If you want to commit crimes, don’t mug old ladies for their Social Security money, don’t rob gas stations, don’t do anything related to drugs because you’re hurting the children and The War on Drugs will get you. All of these crimes will have you join the ranks of the world’s proportionally largest prison population in the US slammer.
No, if you want to commit crimes, go big, go corporate crime. Do that, and if, a big IF, you get prosecuted, you will be treated with kid gloves:
“Federal prosecutors sued Allied Home Mortgage Capital Corp. and two top executives Tuesday, accusing them of running a massive fraud scheme that cost the government at least $834 million in insurance claims on defaulted home loans.
Houston-based Allied and its founder and chief executive, Jim Hodge, were the subject of July 2010 stories by ProPublica, which detailed a trail of alleged misconduct, lawsuits and government sanctions spanning at least 18 states and seven years. Borrowers recounted how they had been lied to by Allied employees, who in some cases had siphoned their loan proceeds for personal gain. Some lost their homes.
Despite years of warnings, the federal government had not — until this week — impaired the company’s ability to issue new mortgages.
The suit, filed Tuesday in U.S. District Court in Manhattan, seeks triple damages and civil penalties, which could total $2.5 billion. Simultaneously, the U.S. Department of Housing and Urban Development suspended the company and Hodge from issuing loans backed by the Federal Housing Administration. The company was also barred from issuing mortgage-backed securities through the Government National Mortgage Association (Ginnie Mae).”
Whoa, talk about harsh punishment. See what they did here? No criminal prosecution. All in civil court. Feels like the equivalent to be sent to your room without dinner.
And to the Rick Santellis of the world: GFY:
“The government’s complaint alleges that between 2001 and 2010, Allied originated 112,324 home mortgages backed by the FHA, which typically go to moderate- and low-income borrowers. Of those, nearly 32 percent — 35,801 — defaulted, resulting in more than $834 million in insurance claims paid by HUD.
In 2006 and 2007, the company’s default rate was a “staggering” 55 percent, the complaint said.
In addition, another 2,509 mortgages are currently in default, which could result in another $363 million in insurance claims paid by HUD.
Borrowers told ProPublica last year that company employees falsified records to bolster their credit worthiness and lured them into unaffordable deals by lying about the terms.
The government’s complaint says: “Allied has profited for years as one of the nation’s largest FHA lenders by engaging in reckless mortgage lending, flouting the requirements of the FHA mortgage insurance program and repeatedly lying about its compliance.””
Also, do you think a prosecutor would talk like that if she were talking about a street crime? (Remember, this is civil court, not criminal court with prosecutors)
“In an interview Tuesday, Helen Kanovsky, HUD’s general counsel, defended the time it took her department to take action.
“We had tried sanctions before,” she said. “We had assessed civil monetary penalties and that had not worked.
“The extraordinary remedy that we have — to be able to terminate somebody’s FHA capacity [and] basically put them out of business — requires a very high level of evidence and a high level of proof.”
The government’s 41-page lawsuit details an alleged scheme by Allied to deceive HUD about its employees and the risks associated with its loans. For years, it operated a network of “shadow” branches that were not approved by HUD and falsely certified that they met legal requirements.
Allied also disguised the high default rates of some branches, the complaint alleges, by tinkering with their addresses to apply for new HUD identification codes for the same offices. When HUD updated its system to prevent such manipulation, Allied simply moved all of its branches to a sister company and obtained new IDs, “thus again achieving a clean slate on its default rates,” the suit said. The sister firm, Allied Home Mortgage Corp., is also named as a defendant.”
I expect the defendants are shaking in their boots with fear and are thoroughly deterred by the prospect of being put out of business and civil sanction.