American Greed

Street Gangs: A New Breed of White Collar Criminals?

Gangs are expanding and becoming more violent, posing an increasing risk to communities across the country, according to the National Gang Intelligence Center. And their latest threat is not drugs or prostitution, it’s white-collar crime.

Michael Lock
Michael Lock

Law enforcement officials nationwide indicate that many gangs in their jurisdictions are involved in mortgage fraud, identity theft, counterfeiting and bank fraud.

These financial crimes have higher profitability and lower risk of detection from authorities than the more common criminal acts of drug dealing and weapons trafficking.

One-time child preacher turned notorious crime bossMichael Lock participated in this new, lucrative area of crime.

“As arrogant as he is, he's a very smart and street savvy guy," said Christopher Blaszak, a detective with the Milwaukee Police Department with 20 years of experience. "I think his sermons, growing up in the church, led him to be a great communicator. But he used it to do the devil’s work.”

Blaszak said he believes that Lock’s communication skills and charisma allowed him to manipulate people to conduct a mortgage scam. Blaszak was part of the task force that sought to bring down Michael Lock.

“Lock elevated himself from street level crimes like illegal gambling, dog fighting, pimping prostitutes and graduated to drug dealing which eventually led to kidnapping and murder,” Blaszak said.

With a mind for business, a violent gang to back him up, and the prospect of large profits, Lock expanded into mortgage fraud. He targeted young women and their good credit scores in order to bilk lenders out of millions.

“These female victims rarely saw much [profit],” Blaszak said. “When it came time for the banks to collect the monthly mortgage payments, that were so high, they couldn’t make them. Those homes ended up being foreclosed upon and their credit scores were just ruined.”

Lock used these women as “straw buyers.” Straw buyers are often duped into believing they are investing in real estate for profit. In reality, the fraudsters use the straw buyers' good credit standing to secure mortgage loans that would be otherwise unattainable.

Curt Novy, a mortgage fraud expert and analyst with 25 years of experience in the industry, said he sees schemes like this all the time.

“The common theme among straw buyers is usually a lack of knowledge of real estate investing and greed to make a quick profit,” Novy said.

But it is the leader of the fraud that keeps the majority of the loan money, not the straw buyer.

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“[The straw buyer faces] foreclosure and in some cases these buyers are viewed as active participants in the scheme and face indictment for bank fraud, wire fraud, and/or mail fraud,” Novy said.

According to Novy, each sale can generate on average $50,000 to $100,000 in profit.

“It’s a much easier and safer way of robbing a bank than handing a teller a robbery note and running out the door with a few hundred dollars,” he said.

But since no one pays the mortgage, the loans default, and the straw buyers are liable for repayment.

Law enforcement is cracking down. Federal agencies have formed task forces to put an end to these schemes. They turn to industry veterans such as Novy to analyze loan files for signs of fraud. Banks also file suspicious activity reports.

“These reports bring mortgage fraud operations to the attention of law enforcement,” Novy added.

Michael Lock orchestrated a fraud totaling more than $2 million, costing banks plenty and ruining financial lives.

Even though Lock was involved in these sophisticated scams, he was still a violent street criminal who would stop at nothing, including murder, to get what he wanted.

In the end he was the one who had to pay. Lock was given a sentence of 30 years for prostitution, 10 years for kidnapping, 13 years for mortgage fraud and two life sentences without parole for the murders of two rival drug dealers.