When state regulators showed up at Samantha Johnson's mortgage company, she had already stolen her first house.
She had forged documents to fleece lenders. She had skimmed money off a customer's loan. She had lied to conceal 19 questionable mortgages.
Florida regulators caught all of that, but they didn't revoke her license or call for a criminal investigation.
Instead, they fined her $4,300 -- less than the commission on a single mortgage -- and made her promise to stop breaking the law.
Back on the prowl, Johnson went on to steal $2.5 million in loans and nine more homes -- including one from a recently widowed, disabled Vietnam veteran and another from a blind, 79-year old woman with Alzheimer's disease.
"It was devastating," said the woman's daughter, Janice Scott-Kittles. "I couldn't believe that somebody could do something like that."
Though agents for Florida's Office of Financial Regulation had the power to stop Johnson anytime, they didn't revoke her license until after a judge had thrown her in jail.
Time and again, regulators caught mortgage professionals breaking the law -- fraud, forgery, and stealing from clients -- but allowed them to stay in the business with few consequences during the richest housing boom in state history, The Miami Herald found.
In fact, as Florida's rate of mortgage fraud rose to the highest in the nation over the past eight years, the number of licenses revoked by state regulators declined each year -- a key measure of a regulatory agency's vigilance.
While Florida regulators failed to weed out former criminals entering the industry, the newspaper found the state's system for monitoring scam operations and disciplining crooked brokers also failed .
Complaints to the Office of Financial Regulation -- the state agency created to police the industry -- were routinely ignored, leaving consumers to fend for themselves, according to public records and interviews.
Among those dismissed: 10 complaints against a notorious Broward brokerage whose president eventually pled guilty to $21 million worth of mortgage fraud.
During an eight-month investigation, The Miami Herald analyzed more than 1,400 final orders issued by the agency between 2000 and 2007 and posted on the OFR website, reviewed quarterly reports the agency presented to the Florida cabinet and scrutinized the agency's annual industry newsletters.
The Herald also reviewed thousands of consumer complaints, court files and police reports.
The newspaper found:
One in three brokers the OFR dicovered committing fraud -- the most serious offense under state law -- were allowed to keep working in the industry with no monitoring.
Eighty-one brokers were caught siphoning funds from clients' escrow accounts and gouging customers with excessive fees but were allowed to keep peddling loans.
While the number of fraud cases soared this decade, regulators opened fewer examinations of brokers' books each year, greatly reducing the threat of state sanctions to fraud mills.
Suspensions -- another tool to protect consumers -- were used so infrequently that for three years, they weren't imposed at all, records show.
The most frequent reason brokers were booted out of the industry: bouncing checks for licensing fees to the OFR.
SWEEPING POWERS While the agency was reaping a windfall during the land boom -- licensing fees drove the OFR's bank balance from $2.7 million in 2000 to $29 million last year -- Florida's mortgage fraud rate was steadily rising.
State law gives the OFR sweeping powers to police the industry. Not only can state agents screen license applicants for prior crimes, but they are entrusted to monitor by investigating brokerages, examining files, levying fines, suspending violators and, ultimately, revoking licenses.
OFR Commissioner Don Saxon said revoking licenses can be difficult, noting the agency has to be able to show "clear and convincing evidence" of wrongdoing before an administrative judge.
"We do the best we can with the existing resources we have," Saxon said.
He said lawmakers repeatedly refused his budget requests. In his 2006 proposal, Saxon said he asked for $1.4 million in raises for examiners and investigators. He didn't get the money. In 2007, he asked for permission to hire six new investigators; he got one.
Saxon said he brought his case to the chairs of the Florida House and Senate committees that oversee his agency.
"I assure you, we do everything in our power to be convincing," he told The Herald.
The chairmen don't remember any sense of urgency from Saxon.
"I certainly didn't have him in my office saying, "I have to have this,'" said J.D. Alexander, R-Winter Haven, who chairs the Senate committee. "We would have funded any of those requests."
"I cannot recall any specific mention that there was a problem with mortgage fraud and he needed to clamp down." said Rep. Ron Reagan, R-Sarasota, chair of the House committee.
