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October 30, 2014

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FBI looking at hundreds in mortgage schemes

Fraud squad targeting cases involving millions of dollars, many victims

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As head of the FBI's Las Vegas division, Steve Martinez has seen "the whole gamut" of violent crimes. Martinez predicts a flood of mortgage fraud and white-collar crime in the next year or so.

Federal law enforcement officials in Nevada are launching a major offensive against mortgage fraud, with the FBI preparing hundreds of complex cases for prosecution against operators who have preyed on Las Vegas’ still-staggering boom-and-bust real estate market.

Top sources at the FBI field office said a special mortgage fraud squad is assembling evidence in 300 cases, many of them involving a million dollars or more in ill-gotten gains. They said agents have identified about 500 people connected to some 85 illegal organizations, most of them in Southern Nevada, who lied on loan applications or manipulated financial documents to defraud lending institutions and property owners.

The intensity of the investigations comes as top Obama administration officials in Washington announced plans nationwide to target mortgage and financial fraud that Attorney General Eric Holder said is “devastating families.”

Steven M. Martinez, special agent in charge of the FBI’s Las Vegas division, said the cases are stacking up so quickly that his agents are cherry-picking the more egregious ones involving multiple victims and millions of dollars.

“We have made some internal shifts to surge toward this problem,” Martinez said, noting that the government has established the Southern Nevada Mortgage Fraud Task Force involving the FBI and other federal law enforcement agencies, as well as state and local investigators.

“We’ve got quite a complement and we’ve got a lot of work to do. And we’ve already done a lot of analysis on suspicious reports. But what we are really looking for are groups that are committing fraud on a large scale.”

Another agent, who asked not to be identified because of the nature of the pending investigations, said the cases are “mushrooming fast.” He compared them to complex drug investigations where “we talk to one person and flip him, and that leads us deeper into these operations.”

Asked to describe the magnitude of the investigations, he said, “We have cases with a lot of fingers going in a lot of directions. It’s beginning to be like shooting fish in a barrel.”

Daniel Bogden, Nevada’s U.S. attorney, said Wednesday that his office was authorized on Oct. 30 to hire two more assistant prosecutors and a paralegal to join other assistants focusing on mortgage fraud.

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Daniel Bogden

“We plan to move forward,” he said. “Mortgage fraud is a significant and pressing problem for our district, and we will address it.”

The FBI and prosecutors also hope to send a message to small operators trying to tap into the volatile real estate market and bilk unwary property owners. That warning was sounded in Washington as well.

“Anyone looking to profit from the misfortune of others, we will investigate you, we will prosecute you, and we will incarcerate you,” Holder said this week. At his side were other top Obama officials, including Treasury Secretary Tim Geithner.

Holder said the FBI is working more than 2,800 mortgage fraud cases nationwide, up almost 400 percent from five years ago. He said the bureau has doubled the number of agents assigned to mortgage scams.

“We will not hesitate to bring charges,” he said.

One of the first cases was the arrest last week of Brian K. Jackson in connection with the now-defunct Las Vegas enterprise he ran, Unlimited Properties. Jackson, 38, who lives in Anaheim, Calif., was indicted by a federal grand jury in Las Vegas on charges of conspiracy to commit bank, mail and wire fraud. He allegedly pocketed about $179,000 in illegal profits.

According to the indictment, Jackson defrauded financial institutions by diverting funding from mortgage loans for “his own use and benefit” by using straw buyers. Homes would be purchased multiple times by different straw buyers at ever-increasing prices, with Jackson allegedly lying about his intent to live in the properties.

The indictment spotlighted a home on the 2000 block of Scenic Sunrise Drive in Las Vegas. Between March 2002 and late 2004, Jackson allegedly twice sold the home to straw buyers and then to himself, and “falsely stated that he intended to reside in the property when he knew he did not.”

Instead Jackson leased the property and kept the rent even though the home legally was owned by the first straw buyer and was in the process of being sold to a second straw buyer.

If convicted, he faces up to 30 years in prison and a $1 million fine.

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