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.
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Why not spend the 700 hours and other time and resources on the Fat Cats who drove us into this mess because of their greed? Bamy bailed them out so the rich folk would get their money back and the Big Boys could get their BONUS. Did any of you get your BONUS? Thought not. Now we have four more years of BAMY and huge tax increases so he can do it all over again. Way to go people,
Actually we have a political duopoly. Both parties do the same thing. Both take campaign funding from the same sources. Both make the same key appointments.
Actually, Bush bailed them out before he left. It was called TARP. He also instigated the auto bailout before he left office (Paul Ryan voted for both of them)
I'm guessing all those "fat cats" were big Romney backers because he would lower their taxes on those bonuses.
Republicans have bad memories.
Anson Pantz is correct--we DO have a political duopoly and both take campaign funding from the same sources. Back in 1999, the financial act that included the rescinding of the Glass - Steagall Act was overwhelmingly voted in by both parties--that financial act was called the Gramm, Leach, Bliley Act of 1999.
Good old Phil Gramm ("The economy is fine. Americans are bunch of whiners").
Old "Enron Phil" is in hiding now.
Why him? Because he's not a connected big political donor Wall St. exec.
Sorry but it's the 'I deserve it' attitude that gets me. Weather it's Joe Shmo or some banker. What ever happened to honesty? What happened to earning your own way with hard work? You know, working for a living, buying a house that you can afford, paying off the mortage and LIVING in the house. Not lieing about how much you earn, sticking your neck out just to buy a huge home that you couldn't possably pay the mortage on just hoping against hope that you can cash in in a couple of years for a boat-load of money risking everything that your family holds dear.
This IRS agent spent 700 hours "investigating" this guy? Unbelievable!! I think the IRS agent is a loose cannon who can't watch TV without trying to find people to "investigate." It's an abuse of his position and does not speak well for the IRS (if there ever was any well spoken words about the IRS). Waste of taxpayer money.
While I don't condone that he lied to get the loan, I also don't agree with the fact that there was no punishment handed down to the lenders who willingly accepted his information. Also, what was gained from this? How much money was spent? By the time they investigated, prosecuted and tried the case and he got his "3 hots and a cot", more was spent than he could have borrowed...... Take the properties, slap him with a penalty, sell the properties and reimburse the lenders for their portion, sell the properties and the government gets the proceeds. I mean really, are there really no bigger fish to fry?
This comes under the heading of Selective Enforcement of the Law. More of the so called - 'Class Warfare'. When there is no one making money to tax, then what will the IRS do?
My neighbor, the guy who paid his rent for three years in cash upfront to the home's owner, is currently in the Crossbar Hotel for altering mortgage papers after the people receiving the mortgages had signed them in good faith. The company had very catchy radio and tv jingles, too, until they made the headlines. He's where he should be, I doubt anyone will ever see the millions he's supposed to pay back.
the IRS agent was a nosy over zealous b****. Yeah, this one individual was guilty but what did this really accomplish here? Think about it, how many hours and tax dollars did the agent spend? And this agent is boasting like he just help lead to capture of a serial killer. Did all his efforts justify putting this guy in jail for all that time? Would the agent use this same vigor and dedication to get the banks? There was no justice served for anyone, including for tax payers, just because he served jail time!
I do have to wonder what his motivation was. He just saw this guy on TV talking about running and decided to launch an investigation of his taxes?
Did the guy say something on TV that irritated him?
Weird.
What people seem to not realize is, every time you pass a law, prosecute someone or put them in jail, it costs money. It cost money for us to pay for this IRS agent, money to take the runner to court and money to keep him in jail for a year and a half.
OUR MONEY.
Is this the proper use of taxpayer funds? When everything, and I mean EVERYTHING, is going to hell in a handbasket? This is the best use of the US people's hard earned tax dollars?
The story didn't seem to say whether he was in default on his loans or was in foreclosure or not. Sure, maybe what he did was wrong but was he paying his bills and was the motgage in good standing? If so then this seems to me like something relaly unfair. During the run-up to the mortgage crisis just about every broker encouraged borrowers to exagerate their income. Not that this is OK, but he didn't do much worse than everybody else getting a mortgage. And I am very troubled by the number or hours and lengths the investigators went to during this investigation. That seems excessive. And to read that his broker, who did this with numerous loand, served less time. This just all seems really unfair, and is exactly what is wrong with the criminal justice system. To prosecute the "Easy" ones is like giving speeding tickets only to the drivers willing to stop. Seems stupid.
The guy broke the law and he as found guilty and punished. BUT...don't ever confuse the law with justice. They are seldom the same.
You got that right. Every Joe Schmo reading this article better realize this could have easily been them. So no one should be casting stones..Plus funny thing about the agent, who watches thinking "Hey, I think I might be able to nab this guy if he's lying about his income?" Now that alone is strange to me.
I think the guy should have been working, instead of running all the time. I'm all for physical fitness, but that's just stupid.
Education is the next problem just like the housing market. In the name of education the government is handing out billions of billions of dollars that will never be paid back and will have to paid for by taxpayers.
Sounds like most of it going to for-profit "colleges" that are basically a scam.
To build a home you must also afford to build a bank.
Everyone know they are LIAR LOANS or you would just submit your Tax Returns ...this was a STUPID Investigation or there is something they are not saying like he got money under the table for buying the homes ie cash out .
