Sunday, October 10, 2010

My first night at the FBI Citizen's Academy

FBI Citizen’s Academy Session 1
On Thursday October 7, I began the 8-week FBI Citizen’s Academy. These are my notes from the first session. Caution: This is my own impression of what I learned, and does not in any way represent official ideas or positions of the FBI.

The Miami office covers Ft. Pierce to the Keys, as well as the Caribbean, South America and Mexico. It’s one of 56 field offices and over 400 satellite offices, along with many legats (legal attaches) at foreign embassies.

They handle domestic intelligence gathering and law enforcement of over 300 different violation classifications.

Their office is ground zero for health care fraud, close to $100 billion annually. No other region comes close; South Florida is responsible for more health care fraud than the rest of the country combined. There are a number of contributing reasons, including the large number of Medicare recipients and, unofficially, the presence of a large Cuban community. Allegedly 98% of those involved in health care fraud are Cubans, and there have been reports of money gained fraudulently going back to the island.

Operation Severed Artery investigated 11 infusion therapy clinics, who were paid $80 million in fraudulent claims. Three brothers set up these clinics providing fake treatments, and billing Medicare.

Terrorism is the FBI’s #1 threat; in South Florida that involves researching those who raise funds for terrorist organizations, and who use criminal activities to fund them.

There are six ASACs in the office—assistant special agents in charge. They handle corporate and securities fraud, bank and mortgage fraud, cyber crimes, crimes against children, and public corruption. There are two ASACs dedicated to health care fraud. They are also responsible for regional agencies in Ft. Pierce and Palm Beach.

We heard a presentation by an intelligence analyst—not an agent, and he doesn’t carry a gun. He researches statistics and gave a presentation on real estate fraud. He began by explaining that there are two types of real estate fraud, both involving lies or misrepresentations:
·         Fraud for housing – where someone uses fraudulent information to obtain a house where he or she lives
·         Fraud for profit—purchasing a house using fraudulent information, then flipping it

There are high returns in this area, with a low risk of being caught. Banks have been lax in their loan approvals because they knew they were just going to sell the loan forward.
One of the research tools is the SAR, suspicious activity report, provided by banks. The bank indicates on the SAR that the suspicious activity may revolve around real estate fraud. Florida is #1 in the highest amount of fraudulent loans.

He also discussed three other types of real estate fraud:
·         Foreclosure rescue/loan modification scams, where someone promises to help a homeowner out of a mortgage but ends up defrauding & taking the money.
·         Builder bailouts—where a builder trying to reduce an inventory of unsold property offers off-the-books incentives to buyers, such as making a year’s worth of mortgage payments, or adding a car or other property to the deal. These additional incentives are never disclosed to the mortage lender.
·         Mortgage Ponzi schemes—someone collects money to be invested in mortgages but never does, and uses the cash from new customers to pay returns to the first ones.

There are several emerging threats:
·         Reverse mortgage loans (HECM) – appraising a house at a higher value but not disclosing that to the elderly subject. Then the scammer takes the difference between the appraised value and the reverse mortgage.
·         Insurance fraud – Distressed homeowners destroying their homes in order to cash in on insurance.
·         Deed forgery – filing a false mortgage satisfaction, then selling the property as if it was unencumbered, or taking a new mortgage.
·         Property flopping – A real estate broker finds a buyer for distressed property. Then he convinces the bank to sell the property to a straw buyer for less than the eventual buyer is willing to pay. Then he flips the property to the eventual buyer at the higher price.

We have a perfect storm of conditions leading to mortgage fraud:
·         Unemployment rising
·         Property values dropping
·         High rate of foreclosure

They have a number of initiatives to fight these problems:
·         Undercover operations
·         A mortgage fraud task force in Miami & Palm Beach
·         Suspicious Activity Reports
·         Mortgage fraud intelligence initiatives, where they recruit agents, brokers etc. to provide intel.

Operation Stolen Dreams netted 125 criminals, 485 arrests, $2-3 billion in estimated losses. $10 million was seized, along with $196 million in property.


Terry Odell said...

I'd love to take this kind of course. I did the Civilian Police Academy in Orlando, and just got back from the Writers' Police Academy which did have a very helpful ATF agent. His pet peeve was authors who portray the FBI as coming in and taking over local cases--makes for good conflict, but just isn't true. Rape, Robbery and Homicide aren't federal crimes, and, as you said, they're too busy fighting terrorism.

Look forward to more of these posts.

Terry's Place
Romance with a Twist--of Mystery

jennymilch said...

What a great opportunity, Neil! Thanks for sharing the experience.