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August 20, 2014

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Task force taking down mortgage scammers, one at a time

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Sam Morris

Senior FBI agent Michael Rawlins is on the Mortgage Fraud Task Force. His office has generated 40 criminal cases since March 2008, with all but one resulting in guilty pleas.

To measure the depth of the mortgage fraud crisis in Las Vegas, look no further than FBI agent Michael Rawlins’ desk. He moved here in March 2008 and has generated 40 criminal cases, all but one of which are ending in guilty pleas.

In the coming weeks he and the bureau’s white-collar crime squad hope to send dozens more cases to federal prosecutors, and dozens more after that.

Such resolutions, as one suspect after another rolls over, might make his work seem like slam dunks.

But the reality is that there are thousands of cases in Nevada he and his FBI colleagues know they will never get to — even if they knew of them all, so widespread is the crime.

Indeed, complaints of real estate fraud are still pouring into the Southern Nevada Mortgage Fraud Task Force Hotline.

Rawlins says it’s an uphill battle that’s worth the fight.

“Our goal is to weed out these bad individuals, to prosecute them and to get them out of the industry,” said Rawlins, a redheaded, no-nonsense agent. He is preparing for the December trial of the lone defendant who has refused to plead guilty.

“It’s realistic to assume we can prosecute a few hundred of these individuals, which would represent only a fraction of the shammers. A fraction, but a significant fraction. The idea we can prosecute everyone is impossible. That will never happen. But we are going to cast as wide a net as possible.”

There simply are too many cases to investigate and prepare for prosecution. Rawlins is working cases every day, as he and his squad mates square off to arrest individuals and companies that during the market boom scored millions of dollars in illicit gains by putting together fraudulent real estate deals and now, in the crash, are targeting desperate homeowners with phony promises to save them from foreclosure.

Considering that one in 23 property owners here are facing foreclosure, the Las Vegas area is ripe for the picking.

To raise the alarm, top federal and state officials met in Las Vegas this week to warn the public about shylocks and to reveal their own efforts at fighting back.

Senate Majority Leader Harry Reid introduced Gilberto and Maria Romero, who in June paid $1,200 to a manipulator who “promised” to restructure their home loan. Instead he vanished with the money — at a time when Gilberto was an out-of-work carpenter and Maria had lost her hotel job because of a back disability.

“They must be amoral to do the things they do,” Reid said. “They prey upon the desperate.”

Jon Leibowitz, chairman of the Federal Trade Commission, announced six new lawsuits, bringing to 28 the number of mortgage relief cases the commission has brought throughout the nation since the housing crisis began. These were sweeping cases against large organizations that the FTC said were bilking thousands of homeowners by charging them big upfront fees but doing little or nothing to help them renegotiate their mortgages.

Las Vegas, Leibowitz said in an interview, is a “treasure trove” for these kinds of cases. “It’s a rich environment for the scammer.”

Assistant Attorney General Tony West, head of the Justice Department’s Civil Division, said he has begun putting several large fraudulent corporations out of business, and is working to return some of their assets to thousands of victims from across the country. “We try to make them as whole as possible,” West said in a separate interview.

Rawlins knows that seizing assets and returning money to victims is difficult at best. Some of the suspects he has corralled lived well; they drove Bentleys and Hummers and lived in million-dollar homes, he said. One spent a good amount of time on the Strip.

“He was a loan officer making $900,000 a year doing fraudulent loans,” Rawlins said. “And if you’re making money that easy, money that is not legally earned, it’s very easy to blow through it. If you make a million dollars in a half-hour, it’s easy to go put that on black on the roulette wheel.”

Agent Rawlins, who earlier worked as a financial auditor for the Defense Department, said the FBI is moving on two fronts.

One is to dismantle crooked operations that ginned up phony loan, appraisal and escrow documents, and made fortunes buying and selling properties through straw purchasers. As an example he cited the defendant who insists on going to trial next month. He is accused of fabricating bank paperwork used in fraudulent property transactions.

The other is to target the latest racket, where operators are running print, television and radio ads luring at-risk homeowners for large upfront fees pledging to realign their mortgages or “rescue” them from foreclosure.

In both types of cases, Rawlins said, the bureau is going after the more complex operations, and those who have pocketed the most money. Most of them, he said, confronted with long prison sentences, eventually agree to plead guilty to a federal felony, take a year or two behind bars, and then help the bureau nab others.

Rawlins calls them “cabals.”

“In a lot of the cases I’m working they have already confessed and are now operating,” he said. “Those are the best cases to make. You already have an insider who can provide you with firsthand information of a conspiracy or the individuals he has worked with.”

It may end up being a small fraction of those who are arrested. But it also may send a strong signal to ward off others, that if they persist, and though it may take a while, the FBI will find them.

“We’re churning through the cases as fast as we can,” Rawlins said.

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