Top News

CHICAGO (CBS) ― Federal authorities have charged 67 people in a dozen new mortgage fraud cases uncovered in Chicago as part of a nationwide investigation.

The cases – many, but not all, of which are related – involve over $170 million in fraudulent mortgages, which were given out by a variety of lenders and security by several hundred homes in the Chicago area and other places across the country.

When the mortgage holders in the cases defaulted, the lending companies suffered losses of more than $40 million, the U.S. Attorney's office said.

In the Chicago case, mortgage brokers, loan officers, realtors, home builders, and attorneys were among those charged, according to the U.S. Attorney's office.

"We're talking about a billion dollars worth of loss in the cases that I'm told, that have been brought in other cases around the country, and that's staggering," said First Asst. U.S. Attorney of the Northern District of Illinois Gary Shapiro.

Six defendants were arrested Wednesday. Among those charged is Jonathan Hon.

"Hon had a coupe of schemes which he ran in 2002 and 2003," Shapiro said.

Prosecutors say Hon owned and operated Burnham Mortgage in a Loop office building.

An 18-page indictment alleges Hon used phony purchasers to defraud lenders, title companies, lien holders and banks at closings.

"He simply took those checks, negotiated them and kept the money," Shapiro said.

Prosecutors say Hon was able to collect $2.5 million through his scheme, through the purchase of seven homes in Oak Park, River Forest and Chicago.

Among them are condo apartments on north Winthrop Avenue.

"I've always known Jonathan to be a hardworking member of the business community," said Hon's attorney, Michael Petro.

Petro questions the timing of the charges against his client.

"When you look at the whole situation around mortgage transactions it's highly regulated, so I am skeptical of the allegations right now," he said.

Nationally in the probe dubbed Operation Malicious Mortgage, more than 400 people have been charged in more than 144 cases, according to the U.S. Attorney's office.

One ringleader, Bobbie L. Brown Jr., was accused in 33 of the cases of running one of the most extensive mortgage fraud schemes ever prosecuted in federal court in Chicago, the U.S. Attorney's office said.

Brown's alleged scam involved $111 million in fraudulent mortgage loans on 183 homes, located in an area ranging from the Chicago suburbs to Nevada and California. Mortgage lenders lost $24.3 million as a result, according to the U.S. Attorney's office.

Three other defendants are accused of getting fraudulent mortgages on 28 properties in the Chicago area worth $40 million in total, and 12 more are accused of getting more than $3.2 million in home loans using phony or stolen identities, according to the U.S. Attorney's office.

"These crimes, on the scale being addressed today, cause banks and lending companies, which have been saddled with huge numbers of fraudulent mortgages, to tighten their lending practices and adjust the costs of doing business," said U.S. Attorney Patrick Fitzgerald. "Ultimately, these burdens are borne by anyone hoping to purchase or sell a home and the shareholders of institutions financing those transactions."

All the alleged offenders were charged with felonies, among them mail fraud and bank fraud which could carry lengthy terms upon conviction. The maximum penalty for mail and wire fraud is 20 years behind bars and a fine of $250,000, while the maximum penalty for bank fraud is 30 years in prison and a fine of $1 million.

CBS 2's Suzanne LeMignot contributed to this report.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

Editor's Picks

• Gay Celebrities
• Did You Know? Stars From Chicago!
• Celebs Who Lean To The Right
• Real Or Fake?