Tackling Mortgage Fraud Locally

An Interview with Isabel Mercedes Cumming, J.D., CFE

By Dick Carozza

Isabel Mercedes Cumming, J.D., CFE, chief of Prince George's County's Economic Crimes Unit, isn't daunted by U.S. foreclosure statistics as she fights fraud in Maryland.

The real estate company said it existed for one major reason: to help desperate homeowners in Prince George’s County, Md., who were facing foreclosure on their properties. The company convinced many to deed the titles to their homes to the company for one year so the homeowners could clean up their credit and shop for lower monthly mortgages.

But, of course, instead of honoring their promises, the company stole the titles to the victims’ homes, obtained inflated appraisals, and used those appraisals to sell the houses to unsuspecting straw buyers. The scammers ran off with the proceeds and didn’t pay the mortgages as promised. The victims lost more than $1 million and their homes to foreclosure.

We’ve all seen the staggering statistics. In 2009, foreclosure filings were reported on more than 2.8 million U.S. properties, a 21 percent increase in total properties from 2008 and a 120 percent increase in total properties from 2007, according to realtytrac.com. Maryland has the fifth-highest amount of foreclosures in the nation. Fraudsters have taken advantage of stressed homeowners on the verge of disaster. Mortgage fraud, a perennial problem during boom times, becomes a burgeoning dilemma when the bottom drops out.

Hundreds of state and county groups are fighting mortgage fraud with a vengeance at the local level. ACFE Regent Emeritus Isabel Mercedes Cumming, J.D., CFE, is chief of the Economic Crimes Unit (ECU) in Prince George’s County, Md., directly adjacent to Washington, D.C. Cumming’s ECU is one of the United States’ first professional investigative units dedicated to mortgage and foreclosure fraud.

The county state’s attorney’s office began the ECU with a grant from the Maryland Governor’s Office of Crime Control and Prevention. The unit’s attorneys, investigators, and numerous interns fight mortgage scams in a county where more than 50 percent of the reported mortgage scams in the state occur. At any one time, the ECU has about 30 active investigations and is taking on more this year.

Cumming, who previously was an assistant state’s attorney in the Baltimore City State’s Attorney’s Office Economic Crimes Unit and an assistant state prosecutor in the Maryland Office of the State Prosecutor, said she relishes tackling mortgage fraud cases one by one.

“So many of my victims have told me that I was their last chance,” said this fraud fighter of more than 25 years. “Hearing that and knowing that you have helped a good person who just trusted the wrong person convinces me that I made the right career choice. I intend to keep up the good fight for the next quarter century!”

You started your career as a senior auditor at KPMG Peat Marwick and later as director of internal auditor/compliance officer. At what point did you realize that you wanted to concentrate on anti-fraud efforts?
I started working for KPMG during the Savings & Loan crisis, and I found fraud examining the most interesting part of the job. I truly loved it! In 1987, I attended a conference in Washington, D.C. where I met [ACFE founder and Chairman] Joe Wells, and I knew that finding and fighting fraudsters was going to be my life’s passion. Back in the early 1980s, it was unheard of to have a career fighting fraud.

After you received your bachelor of business in accounting you earned your MBA. But then shortly after that, you entered law school. What caused you to change directions? Was it part of a larger plan or was there something that prodded you to get into law? 

There was never a change in direction for me. If you go to my high school yearbook, it reads, “college, law school … always set my goals high then it will never be enough to just get by.” I always dreamed of being a lawyer. So I majored in what I had the best grades in – accounting – so I had a better chance to get into law school. At the time I was the student government association president at James Madison University and had several job offers. So I thought I would be a partner in a CPA firm rather than a law firm. Problem was I loved the law – and still do. I was working at a bank and decided to get my MBA at night, but when I was finished I earned my law degree, also at night. It was one of the best things I have done.

What prompted you to move from being a state prosecutor to an economic crimes unit? 

In Maryland, the state prosecutor investigates elected officials. Money and politics go hand and hand – so it was very similar to an economic crimes unit. “Follow the money” is the mantra. I left the state prosecutor’s office to go to the economic crimes unit of Baltimore to handle more trials. My long-range goal is to be the Maryland state prosecutor.

