By Sopan Deb
Rock Center
An emotional Charlie Engle emerged from Dismas Charities, a halfway house in Greensboro, N.C., and greeted his two teenage sons, telling them he could not have done it without them.
He was referring to the prison term he just finished serving (most of it at a federal prison in Beckley, W. Va.) for mortgage fraud.
“The second I walked out that door and I was no longer in prison,” Engle told Rock Center’s Harry Smith. “It's almost impossible to explain the feeling, but it is just that sense that OK, now I can be here for my boys again.” Engle's interview airs Thursday, Nov. 15 at 10 p.m./ 9 p.m. Central on NBC.
Engle spent a year and half in prison for his role in the financial crisis. But he didn’t work on Wall Street and he was not a banker. He was convicted of exaggerating his income on his mortgage applications – a common practice during the housing boom.
While many big banks were chastised for risky behavior in lending by Congress, they got bailouts worth billions. Charlie Engle, meanwhile, was the target of a federal case involving an undercover operative, a dogged IRS agent and conspiring mortgage lenders.
Engle’s troubles started because of his passion for long distance running in extreme environments.
“The run across the Sahara ended up being a little over 4,600 miles,” Engle said. “We basically ran about 50 miles per day, every single day, for 111 consecutive days without taking a single day off.”
Engle’s run, with two friends, would be an adventure to raise money for clean water projects in North Africa. Accompanied by a film crew, the journey was turned into a documentary narrated by actor Matt Damon that premiered at the 2008 Toronto Film Festival.
Engle got some notice, including an appearance on “The Tonight Show” with Jay Leno. That was enough to get the attention of Robert Nordlander, an IRS agent who wondered how Engle could find the time to train for running while still maintaining an income.
“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,” Nordlander told a grand jury in May, 2010.
Nordlander spent almost 700 hours investigating Engle, combing through his banking and tax records. He even put Engle under surveillance and went through his trash looking for evidence.
He was not satisfied and sent in an attractive undercover agent who was also a runner.
WATCH VIDEO: Runner, not Wall Street, prosecuted for mortgage fraud
The agent came to Engle’s front door and said she was looking at apartments in his complex. She suggested they have lunch the next day, where, as Engle remembered, “most of her questions, looking back now, were almost like of a financial nature.”
At a local restaurant in Greensboro called Mimi’s, Engle revealed he had taken out mortgages on a couple of investment properties. He went on to say something that would come back to haunt him.
“…I had a couple of good liar loans out there, you know with my, my mortgage broker who didn’t mind writing down, you know that I was making 400 grand a year when he knew I wasn’t,” said Engle.
“What’s funny is after I made that statement, it’s like all of a sudden, the lunch ended very quickly,” Engle told Smith.
He did not realize that the agent was wearing a wire and that he had just made a statement that would land him in court.
“Liar loans” are the colloquial term for something called “stated-income loans,” which were common during the housing boom and a contributing cause of the housing crisis. These loans did not require lenders to verify a borrower’s assets or incomes.
They were initially conceived decades ago for extremely wealthy borrowers who would normally have complicated tax returns. But during the housing boom, lenders began abusing the practice. Engle was one of millions of borrowers who took out such loans, which were being handed out freely by many lenders eager to get in on the boom.
Engle contended he did not fill in the income figure on his loans, but he admitted he signed the closing documents. He also insisted that the conversation with the undercover agent was taken out of context.
“I did have liar loans, but I’m not the one who told the lies,” Engle said. “The brokers, the banks, the people who -- as a borrower we all know we're not in charge of the process.”
The IRS did not find tax fraud, but Engle was indicted for mortgage fraud.
He was convicted in large part because of the testimony of the mortgage broker for one of his loans, who along with Engle’s loan officer and the seller of the property, all pleaded guilty to conspiring to defraud several banks of millions of dollars.
The mortgage broker, John Hellman, got 10 months in prison while Engle received a 21-month sentence. Neil H. MacBride, the U.S. Attorney for the Eastern District of Virginia, declined Rock Center’s request for an interview, but sent a statement saying, “Mr. Engle was convicted by a jury of fraudulently obtaining more than a million dollars in four mortgage loans…” MacBride also noted his office also prosecuted fraudsters in a case worth $2.9 billion.
The big banks that handed out those liar loans by and large escaped criminal prosecution, said Neil Barofsky, who was the inspector general for TARP, the government’s program to bailout the banks. Barofsky told Rock Center that while it is easier to prosecute the smaller fish involved in the financial crisis, that does not justify ignoring the bigger ones.
