Mortgage Fraud—Michigan

20 people in Michigan have been indicted for their alleged roles in a multi-million dollar mortgage fraud scheme.^[1] According to prosecutors, the 20 individuals devised a scheme to defraud and to obtain money from various lending institutions, banks, and individuals in the Detroit area.^[2]

Two of those indicted, Myron L. Hooker and Peter Garland, allegedly orchestrated the fraud by coordinating and directing the activities of loan officers, straw buyers, collusive sellers, real estate appraisers, and closing agents.^[3] In one example, they are accused of obtaining a falsely inflated appraisal on real estate and paying straw buyers to act as the purchasers of the property.^[4] To bolster the straw buyer’s credit-worthiness, the two orchestrators prepared false income and asset documentation.^[5] Relying on these representations, lending institutions approved and disbursed loans, which often subsequently went onto default and left the institutions with insufficient collateral.^[6]

The 20-count indictment charges the defendants with mail fraud, wire fraud, and conspiracy to commit those frauds.

Mail Fraud
Under 18 U.S.C. § 1341, it is illegal for a person to devise a scheme or artifice to defraud, and then use the mail to carry out that scheme.

The punishment for a violation of this section is a fine, imprisonment for 20 years, or both. If a financial institution is affected by the fraud, the fine can be as high as $1 million, and the prison sentence can be as high as 30 years.

Wire Fraud
Wire fraud, which is criminalized under 18 U.S.C. § 1343, is essentially the same as mail fraud except telecommunications technology is used to carry out the scheme.

The punishment for wire fraud violation is the same as a mail fraud violation.

Conspiracy to Commit Mail or Wire Fraud
Under 18 U.S.C. § 1349, any person who conspires to commit mail or wire fraud will be punished in the same way as if he had committed the offense. There is no overt act requirement in the statute.

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[1] US Attorneys Office, 20 Individuals Charged in Multi-Million Dollar Mortgage Fraud Scheme, Oct. 18, 2005, available here (PDF).
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.