Group of 25 Faces allegations of $100 Million Mortgage Fraud

NEW YORK - Prosecutors have charged 25 people, including bankers, lawyers and a mortgage origination company, with mortgage fraud amounting to more than $102 million. The fraud was run by AFG Financial Group and relied on borrowing money to fund real estate purchases that were never completed, according to Manhattan district attorney Robert Morgenthau. Charges amount to more than $12 million in frauds, although Morgenthau said the scheme probably amounted to around $100 million of fraud.

The scam is alleged to have begun in 2004, lasting until the beginning of this year, although prosecutors say most activity took place between 2005 and 2007 at the height of the US mortgage lending boom. Twelve of the 25 have already pleaded guilty to fraud charges and, according to Morgenthau, will face state prison terms. One lender facing losses from the fraud is New Century Mortgage Corporation, which lost $32.2 million. "This kind of activity is what led to the mortgage crisis," said Morgenthau.