Federal sweep triggered by mortgage crisis nets over 400 for alleged scams
Since March, Operation Malicious Mortgage has led to charges covering a range of alleged schemes. The U.S. also announces the arrest of hedge fund managers from the defunct Bear Stearns firm.
WASHINGTON — Justice Department officials said today that more than 400 people had been charged with fraud and other crimes since March as part of a coordinated sweep triggered by the nationwide mortgage crisis.
The announcement, along with the arrests in New York of two hedge fund managers at the defunct Bear Stearns securities firm, signaled the beginning of a federal law enforcement crackdown in the wake of the mortgage debacle, which has buffeted the economy and homeowners.
The federal sweep, dubbed Operation Malicious Mortgage, was announced at a news conference in Washington by FBI Director Robert S. Mueller III and Deputy Atty. Gen. Mark R. Filip.
The 400 cases cover a range of mortgage scams, the officials said, including lending schemes in which industry professionals constructed mortgage transactions in which they misrepresented the financial status of borrowers. A growing number of cases, they said, involve bankruptcy frauds and foreclosure schemes dressed up as rescue operations for homeowners who are already in dire financial circumstances.
"Mortgage fraud poses a significant threat to our economy, to the stability of our nation's housing market, and to the peace of mind of millions of American homeowners," Fillip said. "It includes a wide variety of criminal acts that have proved devastating to many American families."
He added: "Operation Malicious Mortgage and the Bear Stearns case demonstrate that the Department of Justice is determined to detect and punish mortgage fraud and to help restore stability and confidence in our housing and credit markets."
The FBI estimated that $1 billion in losses were caused by the schemes in the new cases. Officials said 173 people had already been convicted as part of the sweep, which included 287 arrests and 406 persons charged.
Mueller said that the number of mortgage fraud cases the bureau is pursuing has roughly doubled in two years.
rick.schmitt@latimes.com