“And it doesn't really accomplish the broader goals that you want from your Department of Justice in the aftermath of a crisis, and that's to make it very clear, that if you break the law, if you do this type of unethical behavior, that you'll be held accountable,” Barofsky said. “And all the Charlie Engle’s in the world rotting in jail aren't going to accomplish that goal.”
Editor's Note: Harry's Smith's full report about Charlie Engle airs Thursday at 10pm/9c on NBC's Rock Center with Brian Williams.
Leave a Comment:
I think you're missing the bigger point. The bank just asked him on the phone how much he made. And he said "what's the right answer?" They told him. So that's what he said. And it's how we got into this mess. You run across the desert. No bankers out there.
I say give him a pass.
Yeah, we have long history in this country of prosecuting the users and not the pushers!
Time to burn it all down and start over from scratch...
Obamanation-just hired another 1600 IRS agents, can you see why?
There's always one of you lurking....
Right, Joe "Veteran". Only libs are supposed to be here, right? Makes it easier to agree if everyone is on the same page. No room for different opinions in the lib world, is there? Maybe anyone who signs on to this trash lib-site ought to be required to show their lib ID? Oh wait, libs don't believe in ID, do they? It's the only way their boys can get elected. Take off the lib-colored glasses and see the light.
Yes, he committed fraud. Yes he deserved the conviction. Just illustrative of who generally "eats it". The little guy. Always the little guy.
How many of the "big guys" went to jail? They did FAR more damage than this guy ever could and they live very well, today. The other question I have is: How much taxpayer money was spent on prosecuting and incarcerating this guy, all told, versus how much was recovered? Good money after bad.......
The question the article did not address is are the loans on the properties still in force, or did he let them go through short sale or foreclosure. If he still owns them and making the payments no harm no fowl. During the time this happened it was common practice to not be truthful about your income.The real tragedy is that the CEO's of Lehman Bros, JP Morgan etc. should have gone to jail not this poor guy.
And MF Global? Oh wait, Corzine is a big Dem. I wonder why Obama's minions didn't go after that billionaire? Because Obama only cares about dividing people to get their vote. He knows he wouldn't be able to get the votes if they banded together.
And the IRS wonders why it's hated!!! All that time, energy, and money for this little bit of crap.
WHY OH WHY didn't ANYBODY take Mike Huckabee's lead on getting rid of the IRS??? If we all paid a flat sales tax it woulld ELIMINATE personal taxes, tax money earned fraudulantly (drug money, etc) AND we would only be taxed on the money we SPENT NOT THE MONEY WE SAVE!!! It would also ELIMINATE over zealous IRS Special Agents (who were probably bullied in school and now have their chance to bully the poor old people who don't have corporate lawyers defending them!) who waste OUR taxpayer money on a 700 hour investigation that would have been better served investigating the mortgage brokers and banking board of directors who are the real criminals here!
lmao...another rogue government agent conducting a fishing expedition..why didn't this douche spend his time investigating the real crooks here? Wall street...
In response to JayEll-1204918, I have plenty of sympathy for him knowing that the bankers and broker encouraged him to do it. For every consumer that is prosecuted for fraud, 100 bankers and brokers should also be prosecuted. Ever hear of Municipal bond rigging by the big banks and their bond brokers? Are they being prosecuted? NO they are not. That's because they are allowed to hide behind the corporate veil. The fraud perpetrated by the banks in Municipal Bonds costs every city, county, and state to lose millions in interest than they otherwise would have received in an honest system. Where do these Municipalities go to make up the difference? Why, their local taxpayers of course. Want to learn something? Google "Municipal Bond Fraud or Scandal". This is but one of many types of fraud the banks are allowed to get away with. Try Googling "LIBOR Scandal", that could be the next shoe to drop. It probably will be swept under the rug simply because it is too big to deal with and would open up the big banks to millions of lawsuits. Once again, justice won't be served. As long as this double standard is allowed to go on, no individual should be prosecuted for anything mortgage related, IMHO. The thought of the real criminals in the banking industry living it up while this man spent a year and a half in prison away from his family sickens me.
Using your analogy it is more like prosecuting the drug users
if you have money or are needed for something you can buy justice or just avoid it all together. this is what i have learned.
