Arrests made in huge mortgage fraud operation

Ever wonder what’s going on with those huge mansions springing up all over and who would buy them? It turns out many of them are part of criminal mortgage schemes. The Fairfax County Police Department, in conjunction with the FBI, busted 20 suspects involved in an elaborate fraudulent mortgage operation, the police department reported Sept. 24.

The investigation started in 2007 when local officials received complaints from constituents regarding small houses being torn down then built into mansions to be used as boarding houses.

A police investigation of zoning records and permits involving over 200 houses. Many of the permits were issued under the same name. The buyers of the homes allegedly signed fraudulent documents. “Straw buyers,” with annual incomes of less than $25,000, were being approved for loans over $600,000.

Several of those arrested were part of a criminal enterprise and were acting in the capacity of real estate agents, mortgage brokers, and subcontractors. “Straw buyers” were approached and compensated for the use of their unflawed, personal information. The suspects used numerous bank accounts to “float” money into the “straw buyers” accounts so they could qualify for large loan amounts. The house was purchased, torn down, and rebuilt into a mansion sold to a second “straw buyer” for twice the original amount. The house was bought and sold several more times between a network of “straw buyers,” each at higher prices.

Phase I of the investigation ended with arrests relating to 35 houses, valued at $20 million. The properties involved include one house in Annandale (7110 Falcon St.); seven in Falls Church, one in Sterling, and 27 in Springfield. Over 200 properties may be involved with an estimated real estate value of over $80 million.

The Fairfax County Police Department partnered with members of one of the FBI’s 16 Real Estate Fraud Investigations Task Forces, formed to disrupt and significant criminal enterprises committing mortgage fraud.

Seventeen teams of over 100 detectives and agents arrested 20 suspects on Sept. 24. The crimes in the arrest warrants include conspiracy to commit wire and mail fraud, using false statements to obtain property or credit, wire fraud, and mail fraud. Convicted suspects of the federal charges could face up to 30 years in prison and fines of up to $1 million.