As chief of the Prince George’s County ECU, what do you find most challenging? 

Every day is different. Sometimes it’s hard not to bring your work home with you because many of the stories are so sad. Keeping up with all the scams is a big challenge. Luckily, ACFE members are a huge help with all the incredible networking and support they give.

Can you give the names of the team members, and their titles and duties? 

My team consists of:

  • Doyle Niemann, J.D., our senior attorney, who’s both a prosecutor and a legislator
  • Sonia Owen, J.D., and Ray Santiago, J.D., assistant state’s attorneys, who handle a variety of cases
  • April Richardson, J.D., our prosecutor for mortgage fraud
  • Ted Jones, our mortgage fraud investigator
  • Al Reed, who handles most of our elder abuse cases
  • Renata Jones, our financial investigator and my right hand
  • Tracie Lyers, our administrative assistant
  • Malaika Foster, our paralegal and community liaison
  • Detective Tammy Chaffee, sergeant of the financial crimes unit of the Prince George’s Police Department
  • Glenn Ivey, J.D., the state’s attorney for Prince George’s County, my boss, and the reason we have all been able to succeed

How are cases referred to your ECU?
Either by citizens or by the police or other law enforcement.

Joseph T. Wells, CFE, CPA, founder and Chairman of the ACFE, began the association in 1988 to teach anti-fraud professionals ways to deter and detect fraud rather than just deal with messes after the fact. How is deterrence a part of the ECU’s efforts?  

My philosophy is that you not only have to find the schemes but you have to educate the victims so it won’t happen again. We are out in the community weekly teaching our citizens about what to watch out for and how to deter fraud within their worlds. As a government worker, I feel strongly that I work for the people, so helping and teaching members of the community is part of my job.

What do you relish the most when tackling a fraud case? How do you use the skills you’ve learned through the ACFE? 

I love figuring out the scheme – how they were able to get away with it for so long and how to teach my victims the lessons needed to improve their internal controls that will ensure that these crimes won’t happen again.

Can you describe your family background? Can you trace some of your work habits to your family life? 

I have a wonderful family – my father is from Canada and he was an electrical engineer. My mom is from San Juan, Puerto Rico, and a former college professor. Both have master’s degrees from the University of California at Berkeley. They have been married for 52 years. My parents are my heroes. I have a brother and sister who are both CPAs and are very successful.

We often joke in the family that I have the most education but make the least amount of money. But I then remind them that I do have a badge! Growing up, we were always expected to do a good job at whatever we focused on – whether school or athletics or work. I was a gymnast and my kids [Stephen, 14, and Joey, 11] will tell you that I can still do my cartwheels and handstands! Working hard and achieving success were just part of what was expected in my family.

Your ECU was the result of a grant from the Maryland Governor’s Office of Crime Control and Prevention. The grant allows the state attorney’s office to have a prosecutor, investigator, and community liaison (all within the ECU) focus solely on mortgage fraud. How did this unit come to be? Why is it important that the unit resides in your county? How does the community liaison work with citizens? 

Our senior attorney and prosecutor, Doyle Niemann, J.D., identified Maryland’s growing trend of foreclosure fraud. As a result of his concern for the residents of Prince George’s County, he and State’s Attorney Glenn Ivey, J.D., petitioned the Governor’s Office of Crime Control and Prevention to support the funding of the Mortgage Foreclosure Fraud Division. Maryland has the fifth-highest amount of foreclosures in the nation. More than 50 percent of the reported mortgage scams in the state were happening in our county, so we believed it was imperative that our county receive this funding.

April Richardson, J.D., the prosecutor for mortgage fraud, developed a mortgage fraud training seminar for federal, state, and local investigative agencies in which she and our community liaison, Malaika Foster, provide training on how to spot mortgage fraud red flags. They also lead dozens of seminars for community groups on mortgage fraud and foreclosure scam prevention.

Members of the team each spend at least two days of the month out in the community. I give talks to senior centers and community outreach programs. I not only talk about the latest fraud but how to deter it. I try to give them information that will help them and their loved ones from becoming victims. I highly encourage other CFEs to get out there and give talks to the community. It’s a wonderful way to give back.

