Feds Bust Huge Alleged Mortgage Fraud Ring
Federal prosecutors unsealed a massive indictment Tuesday afternoon against a huge alleged mortgage fraud ring in San Diego, Calif., charging 24 people with racketeering activity under the Racketeer Influenced and Corrupt Organizations Act (RICO), involving 220 properties with a total sales price of more than $100 million dollars. The leader of the group was identified in court papers as a member of a San Diego street gang; the alleged leader, Darnell Bell, has been in jail on cocaine charges since April 2008. According to the indictment, between January 2005 and at least April 2008, the defendants engaged in what's become an all-too-common scheme to inflate property values and defraud lenders. The group would identify properties that had sat on the market unsold and seen prices reduced, the indictment alleged, employing straw buyers to make offers on the properties above asking price, while an appraiser in on the scheme would estimate the property's value above market price on the grounds that improvements were to be made to the property -- improvements including handicapped parking and the like. The straw buyers would obtain 100 percent financing for the inflated amount, funneling the excess cash at closing to a shell construction company. The alleged repairs would never be made; instead, according to the indictment, the defendants simply took the money and left the property to rot. The indictment spans all sorts of real estate professionals, from appraisers to licensed real estate agents, and even registered tax preparers. "The individuals charged in this indictment have one thing in common: greed," said FBI special agent-in-charge Keith Slotter. "They represent precisely those who have undermined our country's financial system by perpetuating such egregious schemes." The FBI now says mortgage scams are on the rise, ranking just below terrorism on the federal priority list. On Monday, government officials vowed to crack down on real estate fraud, especially loan modification scams targeting troubled homeowners. See earlier story. ABC News followed the FBI as it rounded up suspects Tuesday morning, and their story is available here. Write to Paul Jackson at email@example.com.