The federal government had indicted countless people of being involved in mortgage fraud during the collapse of the housing market. Notwithstanding the fact that not a single person with decision making ability at any major bank has been charged what are the Feds focused on next? Bail out fraud. That’s right – plenty of people came up with illegal schemes of how to make money on bailing out people who were under water or being foreclosed upon.
The indictments in these bailout schemes have been coming out for the past couple of years.
Recently Sacramento saw one of the first sentences being handed down in the United States v. Clark Head case. In 2008, a federal grand jury indicted Head and 16 other defendants in two cases, charging them with conspiracy to commit mail fraud, mail fraud, and other charges related to the Head Financial Services equity skimming schemes. The government alleged that the defendants solicited homeowners facing foreclosure, promising to help the homeowners avoid foreclosure and repair their credit. Instead the defendants led the victims to complete transactions that substituted straw buyers for the victim homeowners on the titles of properties without the homeowners’ knowledge. These straw buyers were often friends and family members of the defendants, or were solicited on the Internet. Once the straw buyers were on title to the homes, the defendants applied for mortgages to extract the maximum available equity from the homes. The defendants then shared the proceeds of the ill-gotten equity and the “rent” that the victim homeowners paid them. Ultimately, the victim homeowners were left with no home, no equity, and with damaged credit ratings.
Unfortunately the government has cast a wide net in many of these cases. Suspecting and sometimes even indicting people who were victims of these scam artists. It can be hard for zealous government agents to always tell who was actively engaged in fraud and who was victimized by a talented con man. As more and more of these cases play out in the courts we should expect to see more and more people who were unwittingly wrapped up in some of these fraud schemes.