The Herald found 49 final orders involving fraud, forgery or brokers stealing from their clients -- violations that can get brokers kicked out of the industry.
In more than a third of those extreme cases, 17, the brokers were allowed to keep their licenses despite evidence they had broken the law -- charging illegal fees, doctoring loan documents and tapping into clients' escrow accounts to cover their own expenses.
When it comes to mortgage-broker licenses, Joseph "Jay" Biggins was the ultimate survivor.
The OFR forgave his arrest for passing counterfeit bills, and buying five pounds of pot from an undercover cop, when they issued his license. When they caught him gouging clients with excessive fees, he got a written reprimand. As 18 of his employees were indicted for mortgage fraud, he kept his license.
They didn't revoke it until after his fraud conviction in 2003 -- 10 years after he started in the business.
During that run, Biggins built one of the largest independent brokerages in Florida, with offices scattered throughout Palm Beach County.
The explosive growth of Mortgage Express, Inc. -- which wrote up to $400 million worth of mortgages a year -- was part of a larger trend taking place in Florida. The state was about to undergo one of the biggest housing booms in history.
But while Mortgage Express was expanding with 140 employees and three offices, problems were brewing.
After inspecting the company's operations in 1997, regulators caught Mortgage Express ripping off customers through excessive brokerage fees, allowing people to sell mortgages without licenses and failing to keep proper records.
Instead of placing Mortgage Express on probation, regulators slapped the company with an $8,000 fine and a reprimand, leaving the firm free to continue working without oversight.
Over the next two years, Biggins and 18 of his co-workers embarked on one of the most ambitious mortgage-fraud schemes in Palm Beach County, stealing more than $15 million from lenders and consumers, court records show.
Not until federal agents raided his headquarters was the full extent of the company's wrongdoing revealed. Investigators found desk drawers stuffed with blank copies of tax forms and bank statements, used to inflate the incomes and credit-worthiness of borrowers.
Biggins continued to work in the industry for three more years, but his license wasn't revoked by state regulators until after his conviction on fraud charges in 2003. He declined to comment for this report.
Saxon said prosecutors routinely asked his agency not to revoke a license when someone is the subject of a criminal probe, "the last thing we would ever want to do is impede an investigation."
Asked for the name of a prosecutor who had ever made that request, Saxon would not provide one.
David Weinstein, spokesman for the the United States Attorney's Office in Miami, which prosecuted Biggins and Samantha Johnson, said his office "did not ask OFR to refrain from taking license action" in either case.
He added, "We do not routinely ask OFR to refrain from taking license action during an active criminal investigation," and said his agency would "never" ask OFR not to revoke a license once criminal charges are filed.
Industry experts say the new opportunities for easy money, and the sheer numbers of new brokers entering the business, drove a nationwide epidemic of fraud. Florida became the center.
The state had the seventh-highest rate of mortgage fraud in the country in 2003. It ranked 5th in 2004, 3rd in 2005 and 1st in 2006 and 2007.
By last year, one out of every five fraudulent mortgage applications filed in the United States was written in Florida, according the Mortgage Asset Research Institute, a Virginia-based industry analyst.
But instead of more aggressive enforcement, state regulators actually did less. In fact, the single most effective tool they had, license revocations, declined as the fraud rate soared, records show.
During the land boom, the number of licensed brokers and brokerage business owners nearly tripled from 31,319 in 2000 to 91,207 last year. Over the same period, the number of license revocations dropped by more than half, from 42 to 20, according to the agency's final orders and its own published newsletters.
In 2005, the peak of the housing boom, the OFR revoked only 11 licenses.
Regulators turned to license suspensions -- another effective tool -- even less often: an average of one per year, The Herald found.
'CALL THE COPS'
Candance Young went to the OFR's Miami office in 2005 after losing her house in a questionable mortgage deal with Miami broker Michael Fletcher.
Young, then pregnant, said she approached Fletcher for help refinancing her Kendall home. Instead of taking her to his office, she said, he held the closing at a Burger King, and asked her to sign a stack of documents in the dark on the trunk of his car.
Months later, Young said Fletcher showed up in her driveway and said he owned the house. It turned out that one of the documents she had signed had been the deed to her property.
