Search

TARP-Related Convictions Double in 2 Years

by devteam January 30th, 2014 | Share

The Special Inspector General (SIG) forrnthe Toxic Asset Relief Program (TARP) just released its January 2014 QuarterlyrnReport to Congress on the status of TARP. rnSIGTARP is the lead law enforcement agency investigating rescue fraudrnwhich includes bank, mortgage, and securities fraud and money laundering asrnwell as crimes that prey upon people or institutions seeking help from TARP’srnrecue program.  More than six years afterrnTARP was implemented in the wake of the financial crisis SIGTARP says it isrnstill investigating fraud and in fact has ratcheted up enforcement over thernlast two years.</p

The investigative agency says that inrn2012-2013 it nearly doubled the number of defendants that were criminallyrncharged from the numbers in 2009-2011 and also more than doubled the number whornwere convicted.  As of the end of 2013rnits investigations have resulted in criminal charges against 174 defendants,rn112 of which were senior officers of companies. rnAlready 122 of these have been convicted and others are awaitingrntrial.  Seventy-two have received prisonrnsentences with 37 receiving those sentences in 2013 compared with 13 inrn2012.  </p

Because the financial crisis was causedrnby toxic mortgage assets and TARP’s original purpose was to remove those assetsrnfrom bank balance sheets, SIGTARP said it is not surprising that most of thernfraud it investigates is mortgage related. rnThe mortgage process is complicated with many participants and multiple movingrnparts the report says, and fraud can seep into the process at each stage.rnSIGTARPS investigations have detected fraud at origination, during the life ofrnrisky mortgages, and at the sale of defective mortgages on the secondaryrnmarket.</p

SIGTARP mentions as one of its recentrnsignal achievements the October 2013 conviction of Bank of America/CountrywidernFinancial for defrauding the U.S. Government through a process known asrnHigh-Speed Swim Lane or “Hustle.”rn  Another was the multiple year prisonrnsentences handed down on Jun 28, 2013 to the CEO and a vice president ofrnAmerican Mortgage Specialists for defrauding TARP recipient BNC NationalrnBank.  </p

SIGTARP said it is focusing on several typesrnof crime.  The two prosecutions listedrnabove are examples of rescue fraud cases involving TARP banks.  It is also targeting rescue fraud involvingrnmortgage modification schemes targeting homeowners including Internet-based scamsrnand those that target victims either through the Internet, radio, or directrnmail.   Other types of fraud attempt torntake advantage of TARP by manipulating bankruptcy laws or charging homeownersrnfor phony foreclosure prevention assistance.</p

SIGTARP says it currently has more thanrn150 open investigations and that “Treasury’s current status in recovering TARPrnfunds has no bearing on SIGTARP’s enforcing the law for TARP related crime.  A company’s repayment of TARP must not servernas a shield to criminal liability.”  Itrnwill continue, the report says, to open new investigations of ongoing suspectedrnrescue fraud and to detect other rescue fraud by or against TARP institutionsrnthat had been hidden.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs
Share

Comments

Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...