I sat down for a few minutes yesterday afternoon with Keith Slotter, the special agent in charge of San Diego’s FBI office, to chat about mortgage fraud here. Slotter assumed leadership of the San Diego division in May when former chief Dan Dzwilewski left the agency for a post as Sempra Energy’s director of security.
We’ve been hearing about other metro areas that have broadcast their launches of mortgage fraud task forces. Here, law enforcement has been relatively quiet on the issue, at least until we heard about this bust and the four defendants’ subsequent guilty plea.
Slotter comes from a background of investigating white collar crime, spending time on financial institutions fraud cases at the FBI national headquarters among other stops in his professional career as a CPA and 30 years in the FBI.
The local FBI office employs four white collar crime squads, Slotter told me. One is focused on financial crimes, under which mortgage fraud falls. Slotter said the local FBI has “definitely stepped up” its response to mortgage fraud in the region in the last six months and expects that trend to continue into 2008.
“We’re aggressively investigating these things, because there’s a potential for a lot of fraud out there,” he said. “This is not a recent phenomenon. Mortgage fraud has been a problem for a long time.”
And right now, there’s not enough work out there for all of the region’s real estate professionals, he said. With work scarce, some workers turn to desperate measures.
“The temptation is there to do things you wouldn’t otherwise do,” he said.
He said the agency’s investigations aren’t focused on single homeowner efforts, the kind of income aggrandizement on stated-income or “no-doc” loans that many people used just to get into a house. They’re looking for organizational schemes — like in that San Marcos case — that yielded wide-scale harm.
That could include the collusion of professional real estate agents, mortgage brokers and appraisers. They’re looking at the kind of inflated appraisals that net cash back and the extreme falsification of income — the activity in a housing boom “that is illegal but becomes commonplace.”
He said he’s not trying to minimize the illegality of those individual income-exaggerating efforts.
“But we’re more organization-focused, (looking at those organizations) whose sole intent is to profit,” he said. “We’re trying to have the greatest community impact in a positive way.”