MIAMI BEACH, Fla. – With great fanfare, President Obama signed Executive Order 13519 on Nov. 17, 2009, establishing a Financial Fraud Enforcement Task Force to be led by Attorney General Eric Holder with the aim of prosecuting fraud and recovering assets in the economic debacle that began one year earlier.
In 2010, the Mortgage Fraud Working Group organized under the executive order issued its first annual report, boasting that the number of mortgage fraud defendants charged by the U.S. Attorneys’ Offices more than doubled from 526 in fiscal year 2009 to 1,235 in fiscal year 2010. A similar increase was reported in the number of mortgage fraud cases charged, going from 267 in 2009 to 656 in 2010.
However, WND research has demonstrated that the mortgage fraud cases pursued by Holder’s Department of Justice have typically targeted homeowners charged with making fraudulent loan applications. Largely ignored are the financial institutions that made the loans and prominent Democrat donors and colleagues of Obama administration officials.
High friends in high places
As WND has previously reported, Holder has overlooked possibly fraudulent “loan to own” equity recapitalization loans Credit Suisse made to some 15 or more luxury resorts or to various principles involved in the transactions, including supermarket billionaire Ron Burkle, a long-time Democratic Party operative with a history of providing financial support to top Democrats, including Bill and Hillary Clinton.
WND has also reported that Credit Suisse is a client of the Washington-based law firm that Holder left as a partner to become attorney general and Lanny Breuer left as a partner to head of the Justice Department criminal division under Holder.
The firm, Covington & Burling, represents “a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud,” Reuters reported Jan. 20.
In addition to Credit Suisse, they include Bank of America, Citibank, JP Morgan Chase, Wells Fargo & Co. and at least one other bank among the top 10 largest mortgage servicers.
Holder prosecutes mom and pop
On Feb 19, 2011, New York Times Op-Ed writer Joe Nocera lamented that Holder and the Justice Department had decided not to prosecute Angelo R. Mozilo, the high-flying former CEO of Countrywide Financial, one of the mortgage lending firms most responsible for the continuing mortgage crisis.
“Hundreds of billions of dollars have been lost by investors while millions of borrowers have lost their homes,” Nocera wrote, recalling that Mozilo sold $140 million in Countrywide stock while his company was failing. “Few of the people who ran the institutions that contributed to the disaster have been found liable.”
On March 25, 2011, Nocera contrasted the kind treatment Mozilo received at the hands of Holder’s DOJ with the experience of 48 year-old Charlie Engle. Engle caught the attention of Robert W. Nordlander, an IRS special agent, after movie actor Matt Damon financed a documentary film titled “Running the Sahara,” featuring Engle’s ultra-marathon challenge.
Convinced Engle was understating his taxes, Nordlander resorted to a dumpster dive for records Engle may have thrown away, unwilling to believe that all Engle earned from the documentary was $30,000.
Still unsatisfied, Nordlander hired an attractive female undercover agent to meet Engle and see if she could entice him into making admissions.
Engle’s crime, for which Holder’s U.S. Attorneys sent him to prison as a felon, was that he took out a “liar loan,” overstating his income.
“Charlie has always insisted that he never filled out the loan document – his mortgage broker did it, and he was actually a victim of mortgage fraud,” Nocera wrote in yet another editorial on Richard Engle, published June 1, in which he noted the broker later pleaded guilty to another mortgage fraud.
“Indeed, according to a recent court filing by Charlie’s lawyer, the government failed to turn over exculpatory evidence that could have helped Charlie prove his innocence.”
Nocera’s conclusion: “For whatever inexplicable reason, prosecutors really wanted to nail Charlie Engle. And they did.”
Another “small fry” touted by the DOJ in November 2009 as part of a Holder surge in mortgage fraud prosecutions was Lakeisha Gates.
In 2007, Gates worked as a clerk at a small brokerage firm in St. Petersburg, Fla.
