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Duke Cunningham Bribery Ring: Two Down, Two to Go

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Tommy K has now joined Duke Cunningham in prison, with Tommy K being sentenced
to more than eight years and more than a million dollar fine. That leaves Dusty Foggo–presently due to be tried for bribery and then some in the fall in Virginia and currently squabbling over discovery with the government. And Brent Wilkes, who is trying to negotiate bail while he prepares to appeal his conviction.

These guys were all indicted for the gaming of our defense and intelligence contracts using bribes. But the housing crisis has added a nice touch of irony to the equation. Brent Wilkes has had trouble making bail because his southern California real estate has declined in value so much it’s no longer enough to back the $2 million he originally posted for bail.

Burns reinstated the $2 million bail, but wanted current appraisals of any real estate Wilkes would put up to secure $1.4 million of that amount.

Wilkes was short about $600,000 at first. The crash in the real estate market had devalued property previously used to secure the bail.

And Judge Larry Burns was none too happy that–after Tommy K signed a plea deal with the government–he continued to engage in massive mortgage fraud.

Burns also took into account that Kontogiannis continued breaking the law after he pleaded guilty.

“Here you are with your rear end on fire over this Cunningham thing, and you’re out there making bad loans?” Burns said. “I think that’s just brazen.”

So two and a half years after this little bribery ring first became public, its perpetrators are beginning to go to jail.

Howie’s got a good post on the secrecy surrounding Tommy K’s sweet plea deal. Like Howie, I hope that we begin to learn why the government almost gave Tommy K a pass on bribing a Congressman because–they claim–he was cooperating on some counter-terrorism investigation. We saw how Chiquita Bananas similarly got a pass on their crimes, courtesy of Michael Chertoff. I just wonder how many of the folks ripping off middle class home owners in the last several years will, like Tommy K almost did, similarly get a pass.

Tommy K’s Everywhere

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This was a story I was expecting to see: a report that, in recent years of lax oversight, a large number of people have been defrauding mortgage companies.

The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said.

Reports of suspected mortgage fraud have doubled since 2005 and increased eightfold since 2002. Banks filed 47,717 reports this year, up from 21,994 two years ago, according to statistics from the Federal Bureau of Investigation and the Financial Crimes Enforcement Network of the Treasury Department. In 2002, banks filed 5,623 reports.

“I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry,” said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. “There’s too many cases, not enough agents.”

Mortgage fraud covers crimes like false statements on mortgage applications and elaborate “flipping” schemes that involve multiple properties and corrupt appraisers, title companies and straw buyers.

What I’m waiting for, now, is news of what these people used their fraudulent money for. Are these tens of thousands of cases of mortgage fraud just con men getting rich in the easiest way possible? Or were they funneling their ill-gotten money to something or another. In the case of Tommy K, he used his fraudulently gained money bribing Republican Congressmen. Was he the only one capitalizing on the corporatists’ refusal to regulate industry to funnel more money to corporatists?

Tommy K “In Custody”

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I was apparently one of the few who noticed the news last week that Tommy K, Duke Cunningham’s mysterious briber, has continued to engage in apparent mortgage fraud since the time he signed his plea deal in February. From one of the government’s recent filings,

(4) During the pre-trial proceedings of coconspirators Brent Wilkes and John Michael, the government first received information suggesting that defendant Kontogiannis was, in fact, still committing federal criminal offenses, including, but not limited to bank fraud in violation of Title 18, United States Code, Section 1344.

(5) As part of these proceedings, defense counsel for John Michael obtained various financial documents indicating that Mr. Kontogiannis was–unbenknownst to the government–still continuing his illegal mortgage fraud scheme. In addition, Michael’s defense counsel contacted Washington Mutual to obtain information regarding the fraudulent mortgages that they had purchased from Mr. Kontogiannis.

[snip]

…as a direct result of being contracted by Michael’s defense counsel, Washington Mutual contacted the government with information regarding Mr. Kontogiannis’s continued illegal activity.

(8) Within the past two weeks, we obtained clearer indications that Mr. Kontogiannis was engaged in post-plea illegal activity. Read more →