Friday's Fraud Story

Honest Confession:
In some perverse way I think I may actually get a kick out of these posts.

I'm very sorry.
Somewhere, someone was deeply effected by the fraud and indeed lost something of value. Their lives were not improved but instead were damaged by the actions.

Don't get me wrong.
I am certainly not rooting for the bad guys.
Maybe it's more of a matter of my astonishment of their cunning ways. I really can't put a finger on it.

Why do we like all the cops shows?
CSI, Law and Order, and the like?
They all certainly all have victims, people who have lost something.
I pride myself on being able to feel how others in different situations may feel. This is called Empathy. I feel the joys and pain of others.
I am an empathetic person.

But alas, on to the Fraud!

So this guy, Michael Edison of Las Vegas was just indicted for defrauding a SF woman.

He told her he owned a financial planning firm with something like 12,000 clients!
He first got her confidence, then once he had her confidential information, he opened a joint account, I'm guessing a checking / savings combo.

With that opened, he then applied for a mortgage on her home.
He got a first mortgage from Wells Fargo and then a second line of credit from Countrywide.
Since her home was paid off, I guess these would be cash out refinances.

Where did the cash go?
To those joint accounts he set up.
He deposited 5.2 Million to the accounts.
He then drained 2.8 Million from the accounts leaving her with two mortgages and from my calculations $400,000 left in her new accounts!

So how'd she find out?
The banks started foreclosure proceedings on her property for lack of payments.
I guess he wasn't smart enough to setup automatic withdraws.
Even if he did - let's see...

• 2.8 million loan amount
• 30 year term
• 6.5% ballpark interest
• Would give him a theoretical payment of $17, 697 P & I
• Given the $400,000 left that would have lasted for 22 months.
  

"So Mike," (you say) "At least he left her the $400,000"
Don't count on it. Chances are not.
Once the F word was uttered the banks probably froze the accounts in question, if not all of her accounts. When the dust settles she will have lost many thousands of dollars if not millions!

How do I feel now?
Honestly? Not so happy.
As a matter of fact, I feel really sad.

I will never knowingly engage in fraud and yet the possibility of fraud is infused in what I do for a living.

Earlier this week we had a client who wanted us to pull only his credit.
He wants to do a cash out refinance but doesn't want his wife to be emotionally dragged thru all the details. He told a sad story about how his wife just can't handle numbers and finance.
He wants her to NOT be on the loan, not on the deed.
Matter of fact, let's not even tell her we're doing this.
"I'd prefer you only contact me on my cell phone and mail everything to my office."

What's that?
You smell something too?
So did we.