WASHINGTON (5/9/13)--One credit union's vigilance, and frequent filing of Suspicious Activity Reports (SARs), helped uncover an alleged $2 million mortgage loan fraud scheme and resulted in a win for law enforcement, the Financial Crimes Enforcement Network (FinCEN) reported in its SAR Activity Review--Tips, Trends & Issues.
According to FinCEN, the credit union reported a local accountant that allegedly helped clients and complicit realtors obtain mortgage loans by creating fraudulent tax letters stating the borrowers had self-employment income and owned their own businesses. The accountant and employees of his tax preparation business also prepared fraudulent tax returns to back up these claims.
The accountant and his accomplices used these falsified documents to secure loans for homebuyers. The accountant pleaded guilty to bank fraud charges and was sentenced to two years in prison.
In a separate case, credit union SARs contributed to the dismantling of a multi-state drug trafficking and money laundering ring.
Overall, the number of SARs from credit unions that listed the National Credit Union Administration as their primary federal regulator declined by 3% between 2012 and 2011, FinCEN said in another document, its SAR Activity Review--By the Numbers.
That number had increased every year since 2003, according to FinCEN.
Overall, the total number of SARs filed by credit unions and other financial institutions increased by 8% in 2012, with mortgage fraud and check fraud continuing to rank as the most common criminal offenses.
However, there were 29% fewer mortgage fraud SARs filed in 2012 than there were in 2011, FinCEN added. Commercial loan fraud SARs also declined by 19% during that same time period.
Check, commercial loan, consumer loan, credit and debit card, mortgage and wire transfer fraud accounted for 23% of all suspicious activities reported by depository institutions in 2012, FinCEN said.
For both FinCEN releases, use the resource links.