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Money | 09/24/2008 8:30 am

FBI Investigates Bailed Out Financial Firms for Possible Mortgage Fraud

By The Staff at wowOwow.com
© Shutterstock

The FBI is investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG — and their executives — as part of a probe into possible mortgage fraud, multiple news sources reported Wednesday.

FBI spokesman Special Agent Richard Kelko told CNN that 26 firms were currently under investigation as part of the bureau’s general mortgage fraud inquiry.

Having Trouble Making the Mortgage Payment? Be Wary of ‘Foreclosure Rescue Scams’

Earlier this month, FBI director Robert Mueller told Congress that 1,400 individual real-estate lenders, brokers and appraisers, along with two dozen corporations, are under scrutiny. CNN previously reported that Countrywide is also part of the investigation.

The Wall Street Journal reports that the U.S. Attorney in Brooklyn, NY, has brought charges against brokers who allegedly tricked some institutional investors into buying risky auction-rate securities. 

The Washington Post, meanwhile, reports that the Securities and Exchange Commission has opened more than 50 investigations into disclosure and valuation of housing-related investments at banks, insurers and credit-rating agencies, agency Chairman Christopher Cox told the Senate Banking Committee Tuesday. Several lawyers warned that the probe into the complex world of mortgages could surpass the five-year Enron investigation.

Over the past year as the subprime mortgage debacle unraveled, the FBI began investigating a number of wide-ranging companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. Mueller has previously said the agency’s focus in the nation’s subprime mortgage crisis focused on accounting fraud, insider trading and failure to disclose the value of mortgage-related securities and other investments.

Sources told CNN that the probes of Fannie, Freddie, Lehman and AIG are believed to be in the early stages. One source said the government would be "remiss" if it didn’t take a close look at what happened at these firms.

