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Secret Service Seeks Arrests for MBS Fraud

abalert.com | May 2, 2014

The U.S. Secret Service is pressing the Department of Justice to file criminal charges against several senior bankers for their roles in marketing shoddy mortgage-backed securities on the eve of the financial crisis.

It’s unclear which executives or banks the Secret Service is targeting. The agency’s pursuit of the matter apparently stems from a concern that individual bankers have been able to avoid criminal charges for their roles in violating mortgage-securitization and foreclosure rules, even as other government entities have secured huge civil settlements from many of the nation’s largest banks.

Sources said the Secret Service’s financial-crimes task force is in ongoing discussions with officials at the Justice Department on the matter.

“They’re working on a huge case out of New York, and there could be arrests,” one source said. “The fact there haven’t been any [arrests] to date in any of these cases has irked a lot of people. The Secret Service has the jurisdiction to investigate, but it’s going to be up to the U.S. Attorney to push it.”

Aside from providing protection for the President and other U.S. officials, the Secret Service is charged with investigating financial crimes including counterfeiting, money laundering and financial-institution fraud.

The agency is among several that have worked with the Justice Department and various U.S. Attorneys in different states as part of a task force investigating the sales of faulty mortgage securities that ultimately contributed to the financial crisis. The Secret Service also has been involved in dozens of state-level prosecutions, including a investigation in western Pennsylvania that resulted in prison terms for several mortgage brokers and appraisers this year.

But of the 13 major settlements reached thus far with various banks over failed mortgage securities and questionable foreclosure practices — among them, Bank of America, Citigroup, J.P. Morgan, Morgan Stanley and Wells Fargo — there have been no criminal prosecutions. That’s due in large part to the position of Attorney General Eric Holder that civil prosecutions are preferable to criminal convictions, which he believes could have too much of a negative effect on the banks.

But that position appears to be shifting. There’s been growing friction among law-enforcement agencies, including the Secret Service, over the lack of criminal prosecutions in the biggest cases. And with the last remaining settlements currently being negotiated with banks including BofA and Citi, the Justice Department recently has signaled that it’s open to pursuing criminal probes — mindful of a five-year statute of limitations on such cases.

That window, which already has expired in a majority of cases, can be extended as long as a grand jury has been seated. “The Justice Department didn’t want to do it before, but now it looks like with time running out, they finally want to [prosecute] some people,” the source said.

 

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CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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