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EDITOR’S COMMENT: I sat on this story for a while checking out some facts. Words alone can’t describe my reaction to this. They were called “liar’s loans” because the no-doc loans were intended to be approved regardless of actual income. Under TILA and industry standards for underwriting loans, the ultimate responsibility for the accuracy of the data and the viability of the loan is that of the lender. So here is this guy who gets attracted to do exactly what Wall Street wanted him to do —- sign papers regardless of the accuracy of the data.

Minimal due diligence would have and does reveal that the income stated on his application was inaccurate in terms of his true income but accurate in terms of justifying approval of the loan. In virtually all such cases, the mortgage broker makes the decision on the amount of income to state. With the full knowledge of Wall Street aggregators, who were using the money of investors, everything was inflated — stated income, property value, etc. This guy believing that the banks knew what they were doing and were “banking” on the value of the property which was fraudulently stated BY THE LENDER, signs the papers, like everyone else who did NO-DOC loans.

There was actual fraud here. It was the aggregators controlled by Wall Street investment banking firms, who lied to investors to get money on false pretenses. They then used the money to fund fees and yield spread premiums that were many times any amount ever earned on originating mortgages. Basically they got away with it. Settlements involving restitution of a small fraction of the gigantic stolen principal “donated” by investors was all that anyone was hit with.

BUT when it comes to the little guy who gets played by Wall Street into this scam, the U.S. Department of Justice has no problem prosecuting criminal claims against the borrower. I think it was Stalin who said that if you kill one person you’re a murderer, but if you kill millions, you are the head of state.

The defendant here was relying upon the appraisal to justify the deal. He had nothing to do with the amount reported as the appraised value. If he knew that the property was not worth the amount of the loan he would have no reason to proceed with the deal. The borrower thus gets defrauded by the same scheme that defrauded the investors. Yet, in another example of how bankers are controlling he story, it’s a borrower who goes to jail for signing a document that he — and everyone else involved — knew was false as to his income but which he did not know was false as to the property value. He was led to believe the deal would “work out” because of rising property values.

It was not this defendant who brought down the financial system or even all of the other liar loans. It was the people on Wall Street who needed those liar loans to move money and create “profit” and “fees” out of the fictitious transactions. Nobody knows more about underwriting securities and loans than Wall Street and the commercial banks. Any bank loaning their own money would never approve a liar loan with inflated appraisals. And that is why the investment banks ran away with market share. Any risk-averse banker knew that these loans were bad and so did the risk takers on Wall Street. They didn’t care because their goal was to make the trade without regard to outcome. They were churning investor money and houses and lives.

And yet, this guy goes to jail for 21 months. Innocence is not the issue here. Fairness and equal treatment is at issue. And punishment proportionate to the crime — $13 trillion PLUS versus whatever this guy did. How much time did Mozilo get? Adding salt to the wound, the man is ordered to pay restitution to whose company? — Mozilo’s Countrywide, now Bank of America.

In Prison for Taking a Liar Loan


A few weeks ago, when the Justice Department decided not to prosecute Angelo Mozilo, the former chief executive of Countrywide, I wrote a column lamenting the fact that none of the big fish were likely to go to prison for their roles in the financial crisis.

Soon after that column ran, I received an e-mail from a man named Richard Engle, who informed me that I was wrong. There was, in fact, someone behind bars for what he’d supposedly done during the subprime bubble. It was his 48-year-old son, Charlie.

On Valentine’s Day, the elder Mr. Engle said, his son had entered a minimum-security prison in Beaver, W.Va., to begin serving a 21-month sentence for mortgage fraud. He then proceeded to tell me the tale of how federal agents nabbed his son — a tale he backed up with reams of documents and records that suggest, if nothing else, that when the federal government is truly motivated, there is no mountain it won’t move to prosecute someone it wants to nail. And it was definitely motivated to nail Charlie Engle.

Mr. Engle’s is a tale worth telling for a number of reasons, not the least of which is its punch line. Was Mr. Engle convicted of running a crooked subprime company? Was he a mortgage broker who trafficked in predatory loans? A Wall Street huckster who sold toxic assets?

No. Charlie Engle wasn’t a seller of bad mortgages. He was a borrower. And the “mortgage fraud” for which he was prosecuted was something that literally millions of Americans did during the subprime bubble. Supposedly, he lied on two liar loans.

“The Department of Justice has made prosecuting financial crimes, including mortgage fraud, a high priority,” said Neil H. MacBride, the United States attorney for the Eastern District of Virginia, in a statement. (Mr. MacBride, whose office prosecuted Mr. Engle, declined to be interviewed.)

