The fallout of the mortgage crisis has regulators and lawmakers on the lookout for mortgage fraud. In Ohio, an 18-month investigation by a mortgage fraud task force in Cleveland’s Cuyahoga County led to the filing of indictments against 41 people and four companies for their alleged involvement in real estate transactions to purchase 453 homes with fraudulent loans totaling $44m. In a joint statement by Ohio attorney general Richard Cordray and Cuyahoga County prosecutor Bill Mason, officials said they believe Uri Gofman of Beachwood, Ohio orchestrated a massive mortgage fraud scheme by recruiting family, friends and others to invest in his real estate company, Real Asset Fund. Gofman allegedly used straw buyers to purchase homes, falsely claimed repairs and upgrades were made to homes in order to refinance mortgages and then falsified documents to resell the homes to unqualified buyers. According to the release, the defendants siphoned off more than $31m in profits from the enterprise. Eventually, 358 — or 79% — of the homes included in the indictment fell into foreclosure. “Mortgage fraud has cost this country billions of dollars and has caused much of the nation’s current economic hardship,” said Attorney General Cordray. “This case clearly demonstrates the value of teamwork and sends the message that if you are engaged in mortgage fraud, we will come after you and prosecute you to the fullest extent of the law.” It’s only the latest effort by the task force to crack down on mortgage fraud. The Ohio group, operating under the Ohio Organized Crime Investigations Commission, has indicted 289 defendants for approximately $111m in fraudulent loans for 812 houses. Of the 812 houses, 616 fell into foreclosure. Across the country in California, Gov. Arnold Schwarzenegger is expected to sign a bill into law that would let prosecutors indict defendants with felony mortgage fraud charges. Currently, mortgage fraud is only a misdemeanor in California. “Dishonest mortgage brokers often prey on the most vulnerable people in our society,” said the bill’s author, state Sen. Fran Pavley in a release by her office. “They have abused elderly, low-income and non-English speaking borrowers, deceiving them into taking out expensive sub-prime loans they cannot afford.” Pavley added: “Whole neighborhoods have been decimated by rampant foreclosures as a result. We need to take action now to prevent another mortgage foreclosure crisis in the future.” Georgia, Arizona, Nevada and North Carolina have also enacted stronger mortgage fraud legislation in recent years. Pavley’s office said Georgia once led the nation in mortgage fraud, but since the state passed its law in 2005, fraud rates have dropped. Write to Austin Kilgore.