DOJ & FBI Charge 406 Mortgage Fraud Defendants
Wednesday, June 25, 2008
by Michael Peron
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A three-month investigation into mortgage fraud led by the U.S. Department of Justice and the Federal Bureau of Investigations (FBI) has ended with 60 arrests in 15 districts, the opening of 144 mortgage fraud cases and an assortment of charges levied against 406 defendants.
Altogether, the Justice Department says the cases investigated thus far are tied to $1 billion in losses.
The highest profile case involves Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin, both of whom are accused of characterizing two funds as low-risk when, in fact, they were supported by risky subprime loans. The two suspects have been charged with conspiracy, securities fraud and wire fraud. Cioffi also faces a charge of insider trading.
The U.S. Department of Justice said Thursday, “The indictment alleges that by March 2007, the managers believed the funds were in grave condition and at-risk of collapse, but made misrepresentations to stave off investor withdrawal. The funds subsequently collapsed in the summer of 2007 resulting in approximately $1.4 billion in losses to investors.”
The FBI arrested both men at their homes on Thursday morning.
“Mortgage fraud and related securities fraud pose 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,” said Deputy Attorney General Mark Filip. “Operation Malicious Mortgage and our other mortgage-related enforcement actions demonstrate the Justice Department's commitment and determination to combat these criminal schemes, hold their perpetrators accountable and help restore stability and confidence in our housing and credit markets.”Kerri Panchuk
Altogether, the Justice Department says the cases investigated thus far are tied to $1 billion in losses.
The highest profile case involves Bear Stearns hedge fund managers Ralph Cioffi and Matthew Tannin, both of whom are accused of characterizing two funds as low-risk when, in fact, they were supported by risky subprime loans. The two suspects have been charged with conspiracy, securities fraud and wire fraud. Cioffi also faces a charge of insider trading.
The U.S. Department of Justice said Thursday, “The indictment alleges that by March 2007, the managers believed the funds were in grave condition and at-risk of collapse, but made misrepresentations to stave off investor withdrawal. The funds subsequently collapsed in the summer of 2007 resulting in approximately $1.4 billion in losses to investors.”
The FBI arrested both men at their homes on Thursday morning.
“Mortgage fraud and related securities fraud pose 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,” said Deputy Attorney General Mark Filip. “Operation Malicious Mortgage and our other mortgage-related enforcement actions demonstrate the Justice Department's commitment and determination to combat these criminal schemes, hold their perpetrators accountable and help restore stability and confidence in our housing and credit markets.”Kerri Panchuk