Apparently, though, it’s only a high priority if the target is a borrower. Mr. Mozilo’s company made billions in profit, some of it on liar loans that he acknowledged at the time were likely to be fraudulent and which did untold damage to the economy. And he personally was paid hundreds of millions of dollars.  Though he agreed last year to a $67.5 million fine to settle fraud charges brought by the Securities and Exchange Commission, it was a small fraction of what he earned.  Otherwise, he walked.  Thus does the Justice Department display its priorities in the aftermath of the crisis.

It’s not just that Mr. Engle is the smallest of small fry that is bothersome about his prosecution. It is also the way the government went about building its case. Although Mr. Engle took out the two stated-income loans, as liar loans are more formally called, in late 2005 and early 2006, it wasn’t until three years later that his troubles began.

As a young man, Mr. Engle had been a serious drug addict, but after he got clean, he became an ultra-marathoner, one of the best in the world. In the fall of 2006, he and two other ultra-marathoners took on an almost unimaginable challenge: they ran across the Sahara Desert, something that had never been done before. The run took 111 days, and was documented in a film financed by Matt Damon, who served as executive producer and narrator. Mr. Engle received $30,000 for his participation.

The film, “Running the Sahara,” was released in the fall of 2008. Eventually, it caught the attention of Robert W. Nordlander, a special agent for the Internal Revenue Service. As Mr. Nordlander later told the grand jury, “Being the special agent that I am, I was wondering, how does a guy train for this because most people have to work from nine to five and it’s very difficult to train for this part-time.” (He also told the grand jurors that sometimes, when he sees somebody driving a Ferrari, he’ll check to see if they make enough money to afford it. When I called Mr. Nordlander and others at the I.R.S. to ask whether this was an appropriate way to choose subjects for criminal tax investigations, my questions were met with a stone wall of silence.)

Mr. Engle’s tax records showed that while his actual income was substantial, his taxable income was quite small, in part because he had a large tax-loss carry forward, due to a business deal he’d been involved in several years earlier. (Mr. Nordlander would later inform the grand jury only of his much lower taxable income, which made it seem more suspicious.) Still convinced that Mr. Engle must be hiding income, Mr. Nordlander did undercover surveillance and took “Dumpster dives” into Mr. Engle’s garbage. He mainly discovered that Mr. Engle lived modestly.

In March 2009, still unsatisfied, Mr. Nordlander persuaded his superiors to send an attractive female undercover agent, Ellen Burrows, to meet Mr. Engle and see if she could get him to say something incriminating. In the course of several flirtatious encounters, she asked him about his investments.

After acknowledging that he had been speculating in real estate during the bubble to help support his running, he said, according to Mr. Nordlander’s grand jury testimony, “I had a couple of good liar loans out there, you know, which my mortgage broker didn’t mind writing down, you know, that I was making four hundred thousand grand a year when he knew I wasn’t.”

Mr. Engle added, “Everybody was doing it because it was simply the way it was done. That doesn’t make me proud of the fact that I am at least a small part of the problem.”

Unbeknownst to Mr. Engle, Ms. Burrows was wearing a wire.

Lying on a stated-income loan is, without question, a crime, and one ought not to excuse it even though, as Mr. Engle says, “everybody was doing it” — usually with the eager encouragement of their brokers. But the Engle case raises questions not just about the government’s priorities, but about something even more basic: did he even commit the crimes he is accused of?

Partly, I concede, Mr. Engle is easy to root for. He is a personable, upbeat man who has conquered some serious demons. Part of his Sahara expedition was aimed at raising money for a charity to help bring clean water to Africa. “Every experience in life has the ability to teach lessons if I am open to them,” he wrote on a blog as he prepared to enter prison. How can you not like someone like that?

But the more I looked into it, the more I came to believe that the case against him was seriously weak. No tax charges were ever brought, even though that was Mr. Nordlander’s original rationale. Money laundering, the suspicion of which was needed to justify the undercover sting, was a nonissue as well. As for that “confession” to Ms. Burrows, take a closer look. It really isn’t a confession at all. Mr. Engle is confessing to his mortgage broker’s sins, not his own.

Perhaps anticipating that problem, when Mr. Nordlander finally arrested Mr. Engle in May 2010, he claims to have elicited a stronger, better confession while Mr. Engle was handcuffed in the back seat of his car. Mr. Engle fervently denies this. This second supposed confession, however, was never captured on tape.

