Members of the U.S. Attorney's newly formed Mortgage Fraud Task Force met Friday for the first time at San Francisco's Federal Building. They'll review hundreds of possible mortgage fraud cases.
"We're looking at these suspected activity reports that are coming in at a rate of 500 a month. Again, they're not all likely to result in prosecutable cases," says Russoniello, the U.S. Attorney for the Northern District of California.
This comes on the heels of the arrests of two former executives of the wall street firm Bear Stearns on charges they defrauded investors in funds linked with subprime mortgages.
On Wednesday, 60 arrests were made across the country in mortgage fraud cases. So far, there are no arrests in the Bay Area in the operation codenamed "malicious mortgage." Nevertheless, Russoniello and his task force will be busy.
Their cases will involve lending fraud, phony foreclosure rescue programs and bankruptcy scams.
"The most complicated that we'll see are the straw buyers and other attempts to just obtain money from a lending institution without any intent to make payments in the loan."
The highest profile case in the Bay Area, which police say involved that kind of scam, resulted in the murder last April of a San Ramon real estate investor.
Authorities say that plot involved hiring fake buyers for a house at an inflated price, and then defrauding the lender by walking away from the loan.
The U.S. Attorney's task force includes local district attorneys. San Francisco District Attorney Kamala Harris says many of the targets of the scams are senior citizens who have homes with a lot of equity.
Predators are coming n convincing them its time to refinance and frankly refinancing these victims right into becoming homeless."
A former president of the State Mortgage Broker's Association, Leon Huntting, applauds the nationwide federal crackdown.
"We've needed that. When you ring the bell loud enough, people will hear you and that's essentially what this has done because it starts at the top."
Of the 500 or more cases this task force is expected to review every month, Russoniello figures they'll end up prosecuting about a fifth of those cases and that's still quite a lot.
