Federal prosecutors have opened a criminal investigation into Baltimore City Council President Nick Mosby and State’s Attorney Marilyn Mosby, subpoenaing her campaign and the couple’s business records, according to a grand jury subpoena recently obtained by the Baltimore Sun.

The U.S. Attorney and FBI want financial records related to the power couple’s tax returns, bank statements, credit card statements, loan documents, and canceled checks. They subpoenaed records dating back to 2014 related to the Mosbys’ private travel, consulting businesses, and campaigns.[i]

The Federal inquiry is only the latest development in the Mosby saga. Last year, Marilyn Mosby, attracted scrutiny because of a Maryland State Ethics Commission report on her travels.  Baltimore’s top prosecutor took 23 out-of-town trips sponsored by nonprofits and other groups over two years.  She benefitted personally from over $30,000 in airfare, hotel rooms, and per-diem payments.[ii]

The Baltimore Brew offers more detail about a possible legal violation capturing prosecutors’ interest.[iii]  In question is a form of mortgage fraud known as occupancy fraud. This involves a borrower lying about the property’s occupancy status, stating it will be owner-occupied. These borrowers lie to get better mortgage terms.

When she took out a $490,500 loan, Marilyn Mosby agreed on her mortgage documents to use her Florida property only as a second home.  Mosby got a roughly $50,000 break on the down payment and a lower interest rate because of this. [iv]

However, barely two weeks after pledging that she would exclusively “occupy and use” the house she purchased, Marilyn Mosby took out a landlord’s license and hired a management company to rent out the property. Mosby’s property can also be found on Airbnb. [v]

Marilyn Mosby’s response on Twitter was that she “recently purchased a condo & a second home that she rents out when she is not there. Mrs. Mosby earns a salary, has savings, a lender & a credit score-all to support her family& she has a legitimate ability to purchase properties& invest HER money any way she chooses. She is no different than anyone else who does, or have done the same. This should not be news, nor does it merit a federal investigation.  So what?! “[vi]

Mosby faces potential criminal jeopardy for mortgage fraud.  This crime involves “any material misstatement, misrepresentation or omission relied upon by an underwriter or lender.  Such crimes commonly are prosecuted as wire fraud, bank fraud, and conspiracy.  More precisely, Mosby’s “occupancy fraud” involves making false representations about an investment property to qualify for the mortgage rates for owner-occupied residences.[vii]

In recent years, the FBI has been actively pursuing mortgage fraud prosecutions through its “Financial Crimes Task Forces,” comprised of federal, state, and local regulatory and law enforcement agencies working together.  Lenders are also actively cracking down, using private investigative tools.  Lexis-Nexis offers a ‘Verification of Occupancy’ product “to quickly identify areas of potential exposure to mortgage occupancy risk….. speeding research time and occupancy verification, fortifying occupancy fraud prevention and lowering investigative costs.” [viii]

Need an example of the criminal consequences of claiming an owner-occupied mortgage but instead using the property as a rental? Ask Paul Manafort.

Manafort purchased a condo in Manhattan for $2,850,000, which he rented out through Airbnb and elsewhere. When applying for a mortgage on the property, Manafort lied to the bank and said it was a second home for his daughter and son-in-law. As a result, he received an additional count on his criminal indictment.

To be sure, mortgage application fraud may be only one of the issues prosecutors appear to be looking into.  Other news reports note the IRS’s involvement in the case and the subpoena of financial records for campaign accounts, churches, and other nonprofits.

In recent years, Baltimore has suffered from mendacious leadership. Suspicion grows that Marilyn and Nick Mosby will be latest added to this hall of shame.

[i] https://www.baltimoresun.com/news/crime/bs-pr-md-ci-cr-mosby-campaign-investigation-20210319-zeoyvanp2fa2bfwhwyv5uuqpai-story.html

[ii] https://theduckpin.substack.com/p/baltimores-get-out-of-jail-free-prosecutor

[iii] https://www.baltimorebrew.com/2021/03/21/brew-exclusive-marilyn-mosby-purchased-a-476000-florida-condominium-last-month/

[iv] https://baltimorebrew.com/2021/03/22/marilyn-mosby-said-in-mortgage-documents-shed-use-florida-property-as-second-home-then-she-made-it-a-rental/    Mosby signed a document promising that:  “Borrower will maintain exclusive control over the occupancy of the Property . . . and [will not] give a management firm or any other person or entity any control over the occupancy or use of the Property.”

[v] https://www.airbnb.com/rooms/43622579

[vi] https://twitter.com/MarilynMosbyEsq/status/1374112966270971905

[vii] https://www.washingtonpost.com/realestate/a-little-lie-on-mortgage-application-can-cost-you-big/2015/06/30/2e2dcff0-1e6b-11e5-aeb9-a411a84c9d55_story.html

[viii] https://risk.lexisnexis.com/products/verification-of-occupancy