As for the loans themselves, on one of them Mr. Engle claimed an income of $15,000 a month. As it turns out, his total income in 2005, according to his accountant, was $180,000, which amounts to … hmmm …$15,000 a month, though of course Mr. Engle didn’t have the kind of job that generated monthly income. (In addition to real estate speculation, Mr. Engle gave motivational speeches and earned around $50,000 a year as a producer on the hit show “Extreme Makeover: Home Edition.”)

The monthly income listed on the second loan was $32,500, an obviously absurd amount, especially since the loan itself was for only $300,000. It was a refinance of a property Mr. Engle already owned, allowing him to pull out $80,000 of the $215,000 in equity he had in the property.

Mr. Engle claims that he never saw that $32,500 claim and never signed the papers. Indeed, a handwriting analysis conducted by the government raised the distinct possibility that Mr. Engle’s signature and his initials in several places in the mortgage documents had been forged. As it happens, Mr. Engle’s broker for that loan, John J. Hellman, recently pleaded guilty to mortgage fraud for playing fast and loose with a number of mortgage applications. Mr. Hellman testified in court that Mr. Engle had signed the mortgage application. Early this week, Mr. Hellman received a reduced sentence of 10 months, less than half of Mr. Engle’s sentence, in no small part because of his willingness to testify against Mr. Engle.

Even the jurors seemed confused about how to think about Mr. Engle’s supposed crime. When it came time to pronounce a verdict, the jury found him not guilty of providing false information to the bank, which would seem to be the only fraud he could possibly have committed. Yet it still found him guilty of mortgage fraud. “I think the prosecution convinced the jury that I was guilty of something but they weren’t sure what,” Mr. Engle wrote in an e-mail.

Like many people, Mr. Engle’s biggest mistake was believing that housing prices could only go up. When the market collapsed, Mr. Engle defaulted on the two properties, which of course is not a crime. Although his accountant tried to persuade the banks to do a complicated refinancing, they refused and foreclosed on the properties. Like many Americans, Mr. Engle wound up being punished by the market for his mistake, losing all his remaining equity along with the properties themselves. Thanks to the government, though, his punishment was far more severe than most.

At his sentencing, Mr. Engle told the judge: “I can say with confidence that I can turn negatives into positives. I have no doubt I will make the best of it.” With his inspiring prison blog, Running in Place: A Blog About Surviving Adversity, he has already begun to do that.

Even when he emerges from prison, though, his ordeal will not be over. As part of his sentence, Mr. Engle was ordered to pay $262,500 in restitution to the owner of his mortgages. And what institution might that be? You guessed it: Countrywide, now owned by Bank of America.

Angelo Mozilo ought to get a good chuckle out of that one.

30 Responses

  1. OK!

    Something stinks in the details on this or if True, then a 100 Million people should be in jail!

    These loans have been around for 25 years! Brokers didnt do Crap, the Investor Manuel’s from Wall Street explained clearly How to Originate!

    What about the People who lied on Car loans, or CC loans, Installment loans who biased risk on Credit scores for Approval??

    What about Student Loans???????????? They are liar loans biased on ZELCH!! But the Federal GOV loans Millions on NADA!

    What about the FANNIE/FREDDIE who endorsed trillions of these loans, the F’IN Senators like Chris Dodd ( he got a LIAR LOAN ), and FRANK Knew this shit was going on??

    I figure now 300 million should be in Jail including Politicians!

    Something stinks on this, I suspect it has something to other Shady People, and that trip over seas.

  2. Wish they would have jailed all the borrowers then at least we would have gotten lawyer representation, three meals a day and roof over our heads.

  3. Are they going to jail all borrowers that received these loans?
    The lender representatives that came into the mortgage broker offices to solicit business from Indymac and Countrywide told loan officers and loan processors how to structure the loan packages to get the loan approved.
    They would instruct the loan officers and loan processors by saying:
    “don’t show me that”, or
    “don’t fill out the 1003”,
    “leave the income section blank”

    come on America–Get the BANKSTERS BEHIND BARS not the borrowers.

    Even the Lender representatives were just normal folks trying to make a living, putting food on the table for thier kids. They were instructed by the BANKSTERS that formulated the “LIAR LOANS” to instruct the public and mortgage brokers how to present the loans for approval.

    Are we cattle? being led to slaughter?

    If we don’t fight evil it will continue to prevail.


  4. @MikeH That was pretty right on. It’s pretty sick and pretty sad. It’s a stinking lousy, true commentary on people so far afield they would perpetrate these vicious actions on their own countrymen.

  5. If you have lost your home to a credit bid, report it to the IRS. Servicers have no interest in your note and shouldn’t be using bogus credit bids. In addition to the matter of the theft of your home, they should be made to report the pure profit from the ultimate sale of your home.
    The IRS is paying 15 – 22% on recovered tax fraud amts.

