The Justice Department and FBI last week admitted that they grossly overstated the scope of a mortgage fraud crackdown that was conducted last year.
During a press conference held in October 2012, just a few weeks before the presidential election, Attorney General Eric Holder and other law enforcement officials announced, with much fanfare, that the so-called Distressed Homeowner Initiative had resulted in the arrest of 530 individuals on behalf of 73,000 victims who suffered over $1 billion in losses.
However, according to a memo circulated by the FBI and a correction posted online by the Justice Department last week, the number of defendants, the number of victims and the size of the losses were, in fact, only a fraction of what officials claimed.
In its update of the original press release announcing the initiative's success, the Department of Justice explains that the figures presented in October ‘included not only criminal defendants who had been charged in fiscal year 2012, as reported, but also a number of defendants who were the subject of other prosecutive actions – such as a conviction or sentence – in fiscal year 2012.’
‘In addition, the announcement included a number of defendants who were charged in mortgage fraud cases in which the victim(s) did not fit the narrow definition of distressed homeowner that the initiative targeted,’ the DOJ says in its correction. ‘While all of the cases originally reported were part of our collective efforts to ensure stability and fairness in our financial and housing markets, the press release below reflects the accurate, up-to-date data regarding the Distressed Homeowner Initiative.’
According to the revised figures, the Distressed Homeowner Initiative actually resulted in 107 criminal defendants charged in U.S. District Courts across the country, not 530, as had been originally reported. The number of victims was 17,185 – not 73,000 – and the losses incurred totaled $95 million – not $1 billion, as had been originally reported.
In an opinion column published on Aug. 11, Bloomberg News reporter and columnist Jonathan Weil calls on AG Holder and law enforcement to provide further explanation as to how the errors occurred.
‘We're not talking small differences here,’ Weil says in his column, adding that the FBI and DOJ revised the figures only after they were ‘caught red-handed by a couple of nosy reporters.’
‘Holder needs to come forward and explain exactly how this happened and why,’ Weil writes. ‘He used a press conference with the cameras rolling to give out numbers that proved to be false – and they appear to have been willfully false. He should be just as eager to hold another press conference to set the record straight, answer any questions about his apparent sleight of hand when it comes to financial-fraud metrics and apologize to the American people.’
