FBI Wades Into Subprime Mortgage Mess
Official confirms the bureau is investigating 14 companies for accounting fraud.
Jan. 29, 2008— -- The FBI is investigating 14 companies for accounting fraud relating to subprime mortgage loans, a bureau official confirmed Tuesday.
"There are some irregularities we are looking at… [this is] good old-fashioned greed," Neil Power, chief of the FBI's Economic Crimes Unit, told reporters.
FBI officials declined to name the companies facing scrutiny, citing the ongoing investigation.
Power indicated that some people knew about the subprime crisis well ahead of time.
The FBI's Criminal Investigative Division is internally working on a subprime mortgage fraud industry initiative. The investigations are labor-intensive for the bureau, as they involve following paper trails and reviewing documents.
The FBI, which only handles mortgage fraud cases involving more than $500,000, currently has 1,210 cases pending. The caseload has increased 50 percent in the last 12 months.
Relying on data from the Treasury Department's Financial Crimes Enforcement Network, FBI investigators review suspicious activity reports to see if a case is warranted.
The number of reports has also exploded in recent years. In 2003, the FBI received 7,000 reports. The bureau is expected to receive 60,000 in 2008.
In May 2007, the FBI released its most recent report on mortgage fraud, which found strong ties between the scams and loans resulting in default and foreclosure.
The report found that rising foreclosure rates opened a door to criminals, who would prey on homeowners looking to save their homes or exploit offers for home equity lines of credit to perpetrate the fraud.