  6. At the core of this great story is this. “A NATION OF SEEP WILL BEGET A GOVERNMENT OF WOLVES” Edward R. Murrow.

  7. There’s only one signature.

    Trespass Unwanted, alive, allodial, corporeal, live born, born alive, free, in jure proprio, freeman, life, whole blood, in jure divino

  8. If you watched “Inside Job” and can appreciate the excesses of these banksters/mobsters, listen to Max Keiser’s and Stacy Herbert’s expose on the drug money/open border/economic collapse, and how Wachovia and other large banks laundered billions of dollars and kept them afloat to indulge those excesses. An open secret according to Max.

  9. I added Joe Engle’s prison blog to http://www.swarmthebanks a couple of weeks ago. You can post your words of support to Mr.Engle if you like.

  10. Look at the loan application dates. Scanned, altered, printed, and faxed later to be used as evidence against the borrower. If a Title company was used then get a copy and match it up to the brokers. The dates of when they were signed and entered into the brokers program will tell a story.

    In the PSA mine reads….

    In order to determine if a borrower qualifies for a non-conforming loan, the loans have been either approved by Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Prospector automated underwriting systems or they have been manually underwritten by the Originator underwriters. The Originator’s Alt-A loan products have been approved manually by contract underwriters provided by certain mortgage insurance companies. American Home Solutions products must receive an approval from the Assetwise automated underwriting system.

    Try calling the mortgage Insurance company to find out if they provided the underwriter.

    Borrowers don’t have to dig in the garbage. They just can’t get access to the approvals.

  11. California Grass roots fight back… Check it out!

  12. I see these “liar loans” constantly. It always begins with an inflated appraisal and a borrower,
    usually a minority or hispanic, who doesn’t understand English very well who signs the inflated
    Clearly, no one in their right mind ever expected these victims to pay off the Note. Their sole function
    in the Ponzi scheme was to help in the manufacture
    of a Note which could be sold multiple times to gullible investors. They allways used MERS as the
    “mortgage holder” so the investors would never know to how many different investors the same Note would be sold. They always sold the “servicing
    rights” (aka right to foreclose) to the same mega servicers, the names of which are household words.
    When the servicers foreclose, they always use
    fabricated Notes, mortgages and assignments so
    they can fool a “gullible judge” into giving THEM a
    “FREE HOUSE”, because, God Forbid, the Judges
    don’t want the Ponzi Pawn to walk away with a free
    house, even though in most cases, the Ponzi Pawn
    borrower had much more equity in the property than
    the “pretender lender” servicer posing as the Note

  13. Are you looking at the run up to Nazi Germany? People being imprisoned for minor infractions is the beginning.


    the trust” CWALT, INC, ALTERNATIVE LOAN TRUST 2006-OC1″ is in Maiden Lane-II LLC, with the CUSIP # 12668BJU8 and 23244JACO, These assets were bought by the Maiden Lane -II LLC as per Asset Purchase Agreement 12/12/2008 and now these are being bought back by AIG as per Asset Purchase Agreement . The CUSIP # can be verified from the 10-D for this Trust. The Title of the Class is 2A3A and 2A2A

    The game is clear and “FISH” is on the surface.

  15. So once again the little guy is jailed,and the big guys don’t get anything.Not that this man didn’t do something wrong but he was taken as well.Much as I hate to say this I don’t think we did ourselves proud by jailing old Bernie,he couldn’t have pulled it off totaly by himself,Nobody bothered to investigate the powers that be behind all of this.We keep jailing the wrong people nobody will feel vindacated until all the banksters go to prison!!

  16. Yeah and Madoff went to prison, but stangely when you steal from the rich and have Irving Picard as your lawyer…..well guess you will get some justice. Sad that the average Joe only gets as much justice as he can afford to pay for….

  17. A Good Bankster is a Jailed Bankster.

  18. While researching a friend’s refi mortgage filings from 2007 (World Savings Bank) at the County Register of Deeds, I found a satisfaction for the previous mortgage filed by HomEq stating that the amount of outstanding debt on that loan was paid to MERS. Huh?

    How can MERS receive the satisfaction? It can’t, so where could that money have gone (duh!)? But the real point is that it is more likely than not that the phony investor certificates in some trust somewhere are still floating around with their phony claims on the title. So the refi loan mortgage filed in the county is also likely to have been securitized, both of which are clouding the same title.

    Now, to settle the foreclosure (after raising insurmountable issues for Wells and the court as a pro se defendant), the court would like Wells to modify the loan (which they previously side-stepped in one of their typical modification run-around scams so they could lure the borrower into foreclosure).

