Canales: Fraud Prosecution in Need of Resources
Las Vegas-A popular lament among those in the lending community who try to report instances of alleged fraud is that the authorities - either state, local or federal - don't seem to care.
The cops, on the other hand, say that's just not true; it's just that they don't have the resources to chase down every lead.
But at the Mortgage Bankers Association's National Fraud Issues Conference here earlier this month, Rosemary Canales, a senior investigative agent with Wells Fargo Bank, said much of what goes into convincing the police to pursue a case is actually found in the presentation.
Ms. Canales said she gets 50% of her cases prosecuted because she gives the authorities what they need to move forward.
"If the case isn't workable," she told the conference, "don't give it to law enforcement."
Among other things, the certified fraud examiner said mortgage lenders should be able to identify the suspects, especially the "guy behind the scenes" who is the real person of interest.
Lenders also should be able to prove how the suspects benefited from the scheme and how the scheme worked, and be able to provide the evidence necessary to support the case.
Whether to take the case to local law enforcement or the police at a higher level generally depends on the amount of the actual or potential loss to the institution, said Ms. Canales, who works out of San Antonio and became Wells Fargo's first financial crimes mortgage fraud investigator dating back four years ago.
Sometimes, though, that decision will depend on the suspect, who may be wanted or under investigation in other locations.
Other jurisdictional factors include where the property is located, where the loan was closed, where the loan was funded and where the funds came from.
"It could be any of these," she said.
What lenders place in the file to law enforcement is also of utmost importance, Ms. Canales advised. The file should include a cover letter that introduces the investigator, his contact information - e-mail as well as office and cell phone numbers - and his role at his institution, plus a list of what's included in the package.
"Write a one-page summary," she said.
"Open with a short synopsis of the crime to grab their attention. Be concise. Bullet points are a great way to lay out the events and keep the writer from overdoing the details.
"Put the information in a way law enforcement can make sense of it. Don't assume that they understand what you are talking about."
At this point, she also said, it's not necessary that the cops have the whole file. But if there are more than five loans involved, include a spreadsheet that captures the most pertinent details.
"Just enough to get 'em started," she commented. Then should the cops ask for more, "do everything in your power to get them what they want."
Above all, Ms. Canales suggested, present your case as simply as possible. "Ask yourself, 'Would a jury of 12 individuals who don't know anything about mortgage fraud understand this case as I explained it?' Make it plain and simple so someone from the local bowling league can understand it. Stay away from big words."
For lenders who are experiencing a rather high incidence of fraud in a particular geographic area where they don't have a working relationship with law enforcement, the Wells Fargo fraud investigator suggested visiting local agencies in an effort to build rapport with the authorities.