Update: Minnesota Senator Linda Berglin on the Financial Crimes Task Force

When I write about an issue I tag “consumer activism,” I usually try to start the activism myself. So when I reported that Minnesota’s Financial Crimes Task Force is shutting down its mortgage fraud investigations, I went and fired off an e-mail to my state and federal representatives.

Usually when I do this, the response is something like this: “Thank you for contacting me. I am honored to hear from me. I am very busy, and you will be lucky to get a real response.”

This time, however, Minnesota Senator Linda Berglin sent a personal response. It was a bit of a thrill, actually.

But her response was ultimately unsatisfying. Essentially, she said that there is little to no hope of increasing funding while Governor Pawlenty is in charge. And in the past two days, Pawlenty has proved she is right. The best we can do, she said, is refer mortgage fraud to the Department of Commerce, which has the power to revoke licenses, and that is about it.

What I did not get was an impression that this issue is even on Senator Berglin’s radar. But it should be. Mortgage fraudsters are often leveraged to the hilt so that their victims have little hope of recovering their money through the civil justice system. And without criminal penalties, there is no deterrent to those who would practice mortgage fraud. The public ultimate pays the price in the form of lower property values, blight, economic recession, and more.

This needs to be something the Minnesota legislature and governor (and the U.S. legislature and President Bush) are working to address. If the funding is not there, the funding must be found.

Keep reading for the e-mails.

I sent an e-mail to U.S. Senators Amy Klobuchar and Norm Coleman, U.S. Representative Keith Ellison, MN Governor Tim Pawlenty, MN Senator Linda Berglin, and MN Representative Neva Walker. Of the six, only Linda Berglin bothered to reply.

Here is what I sent:

http://www.twincities.com//ci_8631275?IADID=Search-www.twincities.com-www.twincities.com
http://www.behindthemortgage.com/behind_the_mortgage/2008/03/minnesota-finan.html
http://caveatemptorblog.com/2008/03/26/minnesota-gives-mortgage-fraudsters-a-free-pass/

The three links above describe the decision of the Minnesota
Financial Crimes Task Force to stop investigating mortgage fraud. If
they will not investigate these crimes, which are in part responsible
for this country’s miserable financial condition, then who will? No
one will, making Minnesota a safe harbor for criminals.

There are civil remedies, it is true. I am a consumer lawyer, and I
am utterly discouraged at the futility of those remedies. Most of the
frauds are nearly judgment-proof, leaving the defrauded with no
remedy, and a state that apparently would rather look the other way.

Please find the funding and the political will to ensure that those
who are defrauding our friends and neighbors are brought to justice.

Best regards,

Sam

Ms. Berglin delivered a short reply:

Dear Sam,

The Financial Crimes Task Force does not have adequate resources to take on this task. The Department of Commerce regulates banks, realtors and others involved in mortgages, so this is where concerns should be directed. The legislature has worked to add protections for several years in this area.

Linda Berglin

Of course, the “protections” only matter if they are enforceable and enforced. Disappointed by her response, but encouraged by the fact that I got one, I sent back a reply:

Thank you for your response. The Department of Commerce is doing nothing and has no jurisdiction to prosecute crimes. The Financial Crimes Task Force is underfunded. The U.S. Attorney and the FBI are “taking it seriously,” meaning “doing nothing.”

Who will address this?

She replied once more:

Dear Sam,

They have the authority to revoke licenses of those who break laws in the mortgage lending area. I agree that the budget cuts are not helping any, but with a governor who only will cut to balance the budget, is unavoidable.

Linda Berglin

My reply that went unanswered, although perhaps it did not call for a reply:

Revoking mortgage broker licenses does not compensate homeowners who have been ripped off. Nor does it reduce the number of foreclosed, vacant homes that are blighting our city.

I realize that the governor is an obstacle, but if the legislature simply gives up, nothing will ever get done.