Don't feel sorry for this guy....I know this man personally. He knowingly defaulted on these loans. He was flipping houses and got caught in the boom. He led his ex-wife and kids into bankruptcy. He is a master manipulator, and deserved everything.
The guy's a crook. He stole a million dollars that he had no intention of paying back. A year and a half in jail was just a slap on the wrist for this scammer.
Now he's whining 'why me?'
Gimme a break. Go join the other losers with OWS.
This fraudster should still be in prison. He's no victim.
Okay, the guy lied about how much money he made. Big whoop. you want to know how he managed to train for long distance runs without working? Look at a NASCAR racing car. They're covered with ads from companies that are called "SPONSORS". How do you think Lance Armstrong trained for all his races without actually working like the rest of us?
And, Camille, great laugh about the IRS being a private company that "works" for the government.
Oh, BOATDOC, you don't get it. Jay was talking about your hero Obama, or did you think that THAT multi-millionaire was just another "po' black child"?
And, jvtech, if the government went after the drug cartels instead of the guy just looking to score a dime bag, the corrupt cops and politicians would lose all of their graft money.
I could go on, but like most people, i have to go do my job. Unlike politicians and corporate execs, I still have to work for my money.
Poor Charlie Engle should have been in a cell next to his mortgage broker, and banker, and any others involved in his fraud. But in the end, the others would not have been involved in the fraud if Charlie had not started the whole thing by lying to get the loans.
Everyone did what this guy did but idiotic americas insist on blaming the evil banks. Liberals suck.
What gets me is the fact the the IRS underling single-handedly decided for himself that he was going to open an investigation into the guy - 700 hours worth, plus wire taps, and the impostor chick. The guy wasn't even guilty of tax fraud. There had been no indications in his tax forms of fraud, just one guy that wanted to be John Wayne. That IRS guy should have been fired when there was no tax fraud. We paid for that investigation. Mortgage fraud is not even in the IRS jurisdiction. That should have been a law enforcement investigation. And another thing - why weren't the ig wigs investigated with such voracity? This whole thing stinks. And no, I don't think the guy was innocent, but, all that money was spent on investigating him and he only did a crime that was worth 1 year in jail. That's it. Not murder, or racketeering, or stealing some old lady's social security checks which will all get you waay more than 1 year...but they spent all those resources to basically get him misdemeanor time. Idiots.
Exactly. There is something incredibly disturbing about how this guy came to be investigated. There was no probable cause, no hint of any crime of any sort. An IRS agent just happened to see the guy on Leno talking about this amazing feat he accomplished, and his first thought was "I wonder how he made money while doing that" and then set about tearing apart this guy's life because he was curious.
It's as if you were walking down the street and a cop just randomly selected you not just for a "stop and frisk" but a drug test, complete search of your home and vehicle, review of your bank accounts, and interviews with all your friends and co-workers just because he was curious.
Levrentia Beria, Stalin's chief of secret police, once said "Show me the man, and I will find you a crime." It's frightening to think we have law enforcement here operating on the same theory.
I was thinking the same thing. Something is afoul about this. Something isn't quite right. Is there a missing piece of important info that isn't revealed in this article?
Typical Federal agent Sherlock Holmes/Matlock/CSI wannabe. Guys like that don't give a rat's ass about destroying someone's life over a fairly mild white collar crime. Guilty?
Probably...but to get 2 years for mistating his income?
Either this guy had the world's worst defense attorney, or there's more to the story. Doesn't say if he was in default on his mortgages. And even if he was, why would an IRS agent care without an indication of wrongdoing regarding his tax returns? He saw this guy on a TV show?? WTF??
700 hours + wiretaps????
Are you kidding me?
That's hundreds of thousands of dollars in time that could be better spent on much more heinous crimes with a greater return for the US taxpayer.
Why isn't this IRS agent being reprimanded for wasting an extraordinary amount of $$$$ for such little return?
What a joke.
Years ago I had a gas station on the main st. in town. I has just opened it a week or so earlyer. I noticed a blue car parked accross the street but paid no attension to it. This car was parked thier all winter. When summer rolled around and it started getting real warm the window went down and i then saw a man sitting in the car. I started to wonder why, he was alway's looking, glancing at us every time a customer drove in. We were a much bigger operation by then and thier was lots of activity. And I knew the merchants in the stores so I asked most of them. They all said don't know except for one store owner who said "He come in for butts once in a while, he said he was watching you, but don't say anything! Said to myself screw this crap, marched over to his car and asked him if he was casing my station. Told him I already called the cops, which was BS. He hurridly said I work for the IRS, our records say you owe us $76.00 dollars. This was around 1958. I said why didn't you come over and say so, we went accross the street and I gave him the money for a reciept. He said I needed a case with a little relaxation time, I was on a big case and I'm tired,Blah,blah.
He wanted to sit in his car and do nothing.
A million dollars in fraudulent loans so you can pursue your hobby and you wonder why you were targeted? Go back to prison and think about it some more ass hole.
So what if he borrowed a million?
did he do so fraudulently...evidently yes. But no where does it say he was in default. What the article infers is that he sank his own ship by admitting to a "liar loan", which was confirmed by the broker who used that info to reduce his own sentence.
The real problem is an out of control IRS agent playing Elliot Ness on a guy who mistated his income on a mortgage app ...which is not even a crime that the IRS investigates!
700 hours + wiretaps + confidential informant??
What a complete waste of taxpayer funds to catch 1 guy who evidently paid his taxes. They got it wrong...the agent should have done time for the colossal waste of our taxpayer money!!