Mortgage Fraud Schemes in South Carolina – A Review For SC Criminal Attorneys, Lawyers & Law Firms

March 14th, 2022 by admin Leave a reply »

Mortgage fraud is problem that has reached epidemic proportions in the United States (US) in general and in South Carolina (SC) in particular. The white collar practitioner should be aware that mortgage fraud is generally investigated by the United States Federal Bureau of Investigation (FBI), although other agencies routinely assist the FBI and/or take the lead in investigating a case. Some of the other federal agencies which investigate mortgage fraud crimes for criminal prosecution include, but are not limited to, the Internal Revenue Service-Criminal Investigative Division (IRS-CID), United States Postal Inspection Service (USPIS), U.S. Secret Service (USSS), U.S. Immigration and Customs Enforcement (ICE), U.S. Department of Housing and Urban Development-Office of the Inspector General (HUD-OIG), Federal Deposit Insurance Corporation-Office of the Inspector General (FDIC-OIG), the Department of Veterans Affairs-Office of the Inspector General (DVA-OIG) and U.S. Bankruptcy Trustees.

The FBI works extensively with the Financial Crimes Enforcement Network (FinCEN). FinCEN is a bureau of the United States Department of the Treasury, created in 1990, that collects and analyzes information about financial transactions in order to fight financial crimes, including mortgage fraud, money laundering and terrorist financing. The FinCEN network is a means of bringing people and information together to combat complex criminal financial transactions such as mortgage fraud and money laundering by implementing information sharing among law enforcement agencies and its other partners in the regulatory and financial communities. South Carolina lawyers can keep abreast of mortgage fraud developments by visiting the respective websites of the FBI and FinCEN.

In South Carolina, mortgage fraud is generally prosecuted by federal prosecutors. The United States Attorney’s Office (USAO) and the U.S. Department of Justice’s (DOJ) Criminal Fraud Section handle the criminal prosecutions of mortgage fraud cases. The USAO in South Carolina has about 50 prosecutors in the state, and has offices in Charleston, Columbia, Florence, and Greenville. In the investigation stage, a person with possible knowledge or involvement in a mortgage fraud may be considered a witness, subject or target of the investigation. A subject is generally a person the prosecutor believes may have committed a mortgage fraud crime, whereas a target is a person the prosecutor believes has committed a crime such as mortgage fraud and the prosecutor has substantial evidence to support a criminal prosecution. Criminal prosecutions of mortgage fraud felony cases are usually initiated through the federal grand jury process. A federal grand jury consists of between 16 and 23 grand jurors who are presented evidence of alleged criminal activity by the federal prosecutors with the aid of law enforcement agents, usually FBI special agents. At least 12 members of the grand jury must vote in favor of an indictment charging mortgage fraud. South Carolina criminal defense lawyers are not allowed entry into the grand jury at any time, and prosecutors rarely fail to obtain an indictment after presentment of their case to the grand jury.

Often targets of a mortgage fraud prosecution are invited by the prosecution to avail themselves of the grand jury process and to testify in front of the grand jury. Generally, a South Carolina criminal defense attorney should not allow a named target of a federal criminal mortgage fraud investigation to testify before the grand jury. Subjects and witnesses in a mortgage fraud prosecution are often subpoenaed by the prosecutors to testify before the grand jury. A criminal defense attorney should likewise generally advise a witness or subject to not testify if any part of the testimony would possibly incriminate the client. With respect to a federal mortgage fraud investigation, when a citizen receives a target letter, subject letter, or a subpoena to testify before the grand jury, or is contacted in person by a law enforcement officer such as an FBI special agent, a South Carolina criminal lawyer who is experienced in federal prosecutions should be consulted immediately. One of the biggest mistakes a mortgage fraud target, subject or witness can make is to testify before the grand jury or speak to criminal investigators prior to consulting with a criminal defense attorney. The 5th Amendment to the Constitution allows any person, including a target, subject or witness in a mortgage fraud prosecution, to not incriminate himself or herself. Interestingly, there is no 5th Amendment protection for a corporation. Obviously, if a defendant has been indicted or arrested for a federal mortgage fraud crime in South Carolina, an experienced SC mortgage fraud lawyer should be consulted immediately.

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