41 Charged With Mortgage Fraud

NEW YORK - A mortgage fraud crackdown announced Thursday resulted in the arrests of dozens of people, including six lawyers, seven loan officers and three mortgage brokers in four states.

Thirty-one people were arrested in New York, Pennsylvania, Ohio and North Carolina. They were among 41 people charged with engaging in mortgage fraud scams that defrauded lenders out of more than $64 million in home mortgage loans.

Of the 10 other defendants, one was expected to surrender later Thursday, four were previously charged and five remained at large.

Authorities gathering for an afternoon news conference in Manhattan said the crackdown, dubbed "Operation Bad Deeds," was aimed at the failure of gatekeepers in the mortgage industry to act responsibly and legally.

"Unfortunately, instead of protecting our financial system, in some cases they abused their positions and joined criminal schemes to steal millions of dollars," said Richard H. Neiman, the superintendent of banks for New York State.

U.S. Attorney Preet Bharara said in a statement that he found it "especially alarming" that lawyers, loan officers and mortgage brokers treated their professions as a "license to loot banks and profit from other people's pain." Those charged also included an accountant and a residential property appraiser.

Authorities said the arrests resulted from a series of investigations conducted by state and local authorities along with federal prosecutors, the FBI, the New York State Banking Department, federal housing authorities, the U.S. Secret Service and U.S. Postal Service investigators.

Most of the bank fraud, wire fraud and conspiracy charges brought against the defendants carry potential prison terms of 20 to 30 years each.