Friday, June 20, 2008

News Update

Over the past week, we’ve brought you up-to-date news on the latest current events occurring during the current credit crisis happening in America. Yesterday, we reported that Bear Stearns employees Ralph Cioffi and Matthew Tannin were going to be arrested for fraud dealing with a hedge fund account.

The Arizona Republic sheds more light on the situation this morning. In April 2007, they became aware of the current situation when an internal report was released. One of the emails that was written around that time period by Tannin states:

The subprime market looks pretty damn ugly. If we believe the (report) is ANYWHERE CLOSE to accurate I think we should close the funds now. The reason for this is that if (the report) is correct then the entire subprime market is toast.

The two were officially charged with charges of conspiracy and securities and wire fraud for lying to the authorities about the state of the hedge fund. They could both face up to twenty years in prison for these charges.

We also reported on the current mortgage crisis. The FBI has moved agents to different segments in order to deal with the current state of the mortagage business, trying to capture the rampant fraud on the market. This report at the Chicago Times reports that 67 people were charged in mortgage fraud, from builders to loan officers. The three scams targeted were: lending fraud involving false loan applications and bogus real estate appraisals; foreclosure-rescue scams in which financially strapped homeowners lose ownership of their properties to criminals; and mortgage-related bankruptcy fraud. Bonnie L. Brown was the ring leader, and obtained 183 homes through fraudulent loans worth more than $124 million. There were 28 more people in Michigan charged with mortgage fraud according to the Detroit Free Press.

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