Folks, don't forget that the Administration essentially let the Banks off the hook using TARP funding. Left to non-interference by the Obama Administration, the Banks would have gone thru bankruptcy, been bought out by their competition and the management staff would have been fired. Be angry at the Administration for failing to let the free market take care of itself.
That is the wrong question to ask. It's not "Why was I targeted?" as the answer is "because you broke the law(s)!".
The correct question is "Why wasn't John Doe also targeted?".
No sympathy for Charlie Engle. None is deserved. Directed legal attacks and "anger" against the others that didn't serve applicable punishments and the system that allowed them to get away with it.
Ah, but he wasn't targeted because he broke any laws, he was targeted because the agent, Robert Nordlander, saw him in he film, “Running the Sahara, and wondered how he was able to afford to live a live that allowed him to train for extreme sports.
It should make you wonder how many innocent people's lives he snoops into before he catches a person who may have committed a crime.
There are so many hard working hoest Americans trying to buy a home who do not qualify under the current requirements. This moron thinks that just because he got caught he did not do anything wrong. He and the rest of the liars and thieves in this country are the very reason the housing industry is in the toilet. He and everyone touching his loans should be in jail. He pretends to be so concerned about his teenage sons. Nice move dad. How is the mother of the children doin?>
To spend tax payers dollars to put him in jail is a crime. Probation for 10 years would have sufficed . Probation where HE Pays monthly.
So he got convicted of fraud for committing fraud?
That's horrible! lol
Right, but the Banks would lend 500K to a house cleaner who paid her phone bill and had an 800 Fico !
If she stated she had income to support it, yes. They flip the loans to freddie or investors...so they just looked at fees they generated from pushing paper.
Money us the grease in the American machine. It wasn't ever meant to be this way... but that is exactly what it has become.
Our government opens the door for its native industrial plant to flee to China, basically gutting the middle class of its source of income and stripping the government of revenue. Then they bail out Wall Street regardless of how badly it broke the law.
But here comes this guy who fudged a few numbers and he goes to jail. He didn't have enough money to buy our government. Even our votes only become valuable once every three or four years. But... if you got a billion or so to buy Capital Hill, you can do anything.
This speaks volumes about the minds of the people these days.
If you can do it, then it must be okay mind set in the Overly competitive business world has led to a broad gray line between that's Right and Wrong in an ethical and moral sense.
Nobody is saying that lying on a mortgage application is the right thing to do; but it's quite strange that any agent would spend so much time and resources (e.g. our tax money) to go after such a small fish in this big mess. 700 hours of IRS time is an easy $250,000 of resources. All for one guy? Something stinks here. It's also strange that an agent would just be watching a TV show and that somehow puts this whole thing in motion. You'd think the IRS would have a little more methodical approach to finding tax cheats rather than some random agent watching a random TV show.
Every borrower who lied, contributed to the financial crisis and should be prosecuted. Weekends in jail, and a large fine would be better than us paying to incarcerate these losers.
Every mortgage broker, and every appraiser who falsified docs, or who inflated a valuation- should also spend weekends in jail and pay hefty fines.
Saying, "it wasn't just me"...is hardly a defense. Lock them up, and have them pay back- even if it takes 30 years, some portion on this housing crash.
The problem isn't his conviction. He lied and earned it. The problem here is the agent involved investigated someone absent any report of wrongdoing, hoping to fish up something. Crimes should be investigated and punished, but 700 hours spent hunting in hope of finding something... if the agent didn't, this would be harassment. Very troublesome precedent.
if he can get the loan, and somehow can afford paying the interest on those, what is the problem? if he cannot pay the interest the banks will recoup their capital in the form of the real estate, not ideal, but that is how it works. obviously the banks would not like to repossess if possible, but that is why they have to do their due diligence in verifying the truth, unless they don't care about it. how is placing the blame on the guy who lied (and there are exponentially more of those than the number of banks) a better way to enforce justice? this is like catching that one guy who speed at 5mph above the speed limit, all the while the cop is on the side of the road writing tickets everyone else is zooming at 100mph.
While I don't condone his lying to get loans, I also don't agree with the fact that there was no punishment handed down for those who took his information willingly. Also, just wondering how much money was spent investigating the case? I mean really, by the time it was investigated, prosecuted and he got his "3 hots and a cot" for the time he served, what was gained? Seems like the properties could have been taken and sold with reimbursement going to the lenders and the government. Are there really no bigger fish to fry?