What are some other predominant cases that your ECU handles? Can you explain loan modification scams? Also, can you describe schemes in which the fraudster collects an upfront fee to renegotiate a homeowner’s principal or make other arrangements with the lender? 

Loan modification scams are a growing concern nationwide. In short, companies and individuals promise homeowners that for a fee they will negotiate with their lenders for more favorable loan terms. The scam is that these bogus loan modification companies will collect up-front fees from homeowners but then disappear with the money and often with the homeowners’ personal information such as copies of tax statements and driver’s licenses. Maryland’s Protection of Homeowners in Foreclosure Act prohibits the up-front collection of fees from foreclosed homeowners. The law mandates that the mortgage modification has to be fully rendered before homeowners pay their fees. Violations carry criminal and civil penalties.

Other prominent scams involve elder financial abuse, reverse mortgage fraud, Ponzi schemes, identity theft, and embezzlement. However, a tremendous number of our cases still involve the beloved bookkeepers who have stolen the companies’ money. Now is truly not the time to give employees too much trust and temptation. With the awful economy, this type of theft isn’t going away!

A great resource for CFEs is a website we recently constructed, www.StopScammingUs.com. It not only explains the foreclosure process but other mortgage scams such as phantom help, equity stripping, debt elimination, loan application and more.

One of your cases involved an insurance agent accused of defrauding seniors of $280,000 in mortgage and insurance fraud schemes. Can you describe the case and how you were able to catch him and bring him to prosecution? What was the result of the prosecution? 

The agent is accused of persuading elderly clients in several jurisdictions to obtain reverse mortgages on their houses. He would then abscond with the proceeds of the mortgages. The case in my jurisdiction, involving an 84-year-old woman whom he allegedly swindled, is the largest. He’s scheduled for arraignment in March.

Are there some common denominators among the mortgage and foreclosure fraudsters? 

They usually have worked in the business, so they have a strong working knowledge of banking and real estate. They usually have other players in the scheme – whether appraisers, underwriters or even banks. Foreclosure fraudsters pretend to care about the victims’ future, but they’re really only caring for their bottom lines.

What are some of the methods you use to help the members of the ECU mesh their talents and efforts to successfully prosecute cases? 

My attorneys and investigators have individual strengths that we play on: some are great researchers, others shine with complex regulatory cases, and others are pit bulls in the courtroom. I have a great group of talented and enthusiastic people. They understand that this is not a 9 to 5 job – we do what we need to do to successfully prosecute cases.

How did you first hear about the ACFE? What attracted you to the association? 

It was at that 1987 conference I mentioned where I first met Joe Wells – the first National Joint Conference on White Collar-Crime. At that time, the ACFE was called The Institute for Financial Crime Prevention. A good friend, Brian Wolf, CFE, from North Dakota, encouraged me to submit an application to be a CFE. Brian lost his courageous battle to lung cancer last year when he was only 46, but he was the one who told me that this was an organization that I had to join. Then when I heard Joe speak at the conference, I was completely hooked. I knew that I wanted to be part of this organization, and I have never looked back.

What was your impression of Chairman Wells and his ideas for an anti-fraud group? 

I remember vividly sitting there in the conference thinking that this man really got it. He understood that you couldn’t be a great fraud fighter by just learning about accounting – it was so much more. You have to have other skill sets: interviewing and investigation, strong interaction skills, an understanding of the law and criminology, and a good moral compass. It was a dream concept for what later became my dream job – fraud fighting!

You became an ACFE Regent in 1997 and have been very involved with the association for years. You’ve said that in 1998 you even named your son, Joey, after Chairman Wells, whom you’ve said is “one of the most influential men I have known.” How has the ACFE helped you in your career and your fight against fraud? 

The ACFE has been the absolute foundation to my career. The teaching and the instruction have been outstanding. If I had to point to one thing, though, it would be the networking and the contacts I’ve met. It’s hard to believe, but I have been at this for more than over a quarter of a century; the contacts that I have from the ACFE have been the backbone of my success. Brilliant people like Ralph Summerford, Tom Golden, Dennis Dycus, and Joseph Dervaes make me glad to be a part of this organization. Having the opportunity to call Joseph Wells a good friend is something I would have never believed when I first met him back in 1987, but I truly consider Joe, [his wife] Judy, Jim [Ratley, ACFE president] and Jeanette [LeVie, vice president] some of my dear friends and absolute partners in our fight against fraud.

