NPR logo

FBI Puts Focus on Mortgage Fraud Probes

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
FBI Puts Focus on Mortgage Fraud Probes


FBI Puts Focus on Mortgage Fraud Probes

FBI Puts Focus on Mortgage Fraud Probes

  • Download
  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

The FBI is taking pains to put a public focus on investigations into criminal activity related to the subprime loan crisis. So far, two former Bear Stearns hedge fund managers and more than 400 real estate industry players have been implicated and more arrests may be coming.


It's MORNING EDITION from NPR News. Good morning, I'm Steve Inskeep.

We're following up this morning on the first executives to face criminal charges related to the subprime mortgage crisis. The FBI made the arrests yesterday. Hours later in Washington, the Justice Department and the FBI announced the arrests of more than 400 real estate industry players in a nationwide crackdown on mortgage fraud. NPR's Dina Temple-Raston reports the Feds are trying to send a very specific message.

DINA TEMPLE-RASTON: FBI officials let reporters on the street know the defendants were coming with a whistle.

(Soundbite of whistle)

TEMPLE-RASTON: With that cue, two former Bear Stearns hedge fund managers, Ralph Cioffi and Matthew Tannin, were paraded before cameras in handcuffs from the FBI's New York offices to a waiting car.

(Soundbite of car starting)

TEMPLE-RASTON: Then they were taken to a Brooklyn courthouse for processing. Their arrest and the unsealing of the indictment that accuses them of misleading investors was the beginning of a day that the FBI wanted to be all about mortgage fraud.

Attorneys for Cioffi and Tannin had begged federal officials to allow their clients to surrender quietly. Officials said no. Could they avoid the perp walk? That was non-negotiable, too. Then hours later, FBI Director Robert Mueller and Deputy Attorney General Mark Filip had another announcement.

Mr. MARK FILIP (Deputy Attorney General): Today we're here to announce the results of a nationwide law-enforcement sweep aimed at investigating and prosecuting mortgage fraud. In three-and-a-half-months' time, this action, known as Operation Malicious Mortgage, has resulted in charges against more than 400 individual defendants.

TEMPLE-RASTON: He said on Wednesday alone, they arrested 60 people on mortgage-fraud charges, and the arrests, he said, would continue through the week.

FBI Director Robert Mueller, so infamous for his desire to keep a low profile that his staff says he actually strikes out the words - I want to announce -from any speech they hand to him, was front and center, promising more arrests to come.

Director ROBERT MUELLER (Federal Bureau of Investigation): We will follow up, we will investigate, and we will prosecute, and justice will be done. And consequently, I will expect that you will see additional times where we come before you and say these are the number of cases we've investigated, and these are the results of those investigations.

TEMPLE-RASTON: The message was clear. The Department of Justice and the FBI wanted to stress they aren't just fighting terrorism.

Director MUELLER: Our objective, as always, is to protect the consumer and to stabilize the economic markets.

TEMPLE-RASTON: And then, in case any of this was lost on the people involved in the more-than-1,400 mortgage-fraud cases the FBI has opened in recent months, Mueller signaled that there could be more prosecutions related to the subprime mortgage crisis.

Director MUELLER: To persons who are involved in such schemes, we will find you, you will be investigated, and you will be prosecuted. To those who would contemplate misleading, engaging in such schemes, you will spend time in jail.

TEMPLE-RASTON: The men who started the morning with a perp walk, Bear Stearns' Cioffi and Tannin, were arraigned yesterday afternoon. They were charged with conspiracy and securities and wire fraud. Prosecutors say they lied to investors in a hedge fund heavily exposed to bonds linked to mortgage-backed securities. They painted a rosy picture of its prospects just weeks before the funds went belly-up. Investors lost $1.6 billion.

Cioffi and Tannin both pleaded not guilty to the charges and are out on bail. Dina Temple-Raston, NPR News, New York.

Copyright © 2008 NPR. All rights reserved. Visit our website terms of use and permissions pages at for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.