Identity Theft & Bankruptcy Fraud
by Sandra R. Klein, Bankruptcy Fraud Criminal Coordinator, U.S. Trustee Program, Los Angeles
Recently, newspapers across the country have been filled with stories about personal information being lost, stolen, or compromised. Why are these stories getting so much attention and why should we care? What relationship is there between personal information being stolen or compromised and bankruptcy?
Seward Named New Committee Co-chair
Jack Seward, New York, was named new co-chair of the Commercial Fraud Task Force. Mr. Seward has more than 35 years of managing and consulting experience, including public accounting, corporate accounting, forensic accounting, IT and digital/computer forensics. He provides litigation support for e-discovery and recovery of “e-data” that often demands corporate-wide computer forensics solutions in bankruptcy. He is a member of the New York Electronic Crimes Task Force. The NYECTF is organized and sponsored by the U.S. Secret Service and Department of Homeland Security with membership by invitation. Mr. Seward, a contributing editor for the ABI Journal, is frequently published on computer forensics, e-discovery, e-security and digital and bankruptcy fraud. We look forward to his “e-insights” on fraud as a digital/computer forensic technologist in the bankruptcy arena.
Minutes from the 2005 Annual Spring Meeting
Those members in attendance were fortunate to have participated in excellent discussions that followed the presentation, “Single Family Bankruptcy Fraud Investigations,” by Patrick S. Layng, U.S. Trustee Programs, Criminal Enforcement Unit, and Kevin J. Whalen, Senior Special Agent, Criminal Investigations Division, Office of Investigation, U.S. HUD.
The presentation was directly related to bankruptcy fraud with an emphasis on the investigative areas by EOUST and HUD. Specific issues relating to fraud and FHA Single Family Insured Loans were discussed, along with the common HUD/FHA fraud schemes that included the following:
- Bankruptcy Fraud
- SSN/Identity Fraud—Verification of Employment & Income
- Appraisals, Earnest Money and Closing Costs
- Property Flipping, Equity Skimming, Equity Theft and Payoff Diversion
Examples and the process used by many of the fraudsters often included the mortgagor obtaining multiple properties under multiple aliases and then filing bankruptcies to forestall foreclosure. The impact of these types of fraud increase FHA defaults, HUD foreclosures, legal costs and waste of HUD funds and hurt low-income homeowners.
All bankruptcy professionals need to be aware of these schemes and communicate with the U.S. Trustee, chapter 7 trustee and HUD-OIG when specific situations come to their attention. The committee thanks the EOUST and HUD for making this informative and necessary information available.
The planning of events and materials for 2005–06 is underway. Everything and anything related or pertaining to commercial fraud in the bankruptcy arena is the purpose of the committee and we openly solicit your comments and suggestions, which can be sent to new committee co-chair Jack Seward.