With the implosion of the real estate market in 2008, we began seeing a rash of cases involving mortgage brokers, loan bundlers, developers, real estate agents, and investors ,investigated and, in too many cases federally indicted, for fraud. In almost all cases, our clients had no prior criminal records. Almost all were well regarded in the community, were seasoned professionals, most with families, many with their own businesses.
Our typical Post Bubble Real Estate Fraud fraud cases have involved real estate and banking professionals, our clients, accused of falsifying or aiding the falsification of real estate loan applications submitted to and underwritten by federally insured financial institutions. Other cases have involved allegations of our clients defrauding HUD in short sale matters and some have involved more complex patterns of transactions, often involving “straw purchasers.” Almost all have been investigated by either the FBI or IRS criminal investigative division (CID), or both. Some have been featured in the local media.
When indicted, 18 USC § 1344, the federal bank fraud statute is often used, as is 18 USC § 1343, the federal wire fraud statute, along with 18 USC 1371, the federal criminal conspiracy statute. Almost all involve sizeable claims for restitution. We’ve heard a chorus of voices from our clients, especially in recent years, that the banks knew what was going on, tacitly acknowledging or ignoring the “minor” deviations on the applications. But these cases have proven problematic for real estate industry professionals in the aftermath of the 2008 implosion.
Unlike typical “street crime”, federal bank, real estate and mortgage fraud matters often take years to indict, the FBI and IRS moving relatively slowly, amassing and analyzing voluminous documents, interviewing witnesses and consulting with the United States Attorney’s Office. In our view this may be an advantage, giving the attorney and client an opportunity to work with, and in some cases resolve, the matter before formal charges are leveled. In that regard, we think it is especially important to obtain as early as possible qualified counsel familiar with the FBI and IRS and US attorney bank fraud investigative processes.
Michael has handled numerous federal and state bank, real estate and mortgage fraud matters for professional clients, both in the investigative and post indictment stages.