Transcript Money Laundering Presentation

SSA Brian C. Weber
Financial Institution Fraud
Asset Forfeiture Unit
FBI Headquarters
(202) 324-3309
[email protected]
Anti-Money Laundering Association
July 16, 2008 Event
Financial Crimes and SARs
Hundreds of Thousands of SARS
Billions of Dollars in Estimated Losses
Very Important tool for Law Enforcement
– Direct Resources
– Assist With Ongoing Cases
– Track Trends
Suspicious Activity Reports
Number of SARs Reported
Nationwide – FY 2008
(10/01/2007 – 6/30/2008 3rd Quarter)
300,000
265,715
1,979
27,096
438
No Violation Indicated
Identity Theft
Terrorist Financing
Wire Transfer Fraud
Other
9,814
Mysterious Disappearance
Mortgage Fraud
Misuse of Position
Defalcation-Embezzlement
False Statement
5,623
Debit Card Fraud
Counterfeit Instrument
Credit Card Fraud
1,950
Counterfeit Check
Counterfeit Credit-Debit Card
23,042
Computer Intrusion
Consumer Loan Fraud
1,124
100,000
Bribery
Check Fraud
Check Kiting
Commercial Loan Fraud
28,593
3,131
16,419
1,771
28,937
3,836
28,302
4,671
48,510
3,035
61,449
200,000
59,439
244
BSA/Money Laundering
0
520,467 Total SARs
400,000
Number of SARs received
500,000
Suspicious Activity Reports
Dollar Losses Reported
Nationwide - FY 2008
(10/01/2007 – 6/30/2008 – 3rd Quarter)
$2,000
No Violation Indicated
Identity Theft
Terrorist Financing
Other
Wire Transfer Fraud
Mysterious Disappearance
Mortgage Fraud
Misuse of Position
False Statement
Defalcation-Embezzlement
Debit Card Fraud
Credit Card Fraud
Counterfeit Instrument
Counterfeit Credit-Debit Card
Counterfeit Check
Consumer Loan Fraud
Computer Intrusion
Commercial Loan Fraud
Check Kiting
Check Fraud
Bribery
BSA/Money Laundering
$0
$16.0
$469.0
$2.1
$795.1
$430.6
$36.2
$982.2
$429.0
$688.9
$423.0
$57.0
$567.4
$27.8
$66.8
$165.1
$366.1
$39.2
$890.5
$871.5
$560.5
$12.1
$416.9
$500
Dollar Losses in Millions
$1,000
$5,242,047,254 in Total Losses
$1,500
MORTGAGE FRAUD
Lender was stuck
with a $250,000
loan.
Appraisal: recently renovated condominiums,
Brazilan hardwood, Italian granite countertops,
valued at $275,000.
Mortgage fraud is committed
for one of two reasons
To obtain a property
To gain a profit
OPERATION MALICIOUS
MORTGAGE
JUNE 18, 2008
Operation Malicious Mortgage
March 1, 2008 to June 18, 2008
500
406
$1.07 Billion
in estimated
losses
287
250
173
81
0
Arrests
Defendants
Charged
Convictions
Sentencings
Seized Assets from Operation Malicious Mortgage
Seized Assets from Operation Malicious Mortgage
Where is the crime problem?
14 FBI field offices reside in the top ten mortgage fraud hotspots as identified
through intelligence from multiple source indicators.
Top 10 Mortgage
Fraud Hot Spots
Emerging
Problematic
Mortgage Fraud
Areas
Source: FBI 2007 Mortgage Fraud Report
INTELLIGENCE ANALYSIS
Directorate of Intelligence – Financial Crimes Intelligence Unit
Financial Institution Fraud/Asset Forfeiture Unit
Analysis based on research from the following
sources:
FBI-Field office pending cases for FY 2007
HUD-OIG-2007 Pending investigations
FinCEN-SAR analysis
MARI-Mortgage Asset Research Institute
Fannie Mae-Misrepresentation data
RealtyTrac Inc.-Foreclosure data
Interthinx-Provider of industry risk management tools
Radian Guaranty-Mortgage insurance provider
Number of Violations of
Mortgage Related Fraud SARS
Fiscal Years 2003 – 2008
(10/1/2002 – 6/30/2008) Nationwide
Mortgage Fraud
Fiscal Year 2003
Fiscal Year 2005
Fiscal Year 2007
Commercial
Loan Fraud
28,302
4,569
6,784
11,611
21,023
28,692
3,131
0
1,850
1,724
2,126
2,409
3,240
48,510
6,936
17,127
21,994
35,617
46,717
100,000
False Statement
Fiscal Year 2004
Fiscal Year 2006
Fiscal Year 2008 ( as of June 2008)
Dollar Losses Reported of
Mortgage Related Fraud SARS
Fiscal Years 2003 – 2008
(10/1/2002 – 6/30/2008) Nationwide
$689
$998
$1,402
$798
$388
$458
$891
$1,060
$1,163
$711
$540
$1,044
$982
$1,000
$225
$429
$1,014
$946
$813
$2,000
Rounded to nearest millionth
Dollar Losses Reported in Millions
Dollar Losses in Millions
$0
Mortgage Fraud
Fiscal Year 2003
Fiscal Year 2005
Fiscal Year 2007
Commercial
Loan Fraud
False Statement
Fiscal Year 2004
Fiscal Year 2006
Fiscal Year 2008 (as of June 2008)
FBI Mortgage Fraud Cases
Fiscal Years 2003 to 2008
2000
Steady Growth in Pending Cases
1,477
1,204
1000
721
436
881
534
0
FY 2003
FY 2004
FY 2005
FY 2006
FY 2007
FY 2008
(as of
6/30/2008)
Cases Pending
Data Source: Compass & MAR
FY 2003 -2004 CPI Codes; FY 2005-2006 - 29L& 29Ms;
& FY 2007 – present - 329 Classifications Only
updated 6/30/2008
FBI FY 2007 Pending Mortgage
Fraud Investigations
More
than
$1 Million
56%
Loss Amounts tied to Pending
Investigations FY 2007
Under $1
Million
44%
FY 2007 Pending FBI Mortgage
Fraud Investigations By Region
Southeast
22%
Northeast
10%
North
Central
27%
South
Central
18%
West
23%
RealtyTrac Incorporated, 2005 through
2007 Foreclosure Filings by Month
Unclassified
2005
2006
2007
250,000
Foreclosures
200,000
150,000
100,000
50,000
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
RealtyTrac Inc.: Percent of
Households in Foreclosure 2007
State
Percent of Households in Foreclosure 2007
Nevada
3.376
Florida
Michigan
California
2.002
1.947
1.921
Colorado
Ohio
Georgia
1.919
1.797
1.566
Arizona
Illinois
Indiana
1.516
1.250
1.027
Emerging Schemes:
Down Market
Builder-Bailout
Seller Assistance Scams
Short-Sale Frauds
Foreclosure Rescue
ID Theft and HELOCs
Re-emerging Scheme:
Builder-Bailout
Typically consist of builders offering
excessive incentives to buyers, which
are not disclosed on the mortgage loan
documents.
Occur when a builder or developer
experiences difficulty selling their
inventory and uses fraudulent means to
unload it.
Re-emerging Scheme:
Builder-Bailout Example
Builder wishes to sell a property worth
$200,000 to a buyer.
The property’s value is fraudulently inflated
to $240,000.
The lender funds a mortgage loan of
$200,000 believing that $40,000 was paid to
the builder, creating home equity. The
builder forgives the buyers $40,000 down
payment. Hence, the lender unknowingly
funds 100 percent of the home’s value.