Mortgage and Real Estate Fraud
Federal investigators have identified an increase in frauds and schemes in the real estate business. These schemes victimize individuals and businesses, including low-income families lured into home loans they cannot afford, legitimate lenders saddled with over-inflated mortgages, and honest real estate investors fleeced out of their investment dollars.
Special agents with IRS Criminal Investigation are uniquely equipped to investigate these types of mortgage fraud and illegal real estate crimes because they are skilled financial investigators whose mission is to 'follow the money.'
Some of the common real estate fraud schemes include:
- Property Flipping — A buyer pays a low price for property, and then resells it quickly for a much higher price. While this may be legal, providing false statements to the lender is not.
- Two Sets of Settlement Statements — One settlement statement is prepared and provided to the seller accurately reflecting the true selling price of the property. A second fraudulent statement is given to the lender showing a highly inflated purported selling price. The lender provides a loan in excess of the property value, and after the loans are settled, the proceeds are divided among the conspirators.
- Fraudulent Qualifications — Real estate agents assist buyers who would not otherwise qualify by fabricating their employment history or credit record.
The income earned from these types of real estate fraud schemes is often laundered to hide the money from the government. Money laundering is simply a process of trying to make illegally earned income appear to be legitimately earned. IRS Criminal Investigation follows the money and collects evidence to prove applicable tax and/or money laundering violations. Once they have obtained the evidence, IRS agents forward their investigation to the Department of Justice for criminal prosecution.
If a criminal investigation is not warranted, the IRS can also take civil action. Each year the IRS audits thousands of tax returns involving individuals and entities associated with the real-estate business.
Statistical Data - Mortgage and Real Estate Fraud Investigations