2. Anti-Money Laundering Association July 16, 2008 Event SSA Brian C. Weber Financial Institution Fraud Asset Forfeiture Unit FBI Headquarters (202) 324-3309 Brian.Weber@ic.fbi.gov

3. Financial Crimes and SARs Hundreds of Thousands of SARS Hundreds of Thousands of SARS Billions of Dollars in Estimated Losses Billions of Dollars in Estimated Losses Very Important tool for Law Enforcement Very Important tool for Law Enforcement –Direct Resources –Assist With Ongoing Cases –Track Trends

4. Suspicious Activity Reports Number of SARs Reported Nationwide – FY 2008 (10/01/2007 – 6/30/2008 3rd Quarter) Number of SARs received 520,467 Total SARs

5. Suspicious Activity Reports Dollar Losses Reported Nationwide - FY 2008 (10/01/2007 – 6/30/2008 – 3rd Quarter) Dollar Losses in Millions $5,242,047,254 in Total Losses

6. MORTGAGE FRAUD

7. Lender was stuck with a $250,000 loan.

8. Appraisal: recently renovated condominiums, Brazilan hardwood, Italian granite countertops, valued at $275,000.

9. Mortgage fraud is committed for one of two reasons To obtain a property To gain a profit

10. OPERATION MALICIOUS MORTGAGE JUNE 18, 2008

11. $1.07 Billion in estimated losses Operation Malicious Mortgage March 1, 2008 to June 18, 2008

12. Seized Assets from Operation Malicious Mortgage

14. Where is the crime problem? 14 FBI field offices reside in the top ten mortgage fraud hotspots as identified through intelligence from multiple source indicators. Emerging Problematic Mortgage Fraud Areas Top 10 Mortgage Fraud Hot Spots Source: FBI 2007 Mortgage Fraud Report

15. INTELLIGENCE ANALYSIS Directorate of Intelligence – Financial Crimes Intelligence Unit Financial Institution Fraud/Asset Forfeiture Unit Analysis based on research from the following sources: FBI-Field office pending cases for FY 2007 HUD-OIG-2007 Pending investigations FinCEN-SAR analysis MARI-Mortgage Asset Research Institute Fannie Mae-Misrepresentation data RealtyTrac Inc.-Foreclosure data Interthinx-Provider of industry risk management tools Radian Guaranty-Mortgage insurance provider

16. Number of Violations of Mortgage Related Fraud SARS Fiscal Years 2003 – 2008 (10/1/2002 – 6/30/2008) Nationwide Number of SARs received

17. Dollar Losses Reported of Mortgage Related Fraud SARS Fiscal Years 2003 – 2008 (10/1/2002 – 6/30/2008) Nationwide Dollar Losses Reported in Millions Rounded to nearest millionth Dollar Losses in Millions

18. FBI Mortgage Fraud Cases Fiscal Years 2003 to 2008 Data Source: Compass & MAR updated 6/30/2008 Steady Growth in Pending Cases FY 2003 -2004 CPI Codes; FY 2005-2006 - 29L& 29Ms; & FY 2007 – present - 329 Classifications Only

19. FBI FY 2007 Pending Mortgage Fraud Investigations Loss Amounts tied to Pending Investigations FY 2007

20. FY 2007 Pending FBI Mortgage Fraud Investigations By Region

21. RealtyTrac Incorporated, 2005 through 2007 Foreclosure Filings by Month

22. RealtyTrac Inc.: Percent of Households in Foreclosure 2007 StatePercent of Households in Foreclosure 2007 Nevada3.376 Florida2.002 Michigan1.947 California1.921 Colorado1.919 Ohio1.797 Georgia1.566 Arizona1.516 Illinois1.250 Indiana1.027

23. Emerging Schemes: Down Market Builder-Bailout Seller Assistance Scams Short-Sale Frauds Foreclosure Rescue ID Theft and HELOCs

24. Re-emerging Scheme: Builder-Bailout Typically consist of builders offering excessive incentives to buyers, which are not disclosed on the mortgage loan documents. Occur when a builder or developer experiences difficulty selling their inventory and uses fraudulent means to unload it.

25. Re-emerging Scheme: Builder-Bailout Example Builder wishes to sell a property worth $200,000 to a buyer. The property ’ s value is fraudulently inflated to $240,000. The lender funds a mortgage loan of $200,000 believing that $40,000 was paid to the builder, creating home equity. The builder forgives the buyers $40,000 down payment. Hence, the lender unknowingly funds 100 percent of the home ’ s value.