United States Department of Justice
Federal Bureau of Investigation
June 19, 2008 Press Release
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FBI SPRINGFIELD
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OPERATION MALICIOUS MORTGAGE Mortgage fraud is a booming business and a growing problem. Abuse of the mortgage lending system undermines the integrity of the system and can have a measurable impact on the housing market and the nation’s economy. Foreclosure filings were up 75% in 2007. The FBI has seen an increase in the number of mortgage fraud investigations over the last five years. Currently, the FBI has over 1,300 pending mortgage fraud investigations, an increase of approximately 58% from two years ago. The number of federal criminal charges filed in mortgage fraud related investigations increased 43% last year, from 2006. The majority of these investigations have reported dollar losses in excess of $1 million dollars. The FBI works closely with our government and industry partners to analyze emerging mortgage fraud trends. The most common form of mortgage fraud involves illegally flipping property by utilizing false appraisals and other fraudulent loan documents. Illinois is on the list of top ten states affected by mortgage fraud. The Springfield FBI office is actively engaged in mortgage fraud investigation in Central and Southern Illinois, in conjunction with our law enforcement partners. In March of this year, Gary Knox, Decatur, Illinois and Frank Ciota, Riverton, Illinois were sentenced to federal prison for their role in a multi million dollar real estate flipping scheme. The scheme involved over 150 fraudulent real estate sales and financing transactions totaling over $8 million, in Springfield and Decatur. Knox was sentenced to 19 years, 7 months in prison, followed by five years of supervised release, and has been ordered to pay $2,053,170.50 in restitution.. Ciota was sentenced to eight years in prison, following by five years of supervised release, and ordered to pay $478,439.00 in restitution. This investigation was a multi-agency effort, involving the FBI, FDIC Office of Inspector General, U.S. Postal Inspection Service, and the Illinois Department of Financial and Professional Regulation. On March 05, 2008, three individuals from the Decatur area were charged with participating in an unrelated real estate flipping scheme. Diane Shelton, a senior loan officer from Decatur, Illinois; Terry Hart, a licensed realtor from Decatur, Illinois; and Mark Brown, a licensed real estate appraiser from Moweaqua, Illinois, were indicted by a federal grand jury for their role in as many as 40 fraudulent real estate sales and financing transactions totaling as much as $5 million. An indictment is merely an accusation, and all defendants are presumed innocent unless proven guilty. This investigation was also a multi-agency effort, involving the FBI, the U.S. Postal Inspection Service, and the Illinois State Police. Anyone with information about mortgage fraud may call the Springfield FBI office, (217)522-9675, or their nearest law enforcement agency.
Marshall Stone
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