Mortgage Scam Part 3:Even the Big Boys Get Scammed

The Chicago Tribune reports:

Working rapidly, the team of investigators descended on a Chicago branch office of a giant global bank.

In sparsely appointed meeting rooms, they interrogated junior account managers and frightened clerks. Riffling through one branch manager's desk, they confiscated receipts for steakhouse dinners and Bulls tickets.

As they pored through loan files caked with white-out, the investigators came to a startling conclusion: Under prior ownership, the bank's recently acquired mortgage subsidiary had poured some $9.6 million into 81 fraudulent Chicago-area home loans, all in less than a year.

Using phony identities and forged records, a loose-knit band of con artists had taken title to dozens of inner-city buildings, borrowed millions of dollars against the properties, then vanished. Executives overseeing the Chicago branch appeared to have been negligent or complicitous in the fraud.

"A classic straw buyer's scheme," one investigator's memo concluded.

Watching this team of sleuths download computer files and comb through financial receipts, an outsider might have assumed they were FBI agents tracking one of the street gangs that is learning to profit from the surging national crime called mortgage fraud.

But these investigators didn't work for the government. They were a corporate quality control team trying to stanch a growing stream of fraudulent loans from within their own market-leading company.

The tense corporate drama was unfolding in the Chicago central branch office of CitiFinancial, a mortgage and personal loan division of Citigroup, one of the world's most powerful and sophisticated banking firms.

CitiFinancial's internal investigation, detailed in court records, interviews and internal company reports, shows how charlatans can exploit sloppiness and misconduct in a profession that touts its self-policing. Mortgage executives implicated in the Chicago fraud schemes disappeared from CitiFinancial's payroll only to pop up as managers of other firms.

You might want to read the whole article.What's too good to be true usually is.