WASHINGTON, D.C. | Illinois Attorney General Lisa Madigan on Thursday joined the nation’s top law enforcement officials in announcing that nearly 500 arrests have been made in a national campaign against mortgage fraud.
Representing the National Association of Attorneys General, Madigan said she has filed 33 lawsuits in Illinois that have awarded more than $1.2 million in restitution for homeowners as part of the "Operation Stolen Dreams" campaign.
"The foreclosure crisis has become an opportunity for con artists to prey on desperate homeowners," Madigan said. "These scammers promise to save homes, but all they do is steal homeowners’ hard-earned money. They are true predators."
U.S. Attorney General Eric Holder called the campaign "the largest collective enforcement effort ever brought to bear in confronting mortgage fraud."
"These schemes are despicable, they are dangerous to our economy, and they will not be tolerated," Holder said during a press conference.
Madigan filed her two latest lawsuits in Cook County Circuit Court against several Chicago-area mortgage rescue fraud companies. The lawsuits awarded between $50,000 and $60,000 in civil penalties, barred defendants from operating mortgage-saving businesses in Illinois, and provided restitution for the homeowners.
Operation Stolen Dreams began in March and has resulted in 1,215 criminal defendants and 191 civil enforcement actions. Kenneth Donohue, Housing and Urban Development inspector, said 70 groups and task forces are working nationwide on these issues.
The mortgage schemes in Illinois, like the rest of the nation, have involved "straw buyers" who lure distressed homeowners into turning over the equity on their homes, a problem that caused an estimated $2.3 billion in losses for homeowners nationwide.
In Illinois, some scammers led struggling homeowners into so-called "sale leaseback" programs, which encouraged them to temporarily sell their homes by falsely claiming they could pay rent for a year until they got enough money to buy it back.
Others promised to negotiate lower payments for homeowners in exchange for a one-time fee, but then never followed through. Homeowners also sometimes unknowingly sold their homes after signing fraudulent papers.
In one of the indictments, six defendants were charged with various counts of fraud. The defendants allegedly engaged in a scheme between May 2005 and April 2006 to fraudulently obtain more than $1.8 million in mortgage loans in connection with the sale of six properties to two nominee purchasers. Five of the properties were located in Chicago and one was in Olympia Fields. The defendants allegedly caused the submission of false loan applications and supporting documentation to various lenders.
Bruce Brown, 41, of Chicago, was the alleged leader of the scheme, while Brigitte Grose, 36, of Wheatland, Wyo., and Mario Moore, 28, of Burnham, allegedly participated as the purchasers and/or refinancers of the properties.
Loan officer Walker Smith, 38, of Richton Park, was a licensed loan originator employed by Allied Home Mortgage in Chicago, who allegedly submitted false loan applications for Grose and Moore in connection with the sale of four properties and the refinancing of one property.
Licensed real estate broker Anne Taylor, 62, of Flossmoor, was allegedly involved in the fraudulent financing of the Olympia Fields property. Bernard Sheppard, 36, of Richton Park, participated in the scheme by submitting a false document in support of a mortgage loan application, according to the indictment.
The total losses allegedly exceeded more than $1 million and the indictment seeks forfeiture of proceeds in excess of $900,000.
Since last year, pending mortgage fraud cases for the FBI has doubled to 3,000.
Holder said the U.S. Department of Justice has requested $178 million to target mortgage fraud as part of next year’s budget to combat these fraudulent schemes.
Other agencies involved in Operation Stolen Dreams include the U.S. Treasury, U.S. Postal Inspection Service, Federal Trade Commission, U.S. Secret Service, and the Internal Revenue Service.
