954-384-6114

Banks Go Straight to Jail? Defrauding Investors out of Millions gets Chance Card

Fri Oct 28, 2011 by on Florida Law News

Banks continue to draw the lucky Get out of Jail Free card! South Florida Law Blog’sForeclosure Defense Attorney Roy Oppenheim asks: If the government is truly interested in reducing mortgage fraud, why not go after the ones who cause a larger impact on the economy and affect homeowners on a national scale? It seems the banks get the chance card and the little guys go directly to jail.

Last week Citigroup agreed to pay $285 million in a settlement agreement with the Securities and Exchange Commission (S.E.C.). Citigroup to Pay $285 Million to Settle S.E.C. Complaint – NYTimes.com. That’s pocket change for a giant bank that has made over $3.8 billion in profits just last quarter. The defrauded investors contributed to a $ 1 billion portfolio stuffed with high risk mortgage investments. What these unsuspecting investors didn’t know is that Citigroup bet against these investments in hopes that they would lose value. Not only did Citigroup bet against the portfolio, but it was responsible for selecting the mortgage investments that would make up the portfolio.

With all the questionable bank practices that have come to light since the housing market bubble bursts, the S.E.C. has done little to reprimand giants such as Citibank. Not only has the S.E.C or the Justice Department failed to go after the banks, they also have done little to prosecute banking executives who were no doubt involved in criminal activity stemming from the banking crisis. While a bank can’t be sent to jail, the high ranking executives directly responsible for these unethical banking practices should not be able to escape criminal liability. And yet, while the powerful banks and senior executives appear to be above the law, the government has not hesitated in going after individuals who lack powerful political influence on Washington.

Take for example Florida Title Attorney Carol Asbury. The ABA Journal reported that this sole practitioner could be facing 20 years in prison and a fine of up to $250,000 when she is sentenced in November. The alleged mortgage fraud involved paying phony purchasers in return for using their names in fraudulent loan documents. Asbury as well as others involved in the scheme allegedly used these fraudulent loan documents to pretend to purchase homes and obtain loans for more than the purchase price of the homes. The Palm Beach Post reported that Asbury and four others pocketed the difference and made over $1.8 million on $4.9 million worth of loans.

While in no way were Asbury’s actions correct, she could be paying a hefty price, her freedom, for the alleged mortgage scheme while Citibank which made $126 million in profits off the fraudulent portfolio simply has to pay a small fine in relation to what its worth and the senior executives get off scot-free. It seems like the government is willing to go after the little guy and simply slap the wrist of banks too large to be regulated. If the government is truly interested in reducing mortgage fraud, it needs to go after those who cause a larger impact on the economy and affect homeowners on a national scale.

Next card for banks to draw:

Go directly to Jail – do not pass Go, do not collect $200.

Tags: Carol Ashbury, Citigroup, mortgage fraud

3 responses to “Banks Go Straight to Jail? Defrauding Investors out of Millions gets Chance Card”

  1. Lowrider08 says:

    Please explain what if anything PMI insurance and foreclosure have in common. 

  2. […] If the government is truly interested in reducing mortgage fraud, then haven’t we heard about any of the big giys going to jail? Interesting question and an excellent article to read about this is Banks Go Straight to Jail? Defrauding Investors out of Millions gets Chance Card […]

  3. […] In a follow up to the recent $285 million settlement reached between the SEC and Citigroup, someone other than  Roy Oppenheim is starting to ask the  hard questions of why do the banks keep getting a “get out of jail free card”? Roy Oppenheim on Reducing Mortgage Fraud, Banks Take Responsibility | South Florida Law Blog. […]