Federal attention aims at lending fraud
June 20, 2008
A federal investigative task force looking into mortgage fraud and related offenses in a seven-county region including San Luis Obispo County will utilize at least 40 FBI agents and investigators from nine other U.S. agencies.
Dubbed SCAM (for Southern California Mortgage), the program was recently initiated, though the probe has been underway for months. San Luis Obispo is one of the seven Southern California counties included in the task force’s range. More than 100 separate investigations are currently being conducted in the region, according to FBI officials.
The select group is investigating various types of lending fraud that have had a “significant effect on our nation’s economy,” said an FBI statement earlier this week.
In addition to fraud directly related to mortgages, the SCAM task force will focus on fraud for profit cases that includes lending fraud, mortgage related bankruptcy schemes, and foreclosure scams.
This week, federal authorities charged two senior managers of the failed Bear Stearns hedge funds with conspiracy, securities fraud, and wire fraud. The charges allege that despite the pair’s knowledge that the funds were in financial distress, they continued to paint a rosy picture to prospective investors.
Similar allegations have been lodged against numerous local players involved in hard money lending businesses. Investors claim that even though Estate Financial and Hurst Financial officials were aware they were having financial difficulties, they continued to lure customers with promises of high interest on their investments.
Numerous investors and other sources claim the FBI is currently investigating both Hurst Financial and Estate Financial. The FBI would not confirm or deny the claims.
Currently the FBI has over 1,400 active national mortgage fraud cases.
“Indictments are imminent,” said FBI press relations official Laura Eimiller. “In the very near future, you will see numerous indictments.”
Federal officials encourage members of the public to report suspected illegal activity related to mortgages and lending scams to the SCAM Task Force at (866) 959-SCAM. Online complaints are also encouraged and can be submitted.