Reputed gang members arrested in mortgage fraud probe

November 14, 2006 (WLS) -- Chicago and suburban police conduct a series of raids and arrested two people Tuesday, including a reputed street gang member. Police say it is in connection with a mortgage fraud investigation. Authorities say the suspects sold homes in poor neighborhoods at inflated prices.

Prosecutors say many homes were lost to foreclosure. Investigators say there could be dozens of victims.

Police say this is an example of how street gangs are getting more sophisticated. Instead of selling drugs, some of them are getting involved in mortgage and real estate fraud. The charges filed Tuesday could be just the beginning.

Expensive luxury vehicles, including a Bentley, a BMW and Maybach, a commercial van, all part of the profits of the alleged illegal plot. The cars sit in the police headquarters parking lot while two suspects sit in jail.

Police say Terry Faulkner is a member of well known Chicago street gang, who would recruit customers to invest in bogus real estate deals, and Rodrigo Navascues would allegedly provide phony mortgage documents. The police say the result was hundreds of thousands of dollars, if not millions in profits and laundered money.

"The buyer is left with dilapidated property, double the purchase price, and unable to make the mortgage payments with no ability to sell the property. The mortgage company loses hundreds of thousands of dollars, the buyer's credit is destroyed, and the schemers all profit from the transaction," said Supt. Phil Cline, Chicago Police.

Police raided Faulkner's home in Tinley Park early Tuesday morning, seizing property and taking him into custody. They also arrested Navascues at his Near North Side address in Chicago.

Most of the victims, according to police, were low-income residents of Englewood and nearby neighborhoods. Police say they are looking at five possible victims so far, but there could be dozens more.

"They would find unsophisticated people, people that had the American dream to buy a house. Terry Faulkner, using his cars, his flamboyance, he would convince those people that he could help them," said Sgt Kenneth Boudreau, Chicago Police.

Police say Navascues and Faulkner are being charged with 23 counts, including tax evasion and money laundering. They say this investigation is continuing and there will be other charges in the coming days.

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