To this day, Fletcher denies he duped her, saying "she knew what she was doing. I didn't try to steal her house."
Frustrated, Young said she went to the OFR's Miami office and turned over all the documentation.
Regulators immediately recognized she didn't own her home anymore, Young said. But instead of launching an investigation, Young said they told her they couldn't act unless Fletcher had been convicted of a crime. "They told me to call the cops," she said. "It was like they were saying, You're not dead yet, I don't feel like being bothered with this thing.' "
Under state law, regulators could have taken any number of actions, including launching their own investigation and asking for an emergency hearing.
A Miami-Dade circuit court judge eventually voided the deed transfer -- finding the notary and witnesses who signed it were not even present -- but no investigation has been conducted by the state.
Fletcher, who was found guilty in 2007 of grand theft in an unrelated case, still has his mortgage broker's license.
The growth of Lewis Spinner's Cash Out Mortgage -- which operated from a Miramar strip mall with hundreds of agents cold-calling customers -- paralleled the rise of the subprime-loan industry in South Florida.
State regulators got 14 formal complaints against Cash Out between late 2001 and January 2006.
After the seventh complaint, in 2003, they did a cursory examination of Spinner's books. What they found could have gotten him booted from the business.
He charged customers illegal fees, he failed to register his employees with the state and he didn't pass the proceeds from at least one mortgage on to his client.
Of the 615 loans written by Cash Out since 2000, the OFR examiner looked at 12. At least three had been charged illegal or excessive fees, totallying $8,488, reports show.
The OFR made Spinner promise to tell the clients they had been overcharged and offer them a refund.
The examination also found that Spinner failed to list nine of his employees on a mandatory quarterly report to state regulators. Six of them had serious criminal records, including felony theft, armed burglary and cocaine trafficking, The Herald found.
Spinner himself passed the background check and got his Florida license despite disclosing a conviction for possession of stolen property and a fine for filing a fraudulent appraisal.
ALLOWED TO WORK
Most importantly, the examination substantiated the issue raised in the complaint: Cash Out had accepted $120,000 from a bank on behalf of a borrower, but failed to turn the money over to the client. That, alone, is grounds for license revocation under state rules.
But regulators didn't remove Spinner from the business, they didn't even put him on probation. Instead, they fined him $1,500 and left him free to sell mortgages for 2½ more years, expanding his company into a national firm, scamming lenders and borrowers along the way.
Lawyers, clients and even one ex-employee filed subsequent complaints with the state against Cash Out, but the agency didn't take another look.
Those complaints arrived during a period when the agency was launching fewer examinations -- with new cases dropping by more than 50 percent from 2003 to 2007, the agency's quarterly reports show.
In 2003, Sylvester Julien decided to refinance his Winter Garden home. Cash Out provided a good-faith estimate for a 30-year, fixed mortgage at 7 percent interest. At closing, the loan turned out to carry nearly twice the rate with a hefty prepayment penalty.
"I sent a complaint to the regulators," Julien said. "They did nothing as far as I'm concerned."
Then there's former employee Andrea Orbe, who wrote to the OFR in 2005 that managers routinely "adjusted" borrower's pay stubs and W-2 forms to make them look richer and more credit-worthy.
Orbe described a case where her manager "miraculously" increased a home's value on the appraisal. "This is just one of a million times that this has been done," she warned the regulators.
Still, the state took no action.
Finally, a company insider alerted the FBI's economic-crime unit in Broward in 2006, prompting agents to raid the firm and cart away reams of files.
Months later, a federal grand jury in Miami indicted Spinner and his partner -- Howard Roy Kleinman -- in a sweeping fraud case that charged them with stealing $21 million from lenders and consumers over the course of four years.
One of the methods of fraud described in the indictment -- the failure to disburse loan proceeds to customers -- was first exposed during the state's 2003 investigation, records show.
Back then, the state levied a fine and made Spinner promise to stop breaking the law.
He also promised to tell clients they had been overcharged, and to offer them a refund, but he never did.
