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Wells Fargo VP to be Prosecuted by US DOJ in $200 Million Mortgage Fraud

The United States Department of Justice has been given the green light to add Wells Fargo & Co Vice President Kurt Lofrano as a defendant in its lawsuit accusing the bank of mortgage fraud.

Manhattan U.S. District Judge Jesse Furman accepted the feds’ amended complaint to add Lofrano, which is almost a first (see below). The federal government has faced criticism from consumers, their attorneys and consumers’ rights groups of being afraid to criminally prosecute bank employees, in contrast to Iceland, where bankers have received prison sentences for committing fraud.

In this case, the U.S. DOJ is accusing the country’s top lender of misleading the Department of Housing and Urban Development (HUD) into believing many of its loans qualified for federal insurance and were therefore safe. Instead, the losses suffered by taxpayers have reached into the hundreds of millions of dollars.

According to prosecutors, Lofrano played a “critical role” in Wells Fargo’s decision not to report to HUD more than 6,000 materially defective loans that the bank falsely certified for Federal Housing Administration insurance. Lofrano, who was the VP for Quality Control from 2002-2010, kept information that many of the loans were defective, causing HUD (= taxpayers) to pay out close to $200 million in insurance claims to cover the ineligible loans.

The federal government’s goal is to find Kurt Lofrano liable under the federal False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

The only other bank official who has been prosecuted is Rebecca Mairone, a former mid-level executive at Bank of America Corp’s Countrywide unit. Both Marone and Countrwide were found liable by a Manhattan federal jury in October for selling defective home loans to Fannie Mae and Freddie Mac.


© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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