White collar crime – Mortgage fraud – Summary
Section 1: Description of Crimes and Cases
The Bank of America is judged with a mortgage crime by the federal prosecutors (Protess, 2012). The category of crime committed in this case is the profit type of fraud. The profit fraud is a scheme that often entails more than one individual who play different roles in the fraud. The initiators of the crime are the ones that receive a larger share of the profit whereas the rest are paid different amounts depending on the part they played in the scheme and how they had agreed. In this crime in question involving the Bank of America, a scheme was carried out, initiated by the Countrywide Financial unit and they managed to churn out loans at a pace minus proper controls as they defraud the government-supported mortgage agencies (Protess, 2012). That resulted in the taxpayers guaranteeing billions of money involving bad loans.
The other mortgage fraud crime also involves the Deutsche Bank that was accused of defrauding taxpayers at least $1 billion by repeatedly cheating the federal agency during the process of securing the taxpayer-supported insurance for numerous shoddy mortgages (Nasiripour, 2011). The general category of fraud also committed in this case for Deutsche Bank is a profit fraud as it involves the perpetrator making huge profits by fraudulent means. MortgageIT funnels risky mortgages by fraudulent means to the Department of Housing as well as the Urban Development’s Federal Housing. In the meantime, Deutsche Bank makes substantial profits through the sale of those loans to the investors according to the lawsuit claims. The federal authorities discovered some MortgageIT transactions that form the background for its suit. While the Deutsche Bank and the MortgageIT benefited from the resale of those mortgages insured by the government, several homeowners had to face default and eviction.
Wells Fargo & Company is also another institution accused of engaging in a mortgage fraud crime back in the year 2012. The company is the country’s largest mortgage lender, and it was accused of being involved in misconduct in underwriting and originating the government-insured mortgages (Raymond & Shankar, 2015). The general category of this crime also falls under the profit fraud as it engages in fraudulent activities with the aim of making a profit out of the same.
Perpetrators and their Cases
The first fraudulent crime involving the Bank of America has the same bank acting as the perpetrator. The US attorney, Preet Bharara says that the fraudulent conduct was spectacularly brazen in its scope. The case concerned reckless lending by the bank. The bank was forced to repay some of these sourced loans to the victims. The lawsuits also threatened to impose some fines on the bank after the charges are determined. The case was filed by the Justice Department under the False Claims Act that offers for triple the damages the victims have suffered as a result of the crime committed against them.
On the case involving Deutsche Bank, the Justice Department accused the bank as a reckless lender that did not employ enough oversight over its operations. The lawsuit finds Deutsche and MortgageIT guilty of repeatedly and brazenly breaching the public interest. They are likely to face similar charges of repaying thrice the amount they had fraudulently conned the victims. As pertains to Wells Fargo & Co., they are accused of recklessness in origination and underwriting practices. It also accused of its failure to report the loans to the government officials. The full agreement between the court and the accused is being settled after which the full report will be presented to the Justice Department for approvals.
Section 2: Applicable Laws and Category of Cases
Identify and discuss the applicable laws and regulations, as well as the law enforcement agencies that pursue the crimes
There are some applicable laws and regulations including agencies that are involved in regulating the fraud crimes. The conventional legal wisdom assumes that the public records do restrict recording of fraud. One of those regulations is the California’s Dedicated Statute for Mortgage Fraud that provides for the fines and imprisonments of the victims involved in the fraudulent mortgage activities. Under this statute, the loan applicant is fined an amount not more than ten thousand dollars. There is also the felony mortgage fraud statute that provides for the punishment for the mortgage fraud that is an imprisonment for a period not exceeding one year. These mortgage fraud regulations are useful in guiding the process of prosecuting and persecuting the victims of the crime in question. The regulations as mentioned earlier are also part of the chapter 17 of the Penal Code that stipulates for the charges that offer the grounds upon which the mortgage fraudsters are to be charged in court.
Under the same section 17, also the charges can be reduced to a mere misdemeanor so as to reduce an individual’s jail duration. That, however, must thoroughly examine the nature as well as the circumstances of the offenses, the attitude towards the punishment, and the behavior exhibited during the trial of the individual. There are several agencies that handle these legal tasks including the FBI, the US Department of Justice, the Office of Inspector General and the Mortgage Licensing System and Registry.
Categorize the Crimes
Occupational crimes entail the abuses of the structural systems in one’s workplace aimed at accomplishing various white-collar crimes. They often involve a combination of efforts of many people instead of a single person. Corporate crimes are also crimes committed by corporate officials so as to have a corporate gain. They are often referred to as quiet crimes as people do not know who to blame although they may not know that they are being victimized (Freddiemac,com, 2016). The vocational crimes, on the other hand, are a type of white-collar crime that involves members of an organization who temporarily hide the identity, source or destination of fraud via real-estate transactions. The three types of white-collar crimes fall into any one or more of these categories of white-collar crimes.
The first case of a white-collar crime involving the Bank of America is a type of occupational as well as a white-collar vocational crime. It is an occupational crime in that the bank abuses the legal, structural systems that are in place to accomplish various white-collar crimes as explained before. It is also a vocational crime because the criminals try to conceal the evidence of the destination of the money gotten through real-estate transactions. The crime involving the Deutsche and MortgageIT fall into the three categories of criminals when considering the different aspects of the white-collar crime committed. The perpetrators first involve a group of people, it also involves a real-estate transaction, and the entire organization is involved with the victims being unaware of the act. All these types of crimes are almost similar with very slight differences among them, although, in the broad category, they are all the same as they are white-collar crimes.