Pembroke Pines resident Scott Maurer didn't know he had been scammed for $1,500 until The Miami Herald contacted him last week -- five years after state regulators discovered it. Maurer said he was upset that Spinner ripped him off, but even more surprised that the state regulators found out about it and didn't let him know.
"I would have appreciated that," Maurer said, "it would have been a common courtesy."
In a letter to The Herald in June from a federal prison in Pennsylvania, Spinner admitted to the crimes. "I'm guilty. I did what I was convicted of," he wrote.
LACK OF PUNISHMENT
While the state was not keeping up with examinations of brokers, it also failed to punish even those they caught forging documents and stealing from customers.
Mortgage broker Samantha Johnson's first brush with regulators came in 1994.
Shortly after she started peddling loans, the state caught her enticing customers to take out loans for home repairs, while referring the work to her husband -- without disclosing their relationship.
They fined her $500 and made her promise to stop.
Then came the 2001 visit to her office, when regulators found she had been lying to hide questionable loans, forging documents and tacking illegal fees on to mortgages.
Again, they fined her and ordered her to stop.
Johnson was among more than a dozen brokers caught by regulators committing fraud who were allowed to keep working between 2000 and 2007, The Miami Herald found.
David Audiffred was twice caught by regulators gouging clients with illegal fees -- but managed to stay in the business until caught a third time.
State Mortgage and Investment Corporation was caught submitting fraudulent information to lenders and doctoring mortgage agreements with clients in 2001 and charging illegal interest rates in 2004, but was never kicked out of the industry.
Using a network of expert forgers and crooked contractors, Johnson devised a sophisticated plan to steal homes from the poor and elderly.
Johnson, a native of South Africa who had an office in Parkland, began by driving around impoverished Broward neighborhoods in search of homes that appeared to be abandoned or falling into disrepair.
After identifying possible targets, she filed false contractor liens to pave the way for taking ownership.
Using forged drivers licenses and notary stamps, she filed deeds transferring ownership of the homes to shell companies and aliases under her control.
Then, after taking ownership under the false name, she made her money in three simple steps: she got a mortgage on the home, took the money, and then sold the house to an unsuspecting buyer.
Again and again, she repeated the scheme -- at least 10 times on homes in distressed and working-class neighborhoods between 2000 and 2004.
In late 2001, Angel Robinson complained to regulators that Johnson scammed her into buying a dilapidated house in Plantation using a bogus appraisal. She told the OFR that Johnson had "pulled a costly scam on my family, the bank and me," pleading, "Please help me get my property back."
The state did not write her back for more than a year and a half.
Meanwhile, law enforcement launched an investigation after Johnson stole a house from a local developer who called the police.
As law enforcement agents rushed to put together their case, Johnson continued her scams, even while she knew she was under investigation.
"She just kept going," Broward Sheriff's Office Detective Brad Stephenson said.
In an effort to slow her down, Stephenson said he asked state regulators to bar Johnson from the business.
Though she had previously been caught twice by regulators violating the law, Stephenson said his pleas had no effect. "There were numerous requests to the state to suspend her license," he said. "That was a long and tedious process. It seemed to take longer than it should have."
Johnson stole James Simmons' Fort Lauderdale house while it was empty -- he had taken his terminally ill wife to Georgia to die near her family. The 64-year-old disabled Vietnam vet discovered that Johnson sold the house out from under him only after he returned to Florida in 2003.
After her arrest in 2004, federal authorities considered Johnson so dangerous -- a compulsive thief who had contacted a man with a violent past to "take care of" BSO Detective Stephenson -- that they asked the judge to keep in her jail while awaiting trial. The judge agreed.
Stephenson told the court that she shouldn't be let out on bond -- for fear that she would continue stealing homes.
But the Office of Financial Regulation didn't revoke Johnson's license until April 2005 -- three months after her conviction and eight months after she had been thrown in jail.
Janice Scott-Kittles is still fighting to get back the house Johnson stole from her mother, Hazel Scott, in 2004.
A public school teacher in Fort Lauderdale for more than 40 years, Scott was blind and suffering from Alzheimer's when she moved into a nursing home in 2000. That's when Johnson moved in, forging a deed and taking ownership of the elderly woman's home.
"She died," her daughter said. "We never told her what happened."