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Department Investigation Helps Shut Down Mortgage Fraud Scheme

Wednesday, April 3, 2013

The Department of Insurance, Securities and Banking helped investigate a $900,000 mortgage-fraud scheme resulting in five successful prosecutions with more cases to come.

The US Attorney’s office got a conviction of LaFrances Dudley O’Neal of Clinton, MD, last week on charges of using “straw buyers” to obtain mortgages on which the group defaulted.

The Department’s Juliana Tengen was lead investigator in the fraud case, which was initially uncovered by DISB. The US Postal Inspection Service, US Department of Housing and Urban Development’s Office of Inspector General, the FBI’s Washington Field Office and the Metropolitan Police Department also investigated the cases.

Four other defendants have pleaded guilty in this complex scheme and the court has ordered $4.5 million in forfeitures and restitution.

“Mortgage fraud doesn’t just hurt banks,” said Stephen M. Perry, the associate commissioner in charge of the Department’s Enforcement and Consumer Protection Bureau. “It raises the cost of buying a house for everyone. It’s a crime that strikes at anyone who owns a home or wants to buy one.”