I have never called the ACFE with a question and not immediately been given the correct answer, whether it involved a fraud case or a question that one of my students has asked in my principles of fraud class I teach at the University of Baltimore. I’ve been successful in my career as a direct result of becoming a CFE and choosing to get very involved in the ACFE. As an accountant, you often reach a fork in the career road and I took the right path. There’s no doubt in my mind.

What anti-fraud topics do you most enjoy teaching?
I try to bring in lots of guest speakers to the principles of fraud class I teach at the University of Baltimore to expose my students to all the different choices. I also enjoy teaching the community about identity theft, plus mortgage and foreclosure fraud, and elder financial abuse. I also love talking about case studies; one of my favorites is an insurance fraud scheme that I give with arson detective Steve Wagner – it’s a great follow-the-trail story. 

Dick Carozza, is editor-in-chief of Fraud Magazine.  

Cumming's Advice to Budding Fraud Examiners 

  1. Join the ACFE. The contacts are the best in the field.
  2. Go to local ACFE chapter meetings and get involved.
  3. Make every effort to attend the ACFE annual conference; it’s worth the money. You’ll learn from the best fraud fighters in the world, and you’ll meet people who share your dream.
  4. Earn your Certified Fraud Examiner credential – the most important in the field. I have my framed CFE certificate above my law degree in my office.
  5. Try to land an internship so you can learn how to investigate cases from the ground level.
  6. Be professional with everyone; you never really know who your greatest source of information will be on a case.
  7. Enjoy what you’re doing. There are so many people who would give anything to do the interesting work and have the career that you’ve chosen.

Cumming’s Son, Joey ‘Jett,’ Is Top National Skateboarder 

2010-MarchApril-Isabel Cumming-Joey Jett 
Joey "Jett"

The ACFE has been so important to Isabel Cumming that she named her son, Joey, after Joseph T. Wells, CFE, CPA, founder and Chairman of the association. Cumming recalls that about the same time Chairman Wells told her that he had bought a plane to get over his fear of flying, she had bought her son a skateboard at a yard sale when he was 6. “He took to it like a fish to water,” she said. “He won his first contest when he was 7 beating kids that were at least five years older than him.”

He soon became a skateboarding sensation. When he was 9, the Baltimore Examiner named Joey “Jett” (his competition name) one of the top 10 athletes under 25 in Maryland. Now only 11, he regularly wins national competitions against kids who are 10 years older.

“Like his namesake, Joey is scared of heights, but you would never know it because his specialty is the ‘vert ramp,’ ” Cumming said. “The vert ramp is 14 feet high and the first four feet are completely vertical! When he was 8, he was the youngest child in the United States to master the ‘540 Rodeo Flip’ in competition.” The 540 Rodeo Flip requires the skateboarder to skate up that ramp, grab his board, and make a back flip with a half-twist.  

“I don’t think I would have picked this sport for him, but I always encourage him and let him fly – literally!” she said. “I love to watch him. He’s had no official lessons, but he learns from watching the pros. And he skates with some of the best in the world.”

Cumming said Joey is a quiet, thoughtful son who diligently practices new tricks at a nearby skate park and at vert ramp parks in Ocean City, Md.; New Jersey; and Pennsylvania. Cumming has become a skateboard mom as she takes Joey and his much-older teammates around the country for competitions.

“I have met some of the nicest people in the world,” she said. “It’s unlike other sports – the pros actually encourage and cheer each other. There’s so much mutual respect that I’ve learned to truly love it.”

Cumming said Chairman Wells has been very supportive of Joey’s hobby and follows his competitions. “He has even helped fix Joey’s backyard skate ramp. Little Joe considers Big Joe his No. 1 fan and godfather. One Christmas, he got Joey a skateboard autographed by the top pro Tony Hawke!”

Though Joey could become a professional when he reaches his late teens, he’s just enjoying the challenges, travel, and fun of the sport as any 11-year-old would. “I am proud of the type of skater he is but even more proud of the boy he has become,” she said. Follow Joey Jett and see his tricks on www.joeyjett.com.

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