11 Reader Comments (so far…) Sign In or Register to comment

Eliza Dodd
I built a house during the Clinton years and life was good ..Thank GOD ! Then Bush came and made empty promises to Americans …these people played a game in the administration …They Knew …So did the federal Reserve …things were rotten in America …so they offered 0 down loans to people of middle class …And knew they would fall …for it …My friends all had really nice Ranch style houses and most of them paid for and their cars paid for …So when this 0 down bull came into to play everyone wanted the Monster Size Houses …So this is what happened …to all of them and probably most of Americans …in this Big White House Lie > They sold their homes and spent the money …Why not they thought $0 down …and they even borrowed even more to buy Clothes and new cars and trucks and jewelery , vacations computers …lots of stuff they didnt need …Sure the economy was BOOMING on Wal Street …America looked Great ! DECEPTIONS DECEPTIONS !!!Even then on ABC one eveing as I watched they showed a cartoon of what was happening …with a street of houses and all the people who lived in these new Monster size houses …Betting they would get a job and a raise …when the payment and interest rate went up they would still be able to afford their homes …And ABC even said then and showed how many people on a street of dreams would loose thier homes because this would never happen …FORECLOSURES !!! is what they showed 8 years ago ….on ABC …They even knew then what would happen way back yonder !!!And most of my friends are starting ALL OVER like when we got out of H.S.…saving for another down payment and renting …some are still trying to hold on to their dreams of that Monster Size house …Before I moved I went by the banks as pasing the last time threw town ….looking for boxes to move and I saw all these cars and trucks at the bank …and the banks were closed ….It was REPO’S …..The banks parking lots looked like USED CAR LOTS …..And forsale signs all over this town where I once lived …even mine …When I did try to sell with the real estate people they wanted me to sell for $90, and she said if I get that RUN WITH IT …My house was worth $145.000 !!!!!I felt sick and I felt like PUKING !!! Because my house was worth $50 more than that …I had 3 acres and a Lake …stocked ! And it was a beautiful place …Last minute right before I signed those papers ….Someone bought it I knew …for $110, !~! And prior to this in 2003 I had it for sale for a year and only 3 people looked at it …@$120,000…I was saying the Holy Rosary ….And so we sold and moved to Texas ..Ft.Worth and found a ranch with a yard ,1966 it was built .And on top of that I was very Blessed we got mineral rights …one month after we bought it .And I look back and sigh and say Thank GOD ! I sold in the nick of time …The person I sold it to has only had 3 people look at it ….and it will be a yr in October ! And I can imagine if we would of stayed …We would of lost it …even if we filed bankrupt ……There is no way we could of made the payments …Because all the jobs are gone …it DRIED UP in West Tennessee …Sure we could of gotten minium wage ….but there is No Way we could of made the payments and lived ….soap toothpaste and food …gas …My husband had to drive to Memphis everyday to work 100 miles there and 100 miles back …….And we had 3 acres to cut …lots of GAS there …and time and my husband was very tired ….WORN OUT ! He aged 15 years because of what this Administration did to us ….We didnt buy into that 0 down but all our friends did …And we still had it hard …but not as hard as our friends do …I think all these people who had a hand in this Fannis May and even George Bush needs to be put in Prison for a long long time …Bush is the instagator ….and he should also be IMPEACHED along with Dick Cheney …..and Carl Rove …..and if Nancy doesnt put IMPEACHMENT BACK on The Table she too needs to go to Prison for OBSTRUCTING JUSTICE …She is not as INNOCENT as you think she is ….anyone with family in the Mafia never is ….her hands have Blood on them too …innocent blood …..American Blood …..
By Eliza Dodd on 09/24/2008 8:54 am
Diana T
There is a lot to be investigated about this whole debacle. The minute the news broke, there was talk about improper short sales, a practice outlawed in the European markets, I believe. There have been many improprioties in this whole situations for years. This did not happen overnight, and, indeed I heard Paul Volcker worrying about it about 3 years ago on the Charlie Rose show one evening. And, now, the news is that McCain’s own campaign manager was being paid as recently as last month by Freddy/Fannie. Those that were supposed to be overseeing turned their heads, there has been phoney paper being traded to the point that no one was even sure what made up these huge mega-mergers. So, good for those people that will be investigating. May the heads roll where they may.
By Diana T on 09/24/2008 8:59 am
Jennifer Dooley
It’s only just begun!
By Jennifer Dooley on 09/24/2008 9:29 am
WE D
McCain, McCain, McCain oh please. In 2006 he warned about Freddie and Fannie. Why do people forget Obama’s advisors were with Fannie Mae, one walked away with 90 million after taking the company down. Read these if you dare. http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-… http://iusbvision.wordpress.com/2008/09/23/alan-greedspan-and-the-federa… http://hennessysview.com/2008/09/08/obama-the-property-of-freddiefannie-… http://hotair.com/archives/2008/06/16/wsj-investigate-countrywide-politi…
By WE D on 09/24/2008 10:39 am
Diana T
We, I think you should remember that Phiil Gramm, who was McCain’s economic advisor until he had to quit under fire for calling us a nation of whiners, was the author of the grievous bill that gutted the Glass-Steagall Act of 1933. This was the act that regulated Banks. http://en.wikipedia.org/wiki/Glass-Steagall_Act This deed is one of the primary reasons we are in this mess today. Gramm and McCain have been leaders of deregulation bills for years. They call him Enron Phil because in 2000, he slipped in a clause into the Commodities Futures Modernization Act that Enron used as a loophole to commit their fraudulent acts. Mrs. Wendy Gramm sat on the board at Enron and made around $1million+. http://en.wikipedia.org/wiki/Phil_Gramm And, just this past two days, we find out that McCain’s own campaign manager, Rick Davis, was getting paid $15,000@month until last month. http://elections.foxnews.com/2008/09/24/report-mccain-aides-firm-paid-by… McCain has 177 lobbyists on his campaign staff, has voted to support Bush/Cheney over 90% of the time. If you honestly believe that he is suddenly a populist reformer, I know a bridge to Brooklyn I will sell you. And, it does go somewhere.
By Diana T on 09/24/2008 1:01 pm
WE D
If you have it for sale, you must have bought that bridger earlier. If you think BOTH Presidental candidates don’t have some mud on them from this mess, then pigs do know how to fly. Include Dems and Reps in Congress and the Senate for the mess too. Where were those guys on the Banking committee, they just now learned there was a financial problem. What do they do on those committees? Barney Frank and Chris Dowd certainly need to answer to the American public.
