COPS OFFICE: Hello and thank you for listening to the Office of Community Oriented Policing Services podcast on equity skimming, also known as foreclosure rescue scams. Today we will be hearing from Detective Liz Cruthers of the Portland Police Bureau. Detective Cruthers recently spoke to law enforcement professionals from across the country about her department’s investigations of equity skimming and similar scams. For more resources on this topic, please visit the COPS Office web site at www.cops.usdoj.gov. Under the CP Topics portion of our web site, we have posted a list of resources on mortgage fraud and equity skimming, which you can find by clicking on “Crime and the Economy.” DETECTIVE CRUTHERS: Hi, Detective Liz Cruthers with Portland Police. I just want to let everybody know, that as far as our agency is concerned, we make a distinction between mortgage fraud and some of the scams that are going on out there, in particular involving foreclosures and equity skimming. In our area, obviously the FBI is responsible for investigating the mortgage fraud cases because those are federally regulated forms – and bank fraud, wire fraud, and mail fraud, and all the other usual charges that go along with those are most applicably done at the federal level. What we have been doing in the Portland area is trying to concentrate on the foreclosure rescue scams that are out there because these cases are the ones that can be done specifically at a local level and these are the kind of cases that if they are too small for the US Attorney’s Office to prosecute, then sometimes the FBI Office here in Portland, who we have a great relationship with, will give us some of the smaller cases to work if they come through their office. One of the things that we do to try and prevent these crimes is we have drafted a letter that goes out to people who get behind on their payments. In Oregon, they, those people come out on what is called a notice of default list and that is public record. So we send a letter that is signed by our chief to the various people who are in foreclosure, explaining to them that they are about to get inundated with people who may try and rip them off. And the letter describes the various types of scams that we have seen recently. COPS OFFICE: Detective, can you explain the equity skimming or stripping part a little bit? DETECTIVE CRUTHERS: Foreclosure rescues only happen to people who have a ton of equity in their homes. That’s because the scammer doesn’t want the house. What they want is the equity that’s in the house. So in those cases, the people get behind on their payments and come out on the notice of default list. The scammers inundate them through phone calls and through showing up on people’s doorsteps offering to help with special paperwork, maybe refinance, offering them to stay in the house with a lease option to purchase at the end of the transaction. And so if the person goes along with it, they deed the house to the scammer or they unknowingly deed the house to the scammer thinking they’re going to refinance and, at closing, what is happening is the scammer is acquiring the house probably for pennies on the dollar and knows the house is going to appraise for more and oftentimes they have a simultaneous transaction that’s going on in which they are already refinancing the house to strip the equity out of it while the homeowner doesn’t even know about that. And so at the end of the lease option agreement, when the homeowner wants to buy the house back say for 219 or 220, and the scammer has taken out equity to the tune of $280,000, what happens then is the person who used to be the homeowner isn’t able to purchase the home back because the scammer has got it hawked to the hilt and the scammer has taken all of that equity. And those are the kind of cases that we are really trying to focus on here at the local level. And in my mind and in other people’s minds, these are just basically theft cases, but theft of tens of thousands of dollars, but it is also equity stripping. COPS OFFICE: Detective Cruthers, is there a certain threshold, I mean if it’s over $400,000, $500,000, $100,000, before it’s a federal case or anything? Have your US Attorney’s said that part? DETECTIVE CRUTHERS: You know officially sometimes they tell us 100,000. In reality, they don’t have the resources to do those kinds of cases and so oftentimes what our US Attorney’s office is interested in looking at is the dens of thieves basically who have done these kinds of foreclosure rescues or equity stripping to numerous people in the area. For example, they just recently did some cases involving mortgage fraud – a little bit different, but still, in which forty homes and, in another case, 70 homes were affected. So those are the kinds of thresholds that realistically will end up in the US Attorney’s Office. At the local level, we don’t have a threshold but in Oregon we have a statute called aggravated theft in the first degree, which is a theft of $10,000 or more in a single or multiple transactions. And so if these cases can’t be prosecuted at the US Attorney’s Office because it’s 1, 2, 3, 4, 5 houses and maybe it’s only a million dollars, then those cases those are appropriate for state court – at least in our minds out here and that’s what we’re trying to do. COPS OFFICE: Thank you, Detective Cruthers, for speaking to us about this pressing topic. And thanks again to all of you who have downloaded this podcast.