Behind the Scenes as FBI Busts Mortgage Fraud Suspects

April 8, 2009— -- The Federal Bureau of Investigation swooped in and arrested 23 members of a suspected mortgage scam in San Diego today as part of a nationwide crackdown on real estate fraud.

ABC News was given exclusive access as FBI agents carried out sweeping arrests in the largest raid of its kind. Starting at 6 a.m. this morning, agents led alleged scammers of a diversity of races, ages and both genders into FBI headquarters in handcuffs. Some of them were still in their pajamas.

Federal agents believe that the arrests will stop a scam that has allegedly involved loans on more than 200 houses, costing banks millions and causing neighborhood property values to plummet in San Diego County.

"Agents reviewed many, many hundreds of suspicious activity reports and began to see patterns, trends, repeat occurrences," said Keith Slotter, the FBI's special agent in charge of the San Diego office.

U.S. attorney Karen Hewitt named Darnell Bell, a former gang member from the San Diego area, as the leader of the alleged mortgage fraud enterprise who the office says oversaw the purchase of property, among other tasks. Bell, who authorities say turned to mortgage fraud after a career of selling drugs, has been in jail on cocaine charges since April 2008.

FBI officials say that suspected fraudsters recruited or became loan brokers, contractors, appraisers and straw buyers, building a highly sophisticated scam and network of conspirators.

Authorities say ring leaders would find a property, such as a house listed for $499,000 that had often sat on the market for some time. A real estate appraiser, also involved in the alleged scam, would prepare an inflated appraisal for the house at $600,000. The appraisers promised to make improvements to the property, such as giving the homes access for people with disabilities, but never made them.

The "straw buyer," also in on the alleged conspiracy, would then apply for a 100 percent loan based on the inflated appraisal. The excess money, supposedly needed to rehab the house, was instead split among the scammers.

The buyer simply walked away from the house without making any payments. As a result of the alleged scam, the properties were foreclosed on.