It was Monday, January 10, 2000, about 9:30 a.m. QC and I were returning to the office from an early morning appointment when our trusty person Friday, Lucy, said, "MAC, Will Jones from ABC Mortgage is on line 2 for you." I walked straight to my office and picked up the line. "Hi, Will, how are things?" "Not well" he replied. "I have a loan that one of my correspondents wants to fund tomorrow, but my underwriter thinks the Employment Verification might be fraudulent. I want you and QC to check out this employer for me." I said, "Fax us the information and we'll get right on it."

As we were leaving, we gave Lucy the pertinent information on the company and asked her to run our standard checks on the borrower and the company. We headed over to 12345 Watchout Boulevard in Firestone, California, the location of the subject employer. (The employer name listed on the Request for Employment Verification was 'Made in America Manufacturing Company'). Before entering the building, we looked for signs that would indicate that it was located at this address. We found none. We entered the building and were greeted by a nice young lady who identified herself as Tracy, receptionist for Epson Clothing. QC asked, "Do you know of a company by the name of Made in

America Manufacturing Company?" Tracy said, "No." QC questioned whether she knew Mike Smith (the borrower), or Bill Rankon (the person that signed the Employment Verification as the owner). Tracy responded, "I don't know Mike Smith, but Bill Rankon rents a small building from us located in the back of our building." We thanked Tracy and went to check out the back.

We found a small 8 x 8 metal storage locker with the door open and a man sitting behind a very small desk. QC said, "Good morning, sir. My name is QC and this is my partner, MAC. We are trying to locate an employee of Made in America Manufacturing Company by the name of Mike Smith. Do you know him?" The man said, "No, no, I don't think so." QC asked, "How about Bill Rankon?" "Sure, I know Bill. He's a friend." "Where might we find him?" "Oh, oh, he's out in the field right now." QC asked, "What is the name of the business that operates here?"

He said, "I don't know the name of the business. Bill just asked me to stick around while he's out. Just who are you two, anyway?" We again identified ourselves and told him were trying to locate an employee of Made in America Manufacturing Company. (cont. below)

"I have never heard of that company," he said. "And as far as I know, Bill doesn't manufacture anything in here. He'll be back later. Then you can talk to him." "Thank you, sir, we'll do just that," QC replied.

I said to QC, "Let's grab some lunch." We spotted a Cupid's hot dog stand and ordered a couple with the works. While we were eating, I called Lucy to find out the status of the checks she had run on the borrower and employer. She had uncovered some inconsistencies and was following-up. Lucy expected to be finished by mid-afternoon, the time we expected to be back.

It was now 1:30 p.m. We went back to 12345 Watchout Boulevard to see if we could catch up with Bill Rankon. We figured we had given the guy in the small storage locker enough time to reach him so he could get over there before we got back. Just as we expected, when we arrived, none other than Bill Rankon himself was waiting for us.

We identified ourselves and asked if he was Bill Rankon. He said, "Yes." "Are you the owner of Made in America Manufacturing Company?" "Yes, I am." Is this your only location?" "Yes, it is." "What kind of things do you manufacture in this space?" (We noted that the space was an 8 x 8 storage locker.) Rankon said, "We don't manufacture anything. We are manufacturer's brokers. We contract with many large manufacturing companies." "I see. Who are some of the companies you contract with" QC asked. Well, I can't tell you who we do business with because it's confidential. What's this all about, anyway?"

I said, "We work for ABC Mortgage Banking Company and we are trying to re-verify an Employment Verification for Mike Smith. It states here on this Employment Verification that he works at this address as a Machine Operator. Do you have a Mike Smith on your payroll as a Machine Operator? And is this your signature?"

Bill Rankon didn't say anything for what seemed about 10 minutes. QC and I just stood there waiting. Finally Rankon said, I think you should both leave. I'm not answering any more questions. If you want to verify someone's employment, do what

everybody else does. Send me a request in writing. Now, get off my property!" Rankon seemed pretty steamed.

It was now 2:00 p.m. Driving back to the office, I said to QC, "It appears that the only 'manufacturing' business Bill Rankon is operating is 'manufacturing' employment verifications." An hour later, we arrived back at the office. Lucy was just finishing up.

Lucy said, Mike Smith's Social Security number belongs to a 5-year old child. All of my checks on the company reveal that it is not an operating entity. I've checked all of our sources. This employer is a non-entity. Zero, zilch, nada, nothing. It just doesn't exist. The phone number for Made in America Manufacturing Company is even answered by Phoenix Info Services, a telephone bank. Looks like we're up to Number 19 for the month!"

I proceeded to my office to call Will at ABC to let him know that his underwriter was right. I said, "the Employment Verification is as phony as a $3 bill, and you should not fund that loan."

Later that afternoon I sent a written report to ABC, which concluded as follows:

Based on the information obtained in our on-site review, it is QC-MAC's opinion that Made in America Manufacturing Company, whose business address is 12345 Watchout Boulevard, Firestone, California, is not a legitimate business enterprise. Further, the borrower, Mike Smith, is using the Social Security number of a 5-year old child. Therefore, the borrower's actual credit history and outstanding obligations are unknown. It appears that the loan file in question contains significant discrepancies, false statements, and program abuses. Based on this conclusion, we recommend that this file be referred to HUD's Quality Assurance Division in Santa Ana, California and/or to the HUD Regional Office of the Inspector General for further investigation.

Thank you for the opportunity to be of service to you.

Respectfully, QC-MAC