    Problem is, that opens another can of worms for everyone, because even though it may seem that the borrower is waiving any rights she may have had by taking a modification, the fact remains there is no title that can pass to anyone without reconciling all of the shadow owners of the pretend debt. That would seem to open it right back up to the original controversy the court didn’t want to address – who owns the loan?

    Love to hear what Neal has to say about that!

  19. I don’t know if this observation will makes sense to people, depending on your political leanings and what it says about “justice” in this country. But once measured without bias, it is easy to see that extraordinay wealth means you have a different set of laws then the ones ordinary citizens must be cognizant of.

  20. What really bothers me is that we are all over Linda green and those like her “the low hanging fruit” and mozillo is protected.truth of the matter the real gangsters, they are unknown to us .

  21. Justice … The most good for the most porple
    you cannot change the meaning like you can change law by industry decided practices without justice what is left Neil let’s all help get tbis guy out of jail .

  22. OMG OMG OMG this just in:

    “Linda Green” visits New Hampshire, more mortgage fraud and it’s caught on video!

    FRIDAY, APRIL 8, 2011

    Linda Green visits NH; KingCast tells Judge Diane Nicolosi and Attorney Shawn Masterson: If you don’t make material changes in Jeanne Ingress’ case I am reporting both of you for ethics violations.

  23. […] More From Neil Garfield, Living Lies […]

  24. NEIL,



    HYDROGENE 559 907 7623

  25. Neil, please please give me a call. I have his documents and have been looking them over to help him get out of PRISON. Both of his Mortgages are MERS and they were assigned to BANK OF NEW YORK AS TRUSTEE FOR THE CERTIFICATEHOLDERS OF CWALT, INC, ALTERNATIVE LOAN TRUST 2006-OC1, MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2006-OC1 and



    Based on his conviction I should be in Jail also.

    HYDROGENE 559 907 7623

  26. when the people are afraid of the government you have tyranny, when the government fears the people you have democracy. are you afraid or are they ????

  27. Frankly, I believe we are reaching the point where realization meets daylight and explanations are useless. If that were me, I’d be heading to the next GUN SHOW with every penny I could muster. When I was done – that broker and family would not be a footnote on this planet.

    Sound harsh – without a doubt – our Gov & useless justice system have betrayed the American People. How many families have been destroyed by these lying theives and NOTHING is done.

    The people behind these banks are more dangerous to our country than al-Qaeda. They use foreclosure mill attorneys as their insurgents to destroy family after family. A foreclosure mill is no different than a terrorist cell group planning to take-down American families and KNOWING those families have no idea what they were signing at settlement – but equally knowning the courts do not care.

    These foreclosure mill lawyers use our courts cleanse their conscience as they dip their bloody hands in the wash basin when they leave. They simply utter “well, the judges allow it…” as they file false affidavits, forge signatures, and blatant tell the court anything…

    Until the fathers of these families realize this is a WAR against them and their children – they will continue slaughtering and destroying our families and this country. They do it because they have no fear. What then need is FEAR. How many addictions have these theives caused? How many murder-suicides have they caused? How many divorces – how many abuses – how many lives are RUINED because of these lying theives?

    Here’s the question…

    I know this – I am willing to die for my principles and what I believe is a fundamental right for ALL PEOPLE in our country. Are they willing to die for their GREED…? I know, it sounds crazy – too extreme – too out-there… really? How does anyone justify what is happening EVERYDAY in our courts?

    Until THAT question is put in their face and they are held accountable, they will continue their slaughter. Does it matter that these terrorists are dressed in suits – work on Wall Street – have a law degree? I do not fault the jury for their decision.

    The enemy is NOT the gov or those pawns working for our gov. The ENEMY IS THE BANKERS & WALL STREETERS & FORECLOSURE MILL ATTORNEYS – aiding & abetting the enemey agaisnt the American People.

  28. Banks allow home equity lines of credit of up to approximately 2/3 the value of the home as a safeguard in case there is a default on the HELOC.

    In the article it states that…It was a refinance of a property Mr. Engle already owned, allowing him to pull out $80,000 of the $215,000 in equity he had in the property.

    If Mr. Engle was under the 2/3’s rule, he didn’t endanger the banks investment in his property. I’m not convinced that Mr. Engle stole anything.

  29. Did anybody catch the fact that the Inside Job was: “Using voice over narration read by Matt Damon”

    Ya think there might have been a connection? Never did believe the cock ‘n bull dumpster diving story… like anybody these days puts in extra effort without a mission…or $$.

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