Mortgage fraud initiative targets 123 in Southern Nevada

Authorities said the operation, the largest collective enforcement effort aimed at confronting mortgage fraud, led to federal charges this week against 72 people in Las Vegas.

“This particular crime has had an effect and impact economically on most everyone in our community,” said Daniel Bogden, the U.S. attorney for Nevada.

Authorities said 123 defendants were charged, convicted or sentenced in Las Vegas during Operation Stolen Dreams, which began March 1. Those defendants are accused of engaging in hundreds of fraudulent transactions with straw buyers — someone whose name is used by someone else to buy a house — and causing a gross total loss of more than $246 million.

“This has been significant, just by the numbers and the amount of loss, but this is just the beginning,” Bogden said. “This is a good start, but our investigation and prosecution efforts will continue.”

He said the evidence gathered against the defendants stemmed from 25 criminal investigations conducted by the task force, which the FBI formed in 2008.

Most of the defendants worked in the local real estate industry. They include 30 loan officers, 24 real estate agents, six loan processors, five settlement agents, four mortgage brokers, two appraisers and one builder.

“They had inside knowledge of how to rip off our system,” said Kevin Favreau, special agent in charge of the FBI’s Las Vegas division.

Favreau said the task force still has hundreds of cases to investigate. In many cases, investigators received help from members of the public. Favreau said anyone with information about mortgage fraud in Southern Nevada should call the hot line at 584-5555.

“We cannot do it alone,” he said.

Scott Hunter, a supervisory special agent with the FBI’s Las Vegas division, started the Southern Nevada Mortgage Fraud Task Force in the spring of 2008. He called Las Vegas “mortgage fraud ground zero.”

Hunter said the numbers announced Thursday represent only a portion of the work the group has done. He said that the mortgage fraud hot line has received 3,250 calls during the past two years.

“I’ve never seen a crime epidemic like this,” said Hunter, who has investigated white-collar crime for 17 of his 19 years in law enforcement. “It’s so pervasive.”

Hunter said the task force has targeted those who engaged in fraud for profit, “not fraud for housing.”

“They’re not lying on loans for homes they’re going to live in,” he said.

The agent said those who perpetrated the fraud recruited straw buyers with established credit to buy homes at inflated prices. They then walked away from the loans, often sending the properties into foreclosure.

“They treated these houses as if they were ATMs,” Hunter said.

He said the straw buyers sometimes participated in the fraud knowingly, and sometimes they were duped into participating.

The schemes often involved false appraisals, false financial qualifications for the straw buyers and false escrow documents to cover up skimming, authorities said.

Paul Camacho, special agent in charge of Internal Revenue Service Criminal Investigation in Las Vegas, said the task force might be preventing future crimes.

“It’s been our experience that fraudsters just migrate to other frauds,” he said.

The following agencies participated in Operation Stolen Dreams in Nevada: the FBI, IRS Criminal Investigation, the Housing and Urban Development Office of Inspector General; the U.S. Postal Inspection Service, the U.S. Secret Service and Las Vegas police.

U.S. Attorney General Eric Holder announced Thursday in Washington, D.C., that Operation Stolen Dreams has involved 1,215 criminal defendants nationwide. Those defendants are accused of causing more than $2.3 billion in losses.

As of February 2008, Nevada was the top state in the nation for investor-owned mortgage defaults, according to the website of the FBI’s Las Vegas division. Currently, 10 of the division’s approximately 130 agents are assigned exclusively to mortgage fraud investigations, a spokesman said.

On Thursday, real estate industry professionals praised those involved in the Southern Nevada crackdown on mortgage schemes.

William Ochs Jr., owner of Nevada Mortgage, said he supported the investigations and the resulting criminal charges.

Ochs said he has heard of countless mortgage-fraud scenarios, including tales of consumers whose loan-application information was reproduced, unbeknownst to them, on applications for additional mortgages.

“There’s no room for this (fraud) in any business,” Ochs said. “You’re here to help and assist people in one of the most exciting times of their life.”

Homebuyers are “absolutely” safer now than they were before the fraud roundups began, he added.

“Consumers should be much more comfortable and confident that home purchases these days are qualifying (for loans), and that their documents are pretty standard and specific,” he said. “Those processes protect not only you, as a consumer, but they let you know your neighbor is going through the same requirements to qualify.”

Robin Camacho, a Realtor with real estate brokerage Sellstate NRES, said the task force’s work sent a “strong message” to the real estate and mortgage industry.

“I’ve never seen these types of fraud personally, but I know many people around me who have,” she said. “It’s something we, as an industry, need to be much more diligent about watching out for.”

Robin Camacho, who is not related to Paul Camacho, called fraudulent mortgage practices the catalyst for the housing slump in Las Vegas.

“Prices went up really fast, and there were bad people who jumped in and took advantage of that. But those people are gone, and it’s a much safer market,” she said. “The market appears to be stabilizing, too, though it’s too late for unfortunate homeowners who were put in homes they couldn’t afford in the first place.”

Both Ochs and Robin Camacho said the real estate and mortgage professions have made significant strides in self-policing.

Nevada has issued tougher new educational requirements, and loan officers now must be licensed nationally and not just through the state, Ochs said. Plus, the number of mortgage companies in Nevada has dropped from more than 2,000 at the peak of the market to 200 today, while the number of loan officers has plummeted from 18,000 to around 2,000.

Robin Camacho said she is pleased that the task force’s work will continue. “Who better to see these problems coming, and report them to the task force?”

Contact reporter Carri Geer Thevenot at cgeer@reviewjournal.com or 702-384-8710.