Section3: Answer the foundation questions
How does each type of crime fit the various definitions of white collar crimes highlighted in text
The Bank of America crime involves then bank engaging themselves in the fraudulent activities where they churn out the government-backed agencies a large amount of mortgages without its knowledge, thus a criminality. It is the leaders of the institution who are involved, and thus it is white-collar because these people are of high respectability and a high social status, something that falls into the definition of the white-collar crime. It also fits in the definition of the white-collar crime as well as the definition of the occupational crime because the perpetrators commit it in the course of their occupations. It also fits into the definition of the organizational crime since the perpetrators engage in then acts of omission and commission in the formal organization in light of the operative goals of the organization that has serious economic and physical impacts on the consumers and the general public.
The Deutsche and the MortgageIT crime also fits into the various definitions of the white-collar crimes due to its characteristics and the characteristics of the people directly involved in committing the crime. It falls into the definition of the criminality because it has not come to the knowledge of the public opinion although the law has already been violated. Because the people involved are the corporate officials, with high respectability, and they commit the crime in the course of their occupation, the crime fits into the definition of the white-collar and occupational (Strader, 2011). It also fits into the definition of the elite defiance since the people involved come from the highest strata of the society. The crime is also similar to the one involving Wells Fargo with the similar characteristics, and thus, the latter will fit in the various definitions of white-collar crime with similar explanations.
Do perpetrators occupy a position of trust and respectability?
The perpetrators occupy the positions of trust and respectability because all of them are the workers of a bank that we respect and hold in high regard. Also, the institutions themselves are the ones people trust very much since they have entrusted them with their money.
Discuss the Risk Analysis
The crimes committed pose dangers to individuals, agencies, and the government due to their negative impacts on these areas. The institutions themselves risk being thrown out of the business because they are engaging in illegal activities that taint their names as they are organizations held in high respect and trust by people. They also impact the people by lying to them, hence in one way or another can make the lives of the people hard if these criminal activities continue. The government is also affected negatively regarding its economy, and some of the criminal acts involve government agencies.
Describe the Harm
The direct harm is the loss of people’s money that in turn results in the indirect effects of physical and psychological in nature; concentrated and diffuse. When the people come to discover that they have been cheated, they will have already lost their money, and that may negatively impact their lives as they will lack essential things to where the money would have been useful, thus even becoming distressed. That effect can diffuse into their families and other businesses that directly depend on them for sustenance.
Role of Victim
The victims are not aware of what is happening because they take it as a normal business where they can invest their money, time, and strength and get back good returns. They are however used as stepping stones by the perpetrators who have ill intentions of ascending to greatness through devious means.
Section 4: Provide your personal reaction to the crimes, motives, and law enforcement responses
There are many institutions that engage in similar criminal activities without the knowledge of the government and the victims where the two may fall victims. The difference between these white-collar crimes and the other crimes is that they are nonviolent, hence difficult to detect. That seems to make the perpetrators conceal themselves from being known by the law enforcement agencies, and they may be in the illegal business for a long time before they are finally brought to book (Johnson, 2014). The government needs to be very vigilant so as to detect these types of crimes early enough so that the corrective mechanisms can be undertaken to prevent the people from being lied to by these money-hungry perpetrators that are out to enrich themselves from other people using illegal and unacceptable means.
The detection of the crimes took such a long time because there were no means on the ground that would help to detect them early enough to curb much of the loss that was experienced. Furthermore, the investigations take such a long time to the extent that some of the perpetrators manage to get away with the crimes. That is because as the investigations go on, they continue to devise other means of getting away with the crimes undetected. Additionally, the law that is in place leaves out a loophole that enables the criminals to get away with their crimes. For instance during the investigation of the Wells Fargo & Company case, there is a lack of some legal provisions that in turn hinder the investigations from taking place in a fruitful manner.
I suggest that there be a legal process that is reliable in place to make sure that the criminals do not get away with their crimes and to help the investigations to take pace faster. The law can also be made stricter on the people or institutions involved in white collar crimes so that many people can learn from the others’ experience and fear to engage in the same crimes based on the fear of serious consequences. The law enforcement agencies should also liaise with other agencies that can help in the investigations to make sure that the investigation and the trial are accelerated to save time and expenses. Perception is everything; as long as people know that they are immune from being brought to book, they will continue to harbor the perception that victims deserve their fate (StopFraud.gov, 2016).
There are also underestimated losses. The price tags having an attachment to some of the white collar crimes are so staggering to the extent that they are hard to understand. The law also that was examined in the case mentioned above studies has the victims paying a fine of up to three times the amount thought to have been defrauded. Sometimes the loopholes in the justice system make it hard to establish enough evidence or to calculate the losses incurred, physical and economical; direct and indirect fully. Leniency also needs to be addressed in the legal system. Many judges and law-makers are of the mind that the justice system is already overloaded, and thus, jails should only be used for violent offenders, and thus, fraudsters are given lenient sentences or low penalty. Changes should be made to this legal system.
FBI.gov. (2009). 2009 Mortgage Fraud Report “Year in Review”.
FBI.gov. (2009). Mortgage fraud report 2009.
Freddiemac,com (2016). Emerging trends: types if mortgage fraud.
Johnson, R. (2014). Why we need a comprehensive recording fraud registry.
Nasiripour, S. (2011). Deutsche Bank accused of massive mortgage fraud, sued for $1 billion by U.S. Government.
Protess, B. (2012). U.S. accuses Bank of America of a brazen mortgage fraud.
Raymond, N. & Shankar, S. (2015).Wells Fargo to pay $1.2 billion in U.S. mortgage fraud settlement.
StopFraud.gov (2016). Identify fraud and protect yourself.
Strader, J. K. (2011). Understanding white collar crime. LexisNexis.