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US Attorney General Eric H. Holder

The Federal Bureau of Investigation is reviewing 2,800 alleged mortgage fraud crimes, a national caseload that is up 400% from five years ago, according to US Attorney General Eric H. Holder.

Holder calls the fraud allegations a national crisis.  The government has set up a Financial Fraud Enforcement Task Force to work closely with state and local law enforcement agencies.

"Mortgage fraud schemes must be stopped in their tracks," Holder told a meeting of law enforcement officials in Phoenix last week. "Those willing to exploit our national financial crisis for personal gain will be brought to justice."

At the same time Holder was speaking in Phoenix, a separate related incident was being played out in New York City, DSNews.com reports.

The Federal Deposit Insurance Corp. closed down Manhattan's Park Avenue Bank, citing ineffective management and inadequate capital.

The failed bank's former president and CEO, Charles J. Antonucci Sr., was arrested -- the first person to be charged by the federal government with defrauding the Troubled Asset Relief Program (TARP).

DSNews.com reports that according to the complaint filed by the U.S. attorney for the Southern District of New York and unsealed by the court,  Antonucci faces allegations of self-dealing, bank bribery, embezzlement of bank funds, and attempting to fraudulently obtain more than $11 million worth of taxpayer rescue funds from TARP.

Antonucci is charged with using his position at the bank to defraud and deceive the New York State Banking Department and the FDIC into believing that he had invested $6.5 million of his own money in the bank to try and improve its capital position.

But according to prosecutors, Antonucci had, in fact, fraudulently borrowed the funds that he purportedly invested from the bank itself through other entities and businesses that he was associated with.

Antonucci's $6.5 million investment of the bank's own money gave him 308,349 shares of common stock and a 52 percent controlling interest in the Park Avenue Bank's holding company.

The FDIC's complaint alleges Antonucci provided false information to the FDIC to support his scheme when the agency began looking into the matter last year, and then used the $6.5 million transaction to support an application for more than $11 million in taxpayer rescue funds through TARP.

When Antonucci was advised by the FDIC that it would not recommend approval of the Park Avenue Bank's TARP application, he withdrew the application voluntarily, according to the FDIC complaint.

Additionally, Antonucci is accused of violating bank bribery laws in support of his lavish lifestyle by accepting freebies from clients, including use of a private plane.

He also allegedly forced the Park Avenue Bank to improve, lease, and pay expenses for properties he personally owned, and is said to have stolen more than $103,000 from a Florida church.

After growing Park Avenue Bank's business from assets of $100 million at the end of 2004 to $500 million, primarily from commercial real estate (CRE) loans made during the height of last decade's boom, Antonucci stepped down from his post as president in 2009.

But all those historically profitable commercial loans proved to be the catalyst of the bank's demise when property values took their tumble, DSNews.com reports.

In Phoenix, meanwhile, Holder told his audience the federal government's budget for fiscal year 2010 shows that $8 million will be allocated this spring for mortgage fraud enforcement, including $1.7 million in Arizona.

The Phoenix metropolitan area is ranked fourth in the nation for the number of suspicious activity reports filed by depository institutions concerning suspected mortgage fraud, according to a recent study from the Department of Treasury's Financial Crimes Enforcement Network.

Arizona Attorney General Terry Goddard

In addition, HUD said Arizona is ranked No. 1 for homes that were funded by Federal Housing Administration loans and have been foreclosed upon.

"We welcome the opportunity to combine forces with federal agencies to attack the serious problem of mortgage fraud in Arizona," said Arizona Attorney General Terry Goddard.

"Arizona is ground zero in the foreclosure crisis, which plays a large role in our state's economic downturn.

"This crisis has been exacerbated by the deceptive practices of lenders in originating and servicing loans and fraudulent mortgage rescue scams that prey on borrowers desperate to hang on to the American dream of owning a home." 

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