Allegedly at the behest of the owners of the firm, Gretchen and Eric Scott, Gates acted as the nominee purchaser at grossly inflated values for two properties the Scotts owned. She misrepresented on the loan application that she made $5,000 per month as the vice president of a catering company.
Gates obtained a mortgage for $300,000, which soon defaulted. For her participation in the deal, Gates earned $10,000.
She pleaded guilty to federal mortgage fraud charges and agreed to testify against the Scotts, who she said put her up to it. The Scotts were charged with a conspiracy to commit bank and wire fraud.
When the Mortgage Fraud Working Group boasts of prosecuting mortgage fraud, the cases typically involve individual borrowers who had lied or otherwise committed fraud by obtaining mortgages on one or more properties.
Those the Obama administration allows to walk free are the likes of Angelo Mozilo, who built an empire making highly inflated mortgages based on questionable appraisals to lenders who were never properly credit-qualified. Mozilo amassed a fortune that enabled him to pay a $67.5 million fine to settle Securities and Exchange Commission fraud charges without appreciably denting his massive net worth.
WND has previously reported how Countrywide Financial Group gave preferential “friends of Angelo Mozilo” loans to Democrats Franklin Raines and James Johnson, who each made millions personally while holding executive positions in Fannie Mae amid the irresponsible mortgage activities each directed to the ultimate detriment of the taxpayer.
Nocera’s conclusion was that the Justice Department has taken after “the smallest of small fry – and then trumpeted these prosecutions of how tough it is on mortgage fraud.”
He wrote: “It is a shameful way for the government to act.”
‘The fix is in’
WND has previously reported that Edra Blixseth, the former spouse of Tim Blixseth, the founder of Yellowstone Club, has teamed with Ron Burkle, the supermarket billionaire who was a major donor to Hillary Clinton in her 2008 presidential campaign.
Mike Flynn, attorney for Tim Blixseth, has explained to WND his reasons for believing Burkle used his political connections with Holder and Breuer to quash criminal investigations regarding Edra Blixseth.
“The Holder/Breuer-controlled Justice Department quashed the entire investigation; they declared the Yellowstone Club ‘off limits,’ and even the ‘connected’ bankruptcy judge Ralph Kirscher, who declared Edra exonerated and discharged from all liability,” Flynn told WND.
“The Holder DOJ and Judge Kirscher made the decisions to sweep away the pending Montana Yellowstone Club investigation and proposed indictment of Edra Blixseth in the face of the documented, irrefutable evidence,” he said.
Flynn provided WND evidence of a series of questionable loans and various financing attempts to gain ownership of the Yellowstone Club at prices deeply under market undertaken by Edra Blixseth, beginning in June 2007. The transactions resulted in millions of dollars of defaulted loans. Meanwhile, Blixseth, Burkle, various hedge fund investors and Credit Suisse ended up owning the Yellowstone Club for under $10 million.
“Some of the loan documents, Edra Blixseth used to commit this massive fraud or so grossly false on their face for tens of millions of dollars, that it makes the Edra Blixseth case appear to be a cover-up resulting from rank cronyism or worse,” Flynn said.
Flynn told WND his office provided the Obama-appointed Montana U.S. Attorney with documentary evidence proving that while Edra Blixseth was signing perjured loan documents with banks, she was contemporaneously signing sealed affidavits in her divorce reciting the opposite of what she was stating to the banks – in both instances to obtain millions of dollars in her divorce and tens of millions from the banks.
“Tens of millions of dollars of the Edra Blixseth loans have never been paid to creditors or accounted for,” Flynn said.
“Burke and Sam Byrne of the Boston-based hedge fund CrossHarbor Capital Parthers have ended up with $800 million in Blixseth assets, while the Democratic bankruptcy judge has swept all the documentary evidence under the rug. Judge Kirscher has discharged Edra Blixseth, and the Holder/Breuer DOJ has quashed all criminal investigation as ‘off limits.’”