Referenced in our Newsletter Volume 3, Issue 10 - October 2004
Exposing Mortgage Fraud
When dealing with millions upon millions of records, VisuaLinks provides a number of unique ways to "slice & dice" the data to support proactive analytics. In the context of financial crimes analysis, there are certain types of situations that will always result in further evaluation. These typically include large numbers of transactions, frequent use of accounts, or connections to multiple ID numbers, addresses, or phone numbers.
The following example is based on SAR (Suspicious Activity Report) data using the Summarize service to expose a SUBJECT using multiple Social Security Numbers (SSNs) operating out of a specific LOCATION. The interesting aspect of this Summarize configuration was that the Count By selection used the SSN/EIN and the Group By was set to the NAME/DOB of the SUBJECT. Additionally, a filter was applied to only acquire records from a certain geographic region (defined by a CITY/STATE). Furthermore, a SUM aggregation was selected for the VIOLATION AMOUNT associated with the transaction.
The result set identified quite a number of potential targets and the query results were sorted by a combination of the number of SSN/EINs and the summed VIOLATION AMOUNT. Immediately, a specific target was identified and is shown below with 11 unique SAR violations.
A quick inspection of the NARRATIVES shows that all of the SARs reflect ongoing mortgage fraud(s). Generally, the banks indicated that there were misrepresentations in employment, overstated income, or falsified assets. With historically low interest rates, rising housing prices, and record new-home construction (9.4% in August 2004), the marketplace has been wrought with various frauds - especially mortgage fraud. The next level of the diagram is shown below indicating that there are at least 1-2 additional SUBJECTs per transaction involving our primary target.
From here, the networks were expanded again to bring in any ACCOUNT information associated with the SUBJECTs. Clearly the diagram indicates these subjects are all working independent of one another because each involves a separate account. The primary subject (in the center) is the controlling entity for all of these mortgage frauds.
Finally, the ADDRESSes for these SUBJECTs are displayed, which confirms they are all based on separate transactions. Notice, for each pairing of SUBJECTs for a SAR, there is a common address shown between them. Supposedly, these addresses would be the properties involved in the mortgage fraud.
Finally, a Temporal Grid was generated using the Day-of-Week (X-axis) and Week-of-Year (Y-axis) settings to show when these SARs took place. As depicted in the diagram below, there is a heavier concentration towards the end of the summer for this activity. Keep in mind that a SAR may contain multiple, independent transactions.
The behavior of our primary subject clearly shows the few transactions conducted earlier in the year tested the waters to determine if the scheme was detected by authorities. The last transaction occurred a week prior to writing this description, which indicates the fraud is presently active and our target is subject to prosecution from law enforcement.
Money laundering takes on many different characteristics. Whether people are structuring transactions to avoid the $10,000 filing limits, kiting checks, performing terrorist financing, or committing mortgage fraud - all of these types of violations are ultimately reviewed by the government agencies (e.g., FBI, IRS, FinCEN, DEA, etc.) chartered with investigating these types of crimes.
For more information on mortgage frauds, see the following CNN news reference:
http://edition.cnn.com/2004/LAW/09/17/mortgage.fraud/
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