Texas’s U.S. Attorneys for the Northern, Southern, Eastern, and Western Districts of Texas say that prosecuting mortgage fraud is their top priority, writes Mary Flood in the Houston Chronicle. “There will be a lot of work for you”, said the U.S. Attorney for the Southern District of Texas to the group of mostly criminal-defense lawyers at South Texas College of Law.
Ten years ago I might have read this news and thought, “jackpot!” After all, mortgage fraud is white collar crime, and white collar crime means fat-cat defendants with money, and fat-cat defendants with money means big legal fees, right?
At the birth of the mortgage fraud industry, the people committing mortgage fraud were inventing ways to steal. They were educated and (internally) motivated, two characteristics that often go along with having the means to properly fund the defense of a criminal case.
But mortgage fraud became so easy in the last decade, and the techniques for committing it became so widely known, that it required no special education or training. It was like stealing lawnmowers out of people’s garages. Mortgage fraud became a white-collar crime committed by blue-collar people.
Blue-collar people are often able to hire competent criminal defense counsel for most types of cases. Many of my clients are blue-collar people. But the amount of money required to properly fund the defense of a document-intensive federal case like a mortgage fraud case is much greater than that required for the defense of most any other sort of case (capital murder cases and drug cases involving wiretaps being among the exceptions).
While the government will pump up its numbers for the press (by designating as loss the total amount of all loans involving fraud), the sad fact is that most of the people who will be arrested for mortgage fraud from here on out are the bit players, who will have gained only a couple of percent of that loss, if anything, from their alleged machinations.
People steal for a reason: they want easy money. Except in unusual pathological cases, the amount of gain sought is significant to the thief. People with lots of resources don’t steal small. Most of the people we will see arrested for mortgage fraud in coming years will have, at most, scraped a thousand dollars off of this deal and a thousand dollars off of that one. That money’s gone already (and couldn’t have been used to pay lawyers in any case), but the point is that they were stealing small because they didn’t have a lot of resources to begin. They and their families won’t have the assets to pay the high-five- or six-figure fees necessary to hire competent counsel who will zealously defend them.
So what happens to them, those who don’t have the wherewithal to pay for a zealous defense? The luckier ones won’t have enough resources to hire lawyers at all; the really unlucky ones will have enough money to hire inexpensive lawyers.