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Tuesday, October 9, 2012

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PLEASE NOTE: The press release below inadvertently reported inaccurate figures. An extensive review of the reported cases concluded that, contrary to the figures contained in the initial announcement, the initiative resulted in 107 criminal defendants charged in U.S. District Courts across the country. These cases involved more than 17,185 homeowner victims and total losses by those victims estimated by law enforcement at more than $95 million. In federal civil actions involving distressed homeowner victims, the Justice Department’s U.S. Trustee Program, the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB), protectors of the nation’s bankruptcy laws and federal consumer laws, filed cases against 128 defendants in federal cases across the country, with at least19,198 victims identified and losses estimated at more than $54 million.

     The discrepancy occurred due to the fact that the original figures included in the Distressed Homeowner Initiative materials included not only criminal defendants who had been charged in Fiscal Year 2012, but also a number of defendants who were the subject of other prosecutive actions – such as a conviction or sentencing – in Fiscal Year 2012. In addition, the announcement included a number of defendants who were charged in mortgage fraud cases in which the victim(s) did not fit the narrow definition of “distressed homeowner” that the initiative targeted.

U.S. Attorney Machen Announces Results of Initiative Targeting
Mortgage Fraud, Foreclosure Rescue Fraud and Other Crimes
-First Law Enforcement Effort Focused on Crimes Against Struggling Homeowners –

     WASHINGTON – A national initiative that targeted fraud schemes preying upon financially troubled homeowners has led to successful prosecutions in three federal cases in the District of Columbia involving more than $5 million in losses, U.S. Attorney Ronald C. Machen Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, announced today.

     The Distressed Homeowner Initiative focused on foreclosure rescue fraud, loan modification fraud, and similar mortgage fraud crimes. Nationally, from Oct. 1, 2011 to Sept. 30, 2012 (the 2012 fiscal year), the effort led to the filing of charges against 530 criminal defendants, including 172 executives, in cases involving more than $1 billion in estimated losses.

     The national initiative was launched by the FBI, a co-chair of the Financial Fraud Enforcement Task Force’s Mortgage Fraud Working Group. Other participating federal agencies included the Office of Inspector General of the Department of Housing and Urban Development, the Federal Housing Finance Agency’s Office of Inspector General, the Office of the Special Inspector General for the Troubled Asset Relief Program, Internal Revenue Service-Criminal Investigation, U.S. Postal Inspection Service and the U.S. Secret Service.

     “Fraudsters often seek to take advantage of vulnerable homeowners who are facing financial hardship,” said U.S. Attorney Machen. “Here in the District of Columbia, we have taken action to hold accountable the criminals who prey on homeowners struggling to make their mortgage payments. We will press on in our efforts to protect families from con artists who try to exploit others’ financial crises to get rich.”</p>

     “Mortgage fraud continues to be a priority within the FBI, because of the impact of mortgage lending on the nation’s economy and the impact of foreclosures on the community,” said Assistant Director in Charge McJunkin. “Mortgage fraud perpetrators are resilient, and adapt their schemes to changes in the economy and changes in lending practices. The FBI will continue to work with our law enforcement and regulatory partners to bring those responsible for orchestrating this fraud to justice.”</p>


     The cases filed in the District of Columbia led to guilty pleas from these defendants:

     Oh Sung Kwon

     Kwon, also known as Thomas Kwon, was operations manager of Onyx Financial Services, based in Annandale, Va. Kwon, 47, of Vienna, Va., pled guilty in September 2012 to federal charges stemming from a bribery scheme involving millions of dollars in government contracts, as well as a separate scheme involving fraudulent real estate sales and refinances. In the real estate/refinancing scheme, which ran from 2004 until 2010, Kwon admitted involvement in at least six fraudulent real estate sales and refinances in northern Virginia, with loan amounts of about $1.8 million. No sentencing date has been set.

     Carline M. Charles

     Charles represented herself as the owner of C & O Property Solutions, LLC, a company that offered refinancing options to homeowners in the District of Columbia and Maryland whose properties were facing imminent foreclosure. In fact, from 2005 to 2007, Charles was operating a scheme that ultimately involved 12 homes along with fraudulently obtained mortgages, financial losses for lenders, and evictions for many who turned to her for help. Charles cost the homeowners and the lenders almost $2 million in losses. Charles, 41, of Silver Spring, Md., pled guilty in July 2012 to conspiracy to commit bank fraud and is to be sentenced Nov. 15, 2012.

     Akinola George

     George, with the assistance of others, defrauded banks and other lenders of money through false statements and misrepresentations in a scheme that ran from 2004 to 2008. The lenders were forced to foreclose and resell the properties at a loss of more than $2 million. George, 42, of Washington, D.C., was sentenced in January 2012 to a prison term of 40 months. As part of his plea agreement, George agreed to forfeiture of $2.4 million. He also was required to pay restitution in the amount of $2,021,346 to victims of his crime.


     Nationally, the Distressed Homeowner Initiative included federal criminal prosecutions brought by various U.S. Attorneys’ offices and the Department of Justice’s Criminal and Civil Divisions, civil enforcement cases filed by the Department of Justice’s U.S. Trustee Program, the Federal Trade Commission and the Consumer Financial Protection Bureau, and criminal and civil cases brought by Attorneys General in over 11 states.

     The national results were announced today by Attorney General Eric Holder, Housing and Urban Development (HUD) Secretary Shaun Donovan, FBI Associate Deputy Director Kevin L. Perkins, and Federal Trade Commission Chairman Jon Leibowitz.

     “These comprehensive efforts represent an historic, government-wide commitment to eradicating mortgage fraud and related offenses,” said Attorney General Holder. “The success of the Distressed Homeowner Initiative, and the developments we announce today, underscore our determination to pursue these and other financial fraud criminals around the country.”

     The Mortgage Fraud Working Group of President Obama’s interagency Financial Fraud Enforcement Task Force was established to lead an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force, chaired by Attorney General Holder, includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

     To learn more about scams targeting homeowners, how to protect yourself from scams, or how to report fraud if you believe you have been a victim, please visit:

The site also includes information about the Financial Fraud Enforcement Task Force and the Distressed Homeowner Initiative, as well as stories about common scams, fraudsters’ sample marketing materials, and radio and television public service announcements.





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