British Government Using Civil Forfeiture In Pursuit Of Mortgage Fraudsters
This story involves a British government freeze of assets with a value of 11.8 million British pounds following a Property Freezing Order issued by their High Court as part of an ongoing investigation into a large scale mortgage fraud and money laundering operation. The British government, through their recently created (2002) Assets Recovery Agency ("ARA"), alleges that 77 properties have been funded by the proceeds of financial crime and used to launder money. The equity value of the property is estimated at 4.7 million British pounds, and consists largely of rental homes & flats.
Editor's Note:
In this story, it appears that the British government, through ARA, is seeking civil recovery of the proceeds of unlawful activity (mortgage fraud & money laundering) by an action in the British High Court without actually arresting and charging anybody with crimes (as of now, anyway). (If I'm not mistaken, I think that U.S. Federal law enforcement authorities (and possibly even state law enforcement authorities) also have the power to initiate civil actions to seek recovery of the proceeds of unlawful activity in the U.S.).
Reportedly, "[ARA] can also issue tax assessments where there are reasonable grounds to suspect that there is taxable income, gain or profit from criminal conduct" (I think the Internal Revenue Service as well as state taxing authorities can do that in the U.S.).
On January 11, 2007, the British Government has laid out a proposal before the British Parliament requesting, among other things, an extension to prosecutors of the power to launch civil recovery action under the British Proceeds of Crime Act 2002 (the law that created ARA). This proposal, the Written Ministerial Statement, can be viewed here.
(I don't have a clue whether local county prosecutors in the U.S. can initiate civil actions against suspected mortgage fraud scammers and money launderers to recover assets acquired through unlawful activity. If there are any local prosecutors out there who can shed some light on this as it relates to their District Attorney's / State Attorney's office, click "Comments" below and drop me a line.)
While the British are apparently doing it, I can't recall having seen anything in the U.S. where Federal or State authorities have used civil actions to go after mortgage fraud (outside of foreclosure rescue situations). It seems to me that, at a minimum, the Internal Revenue Service can always investigate the "cash back" fraudsters and the "flippers" to see that they've paid the proper amount of income taxes on any fraud-tainted proceeds they received from those deals (and obviously, prosecute them if they haven't).
Put another way, if Federal & State law enforcement authorities are having a tough time prosecuting all the mortgage fraud complaints that they're getting (with the labor intensive criminal investigations that go along with that), it may be that prosecuting some of the alleged scammers (the ones who have actually accumulated some wealth from their unlawful activities) for failure to pay Federal & State income taxes on the proceeds of their fraud may be an easier prosecution (the government successfully used this approach against famous gangster Al Capone, after unsuccessfully prosecuting him on racketeering charges).
Further, it seems to me that the threat of criminal tax prosecution can be used to "squeeze", or otherwise "persuade", one or more members of organized mortgage fraud groups to cooperate in a criminal investigation by "explaining" how the ringleaders conducted their operations, thereby making the prosecutions of the frauds themselves easier.
To read more on the British Government's use of civil recovery actions to attack mortgage fraud and money laundering operations, see:
ARA freezes #11.8 million of property in Manchester
Manchester Property Portfolio at Heart of Fraud Scandal
.
Editor's Note:
In this story, it appears that the British government, through ARA, is seeking civil recovery of the proceeds of unlawful activity (mortgage fraud & money laundering) by an action in the British High Court without actually arresting and charging anybody with crimes (as of now, anyway). (If I'm not mistaken, I think that U.S. Federal law enforcement authorities (and possibly even state law enforcement authorities) also have the power to initiate civil actions to seek recovery of the proceeds of unlawful activity in the U.S.).
Reportedly, "[ARA] can also issue tax assessments where there are reasonable grounds to suspect that there is taxable income, gain or profit from criminal conduct" (I think the Internal Revenue Service as well as state taxing authorities can do that in the U.S.).
On January 11, 2007, the British Government has laid out a proposal before the British Parliament requesting, among other things, an extension to prosecutors of the power to launch civil recovery action under the British Proceeds of Crime Act 2002 (the law that created ARA). This proposal, the Written Ministerial Statement, can be viewed here.
(I don't have a clue whether local county prosecutors in the U.S. can initiate civil actions against suspected mortgage fraud scammers and money launderers to recover assets acquired through unlawful activity. If there are any local prosecutors out there who can shed some light on this as it relates to their District Attorney's / State Attorney's office, click "Comments" below and drop me a line.)
While the British are apparently doing it, I can't recall having seen anything in the U.S. where Federal or State authorities have used civil actions to go after mortgage fraud (outside of foreclosure rescue situations). It seems to me that, at a minimum, the Internal Revenue Service can always investigate the "cash back" fraudsters and the "flippers" to see that they've paid the proper amount of income taxes on any fraud-tainted proceeds they received from those deals (and obviously, prosecute them if they haven't).
Put another way, if Federal & State law enforcement authorities are having a tough time prosecuting all the mortgage fraud complaints that they're getting (with the labor intensive criminal investigations that go along with that), it may be that prosecuting some of the alleged scammers (the ones who have actually accumulated some wealth from their unlawful activities) for failure to pay Federal & State income taxes on the proceeds of their fraud may be an easier prosecution (the government successfully used this approach against famous gangster Al Capone, after unsuccessfully prosecuting him on racketeering charges).
Further, it seems to me that the threat of criminal tax prosecution can be used to "squeeze", or otherwise "persuade", one or more members of organized mortgage fraud groups to cooperate in a criminal investigation by "explaining" how the ringleaders conducted their operations, thereby making the prosecutions of the frauds themselves easier.
To read more on the British Government's use of civil recovery actions to attack mortgage fraud and money laundering operations, see:
ARA freezes #11.8 million of property in Manchester
Manchester Property Portfolio at Heart of Fraud Scandal
.
posted by Home Equity Theft Reporter at 7:13 AM
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