This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
A Senate committee unanimously passed a bill Tuesday to appropriate $2 million from a recent mortgage settlement with major banks to create a fraud prosecution unit in the Attorney General's Office.
The Senate Revenue and Taxation Committee approved the bill sponsored by Sen. Ben McAdams, D-Salt Lake City, with little discussion.
Deputy Attorney General Kirk Torgensen told the committee the state now has only two prosecutors and two investigators to confront "this massive amount of fraud that exists in this state."
"We are constantly listed in the top five states for financial fraud," he said, and will continue to be there "unless we do something about it."
The money from the settlement announced recently by Utah and 48 other states with five banks probably would mean hiring five additional people in the Attorney General's Office, including a financial analyst, two investigators, a paralegal and a prosecutor, Torgenson said in an interview before the committee hearing.
The banks were accused of violating state loan laws. The settlement announced Feb. 9 brought Utah about $171 million, most of which is to go to homeowners in the form of loan reductions or direct payments to those who already lost their homes, with about $25 million in cash sent to state coffers.
Gov. Gary Herbert has said he wants most of that for education and counseling and for a legal clinic to help homeowners.
Torgensen said the state was hit by a wave of mortgage fraud during the housing bubble that involved banks, real estate agents, appraisers, builders and others.
"I'd say we had so many cases a few years ago that, sad to say, we just scratched the surface going after just the worst of the worst," he said in the interview. "There were a lot of people who got considerably wealthy off of the 'no doc' loans and all that stupid stuff that went on in the industry. We were just too overwhelmed to go after all of them."
Federal and state investigators have said about $2 billion worth of fraud is under investigation or being processed in Utah courts.
McAdams told the Senate committee that compares to about $700 million in annual revenues for the state's ski industry.
"We do have an issue with fraud in Utah," he said. "I believe it's crucial we fund mortgage and financial fraud investigations."
Torgensen said the one-time money could fund the fraud unit for perhaps four years.
The bill, SB281, was approved 3-0 with four committee members absent. It now goes to the full Senate for consideration.
Twitter: @TomHarveySltrib