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General News    H2'ed 7/7/08

Don't Blame The Borrowers ... Catch The Criminals !!! Grassroots Activists Unite and Blow Whistle On Mortgage Fraud

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ATLANTA, GA – The Congress Against Racism and Corruption in Law Enforcement (CARCLE) and the National Judicial Conduct and Disability Law Project (NJCDLP) have joined forces with other grassroots consumer advocacy groups and initiated a national Predatory Lending and Mortgage Fraud Taskforce. During the closing plenary of whistleblower’s week hosted at the National Press Club, CARCLE and International Association of Whistleblowers (IAW) presented victims of mortgage fraud, grassroots advocates, and banking and finance companies and announced the need for stronger judicial and law enforcement engagement to combat this problem. 


          Last week, the U.S. Department of Justice and the Federal Bureau (FBI) of Investigations announced operation “Malicious Mortgage” which netted and charged 406 real estate and investment professionals in a federal crackdown on mortgage fraud schemes. These investigations support the Congress Against Racism and Corruption in Law Enforcement (CARCLE)’s contention that the sub-prime lending crises is the result of lax local law enforcement of predatory lending and mortgage fraud. “We support the U.S. Department of Justice recent efforts to combat mortgage fraud and white collar crime in minority communities; the primary targets of sub-prime predatory lending. However, we hope that operation “Malicious Mortgage” represents an ongoing priority for the FBI and the U.S. Attorney’s office – if not it will simply be too little … too late” states Chief Deputy Marshal Matthew Fogg.                                     

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CARCLE’s mortgage fraud taskforce found that a major contributor to this problem is the lack of local law enforcement and judicial apathy. The problem is that many small loans of dubious origins and/or containing predatory or fraudulent features are “packaged” and allowed to be sold to unsuspecting investors. Like other “white collar” crimes, local law enforcement officials often ignore allegations of predatory lending or mortgage fraud for a variety reasons; some of which include racism, bias and actual public corruption. The lack of effective law and judicial enforcement of these underlying loans has resulted in billions, if not trillions, of dollars in consumer losses and the impending global securities crisis. Unfortunately, these devastating losses could have been mitigated or avoided if regulators and law enforcement had heeded the warnings of consumer advocates and whistleblowers relating to Predatory Lending and Mortgage Fraud.


From March 1 to June 18, 2008, FBI Operation Malicious Mortgage resulted in 144 mortgage fraud cases with 406 defendants were charged. Last week, 60 arrests were made in mortgage fraud-related cases in 15 districts, including Atlanta.  Several metro Atlanta mortgage fraud cases were included in the national "Operation Malicious Mortgage" crackdown reported by prosecutors and FBI officials. Georgia has led the nation in mortgage fraud according to recent FBI statistics. More importantly, many of Georgia’s mortgage fraud scams often involve substantial federal financing, most of which is intended for disadvantage minority businesses and/or low to moderate income families.


.          The Ellis Hotel / Dillard-Winecoff mortgage fraud case highlights the current sub-prime lending crises and lack of local law enforcement related to sub-prime mortgage loans, including projects with significant federal funding and resources; and how private sector whistleblowing positively impacts federal government operations by exposing private sector fraudulent schemes which rely upon significant federal funding resources. U.S. Chief Deputy Marshal Matthew Fogg (INA) states “the Winecofff Hotel is an example of a $30 million commercial mortgage fraud scheme containing nearly $20 million in federal grants, subsidies and tax credits, and an additional $1.5 million in municipal backed securities.”


.          The Winecoff is arguably the subject of one of the most egregious cases of mortgage fraud in America. Once proved, the Dillard-Winecoff case is one of the worst cases of mortgage fraud, securities fraud and public corruption I’ve seen in my 25 years experience in federal law enforcement” concludes Marshal Fogg (INA) – President of the Congress against Racism and Corruption in Law Enforcement and expert witness for Dillard-Winecoff. A similar hotel fraud occurred in New York City last year, when a Brooklyn man was arrested after trying to steal New York City's SoHo Grand Hotel by filing a fraudulent deed to transfer ownership of the $76 million establishment to himself. The only difference between the cases is that the Winecoff Case involves nearly $30 million dollars of federal funding, and New York authorities actually investigated the SoHo case, whereas Georgia has refused all local law enforcement requests. 


.          CARCLE contends that “internal law enforcement bias leads to external bias through the war on drugs, racial profiling, supposedly justifiable homicides, police brutality, the death penalty, and prison networks.” CARCLE accordingly evolved into a community advocacy by empowering local communities to lawfully expose and neutralize if not eliminate racism and similar corruption in criminal law enforcement, through corporate problem solving strategies while helping implement old fashioned, grassroots activism – all towards the end of social and economic justice for all. 

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.           CARCLE was founded more than a decade ago by Matthew F. Fogg, a presently inactive U.S. Marshal and international human rights activist. The organization began as essentially a union of primarily African American, deputy U.S. Marshals contending with rampant inter-departmental racism that riddled the U.S. Marshal’s Service. In fact, Fogg’s epic journey through the dangerous ʺblue wall of silenceʺ culminated with a $4 million dollar jury award on his discrimination claim against the U.S. Marshal’s Service.  Join CARCLE's Mortgage Fraud Taskforce and fight for social and economic justice today www.carcle.us


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Michael McCray is a public interest advocate who combats racism and corruption in the government and other institutions which deprive individuals of their basic civil rights, human rights and constitutional liberties. McCray is co-chair (more...)

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