AUDIT OF THE DEPARTMENT OF JUSTICE’S
EFFORTS TO ADDRESS MORTGAGE FRAUD
The Department of Justice (DOJ) and its components, particularly the FBI, United States Attorneys’ Offices (USAO), Criminal Division, and Civil Division, along with the DOJ-led interagency Financial Fraud Enforcement Task Force (FFETF), play an important role in combating mortgage fraud through civil litigation and criminal investigation and prosecution. The objective of this audit was to assess DOJ’s approach and enforcement efforts in addressing mortgage fraud generally between fiscal years (FY) 2009 and 2011. DOJ and its components have repeatedly stated publicly that mortgage fraud is a high priority and during this audit we found some examples of DOJ-led efforts that supported those claims. Two such examples are the Criminal Division’s leadership of its mortgage fraud working group and the FBI and USAOs’ participation on more than 90 local task forces and working groups. However, we also determined during this audit that DOJ did not uniformly ensure that mortgage fraud was prioritized at a level commensurate with its public statements. For example, the Federal Bureau of Investigation (FBI) Criminal Investigative Division ranked mortgage fraud as the lowest ranked criminal threat in its lowest crime category.
Additionally, we found mortgage fraud to be a low priority, or not listed as a priority, for the FBI Field Offices we visited, including Baltimore, Los Angeles, Miami, and New York. We also found that while the FBI received $196 million in appropriated funding to investigate mortgage fraud activities from fiscal years 2009 through 2011, in FY 2011 the number of FBI agents investigating mortgage fraud as well as the number of pending investigations decreased. We also attempted to review the scope of DOJ’s prosecutorial efforts to address mortgage fraud by reviewing case data. However, we found that the Executive Office for United States Attorneys’ (EOUSA) case management system did not allow for a complete or reliable assessment of DOJ’s mortgage fraud efforts because many Assistant United States Attorneys (AUSA) informed us about underreporting and misclassification of mortgage fraud cases. They further explained that mortgage fraud cases are often coupled with other criminal activities and that, when initiating a case file, an AUSA may fail to include the mortgage fraud code if it is not the leading charge in a case. In addition, EOUSA is unable to track the complexity of criminal cases or whether the individual defendants prosecuted were high level officials. Capturing such information would allow DOJ to better understand its overall effort and to better evaluate its performance in targeting high-profile offenders.
According to FBI Criminal Investigative Division officials, certain complex financial crimes are not assigned a priority ranking. For example, the FBI informed us that crimes such as bankruptcy fraud, credit card fraud, mass marketing fraud, insurance fraud, money laundering, and other mail and wire fraud crimes were not ranked at all.