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Operation Malicious Mortgage Transcript

Transcript of remarks by Director Mueller at the Operation Malicious Mortgage press conference on June 19, 2008.


FBI Director Robert S. Mueller, III,
at the Operation Malicious Mortgage
Press Conference, June 19, 2008

I want to underscore the Deputy Attorney General’s remarks on the significant threat posed by both mortgage fraud and corporate securities fraud.

Operation Malicious Mortgage focused on three types of mortgage fraud – lending fraud, foreclosure rescue schemes, and mortgage-related bankruptcy schemes. Through this operation, more than 400 defendants have been charged. We have obtained 173 convictions and 81 sentencings in crimes that accounted for more than $1 billion dollars in estimated losses.

These results represent takedown operations in 46 of our 56 field offices. As part of this operation, the FBI has also secured nearly 60 million dollars in assets.

The FBI is working closely with our partners to identify emerging mortgage fraud schemes on both the individual and corporate level.

We will continue to direct additional resources to combat this growing problem.

The FBI has seen steady growth in pending FBI mortgage fraud cases. The Bureau has engaged each of our 56 field offices to focus on this criminal priority. We currently have 42 mortgage fraud task forces and working groups addressing this issue.

The FBI’s mortgage fraud caseload has doubled in the past three years, to more than 1,400 pending investigations.

In 2007, the FBI obtained 321 indictments and informations, and 260 convictions in mortgage fraud-related investigations. As of April of this year, we had obtained 189 indictments and informations and 122 convictions.

In Fiscal Year 2007, we had 120 Agents working mortgage fraud cases. Today, there are 180 Agents working such cases, including 19 sub-prime-related corporate fraud investigations. The majority of the corporate fraud investigations deal with Accounting Fraud, Insider Trading, and with criminal intent, the failure to disclose the proper valuations of the securitized loans and derivatives.

In many of these investigations, the Bureau is working with the Securities and Exchange Commission and DOJ to determine the criminal intent of these identified violations. As you all know, in cases such as Enron and WorldCom, these cases are document intensive and complex.

We appreciate the efforts of the Eastern District of New York, the SEC, and the New York Field Office resulting in the swift indictment of the Bear Stearns wrong-doers Mark mentioned.

The FBI recognizes these Corporate Fraud cases will increase in numbers due to an enhanced level of regulatory and internal audit reviews by many of these Wall Street Firms, and we will address these cases as they are identified.

Currently, the FBI has been focusing its investigative resources on potential frauds committed by Investment Banks, Hedge Funds, Brokerage Houses, Rating Agencies, and Due Diligence Firms.

It is clear that emerging and re-emerging schemes in a down market include builder-bailouts, seller assistance, short sales, foreclosure rescue, and identity thefts exploiting home equity lines of credit.

Several of these schemes have emerged with the potential to spread as the recent rise in foreclosures, depressed housing prices, and decreased demand place financial pressure on lenders, builders and home sellers.

We will continue to work hard with our federal, state, and local partners to combat these frauds, and we will continue to dedicate the necessary resources to this challenge. Our objective, as always, is to protect the consumer and stabilize our economic markets.

I would be happy to answer any questions.

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