By WE D on 09/24/2008 2:41 pm
Tee Zee
If McCain knew in 2006 why didn’t he do anything about it? What’s he been doing besides buying houses and cars? He sure hasn’t spent any time doing his job in the senate.
By Tee Zee on 09/24/2008 7:00 pm
WE D
What has Frank and Dowd been doing. They head the Banking Commission
By WE D on 09/24/2008 8:19 pm
Barbara Ann Jackson
re: Lehman Brothers, Foreclosure Fraud, Wells Fargo, Conspiracy; Deceptive Judicial Filings LEHMAN BROTHERS’ mortgage troubles provides a yet further occasion to call attention to FORECLOSURE FRAUDS being carried out by via deceptive collections through use of the court system in furtherance of real estate racketeering and IRS fraud. In conjunction with the big Lehman Brother picture, the following is a small (local) component affecting Lehman’s decline. *See the court pleadings and more posted at: http://www.lawgrace.org/2008/09/14/lehman-brothers%E2%80%99-mortgage-tro… Despite probes into factors of the mortgage crisis, there has been almost no investigation of the most lethal mortgage mess component: FORECLOSURE ATTORNEYS DEBT COLLECTION ABUSES and JUDICIAL COLLUSION. Congress needs to seek the whereabouts of perhaps billions of dollars and massive amounts of real estate that winds up in the collector attorneys’ possession -as well as examine the scores of attorney bankruptcy court frauds. Referring to a foreclosure case entitled: “Lehman Brothers Bank v. Clement Bailey,” case #2007-5610 in Orleans Parish Civil District Court, and New Orleans federal case #08-3881, entitled: “Wells Fargo v. Clement Bailey, JP Morgan Chase, Bank of America, and Allstate Flood Insurance Program.” The KEY element about these 2 cases is that debt collector attorney Herschel C. Adcock, Jr., filed a Lehman Brothers foreclosure in State Court claiming Lehman holds the note. But, Wells Fargo filed the latter lawsuit claiming Wells Fargo owns that same note. If Wells Fargo succeeds in concealing Lehman Brothers’ (true or untrue) claim against Clement Bailey’s property, Wells Fargo and Mr. Adcock will wound up gleaning $$$$ —most likely from JP Morgan Chase, Bank of America, and Allstate Flood Insurance. [As mentioned, millions, perhaps billions of dollars being unlawfully gleaned by unscrupulous debt collectors through fraudulent foreclosures has too long remained an unheeded atrocity for which distressed property owners have long been subjected to, but now also impacts Investors!] Exhibits on the www.lawgrace.org website: *Orleans Parish Civil Sheriff Docket record for the Lehman Bros. v. Clement Bailey foreclosure filed by debt collector attorney Herschel C. Adcock, Jr., showing docket entry “ADA” code for of $2,203.00 to Adcock. *Letter dated from Adcock to J.P.Morgan Chase, informing Adcock’s representation of Wells Fargo, and seeking $$$ on Wells Fargo’s behalf while at the same time maintaining a foreclosure case on Lehman’s behalf. *Page one of the lawsuit that Wells Fargo filed in state court against Bailey, J.P. Morgan Chase, Bank of America, and Allstate Insurance. Even more proof of deliberate foreclosure fraud, and Securities fraud becomes clear when falsified IRS form 1099’s become filed by lenders like Wells Fargo Bank, NA. For such reasons, property owners need to be WARNED about mortgage lenders’ practice of filing falsified IRS tax form 1099-A’s or 1099-C’s. Here’s the LINK to that statement: http://www.lawgrace.org/2008/08/08/my-august-8-2008-statement-to-the-lou… Barbara Ann Jackson (Katrina-displaced from New Orleans) http://www.lawgrace.org
By Barbara Ann Jackson on 09/24/2008 8:59 pm
Sherrie Crews
If you have it for sale, you must have bought that bridger earlier.” By WE D on 09/24/2008 2:41 pm The “buyers and the sellers” in “Temple” of Wall Street didn’t have to own all those shares and bonds they were buying, selling, trading and betting on. They just had to borrow them.
By Sherrie Crews on 09/25/2008 8:52 am
Bob Gordon
I read over ELIZA DODD’s comments. She is blaming BUSH, when the blame is the “Failed Policies of the Democratic congress” - not the so called “Failed Policies of the Bush Administration”. Please check your facts when blaming somebody. First of all and again this is alledged (until the investigation has been completed) - if you do some research you will find that the collaspe was created by the majority party who has total control over both the Senate and the House - CONGRESS. If you check further you will find names like Chris Dodd, Frank, Shumer, Polisie, Obama and many more that had a direct involvement in the collaspe of the real estate market. The real estate market collasped because of so called good intentions of the Democrats in power to lower the standards for poor people - or people who could not really qualify to buy a house - in a sense they were trying to make it easy for people to get in the so called “American Dream” but with all of their good intentions - the good intentions failed because again like most liberal agendas it was all conceived through hot air without any substance. So when you blame BUSH you need to look into who really was at fault. The policies for Fannie Mae and Freddy Mac all started by again the Democratic party back around the late 1930 ties, and like everything else the liberals touch they push again for more and more liberal laws which then collasped the whole system. By lowering the qualifications to get into real estate it pushed the prices higher and higher - then people who really did not belong in real estate for various reasons could not pay their debt. On top of that they also refianced their credit cards with the equity in their house, that just added fuel to fire. Also if we are not careful and we elect OBAMA who is directly linked to ACORN and to the “Failed Policies of the Democratic Congress” we will be putting into power very left wing liberals who will block needed investigation into what happened, since the Democrats are directly responsible. Then there is the ENERGY MESS - with high gas prices. Lets again look at the “Failed Policies of the Democratic Congress” - they set into place laws that would not allow for drilling, refining, and nuclear. So we had to buy Oil and Energy from some where so we had to go to the foreigners who really do not like the US, - this again is FACT so please check on this. The BUSH Adminstration had nothing to do with it, no drilling, not refining, and no nuclear is the law, pushed through by the Democrats, who again have left us with high energy costs. One more last thing - and this I know from personal experience that contrary to the liberals and the Democratic party “Supply Side Economics” really does work, JFK Jack Kennedy invoked this economic philosophy back in around 1960. Taxing the so called rich does not work (ask yourself have you ever gotten a job from a poor person). The way I saw this work in real life I created a company, the company grew I was able to hire 60 employees, many had children of their own, they were able to from working for me finance their children’s college education. Now that is supply side economics, not a transfer of wealth that OBAMA and the Democrats want to do. So think about all this when you vote, get the facts and stop blaming BUSH
By Bob Gordon on 10/21/2008 5:00 pm