dismantle fraud syndicates and safeguard the financial industry from these pervasive crimes.