Matthew Cox: The Evolution of a Con Man from Mortgage Fraud to Synthetic Identity Theft

This episode features Matthew Cox, a former con man who served 13 years for extensive bank fraud, mortgage fraud, identity theft, and passport fraud. Cox details his initial foray into criminal activity, beginning with a seemingly minor act of white-out on a loan application to secure a commission. He describes the immense financial pressure he faced, which led him to rationalize this first fraudulent step, viewing it as a necessary means to avoid personal financial ruin rather than a deliberate criminal act. This initial success, coupled with the assurance from his manager that the worst outcome would be termination, emboldened him and set him on a path of escalating deception, quickly moving from minor alterations to fabricating entire financial histories.

Cox explains the intricacies of mortgage fraud, particularly within the subprime lending market, where borrowers often had limited options. He highlights how his natural salesmanship and ability to build trust allowed him to "massage deals," manipulating contracts and financial documents to secure loans for clients who wouldn't otherwise qualify. He initially justified these actions as "doing God's work," helping financially struggling individuals secure homes. However, a later reflection while in prison, tasked with writing an ethics course for mortgage brokers, led him to a stark realization: many of these individuals were not financially equipped for homeownership, and his actions ultimately led to their foreclosures, demonstrating the profound and often devastating consequences of his fraud.

One of the most fascinating aspects of Cox's criminal career was his development of "synthetic identity" creation. He meticulously describes how he exploited loopholes in the credit reporting and Social Security systems, inspired by a client who used her child's SSN to rebuild her credit after a divorce. Cox learned to generate new, clean credit profiles by obtaining Social Security numbers for non-existent children (through fabricated birth certificates and elaborate phone calls to the Social Security Administration) and then establishing credit lines under these new identities. He details the process of ordering security paper, creating fake seals, and even the casual indifference of DMV employees when presented with expertly forged documents.

The podcast delves into the systemic vulnerabilities that allowed Cox's schemes to flourish, from lax underwriting guidelines during the "liar loan" era to the fragmented nature of identity verification. It underscores the psychological journey of a criminal, from initial fear and rationalization to eventual mastery and detachment, viewing his elaborate frauds as "artwork." The conversation also touches on the ethical dilemmas faced by individuals struggling within a rigid financial system, where shortcuts, though illegal, can appear as the only viable path to stability, highlighting the complex interplay between individual choice, systemic flaws, and the slippery slope of criminal enterprise.

"I tell her look people are looking for me who law enforcement which ones all of them you know she's like that doesn't even what for what I go mostly bank fraud and she's like well how are they not finding you mhm I mean everybody you know people know you like you know your general contractor which I met 4 months before this guy 6 months before this was two months before you know she's like so and so so and so so and I'm like right right well I said well she's like I mean they've got your name they've got your I go well that's identity theft and she was like what do you mean I said well my name's not you know my name's not it's not Joseph Carter"

"anytime you lie to the bank you've committed fraud and it's funny when I was you know doing it I would say ah it's it's in the gray area there's no gray area you're either lying in some capacity or you're not"

"I was concerned because I was behind on my on my truck payment I was behind on my mortgage like I had banked on being a mortgage broker and I'd gone deep deep behind on all my bills to do this so in the last minute when this loan isn't going to close and I have to commit fraud to make that happen and the idea my fear was they were going to figure it out and maybe I'd get fired"

"if I was you and she handed she I'd wi it out make a copy stick it back in the file yeah she said it'll be fine and I went I could I was like that that's fraud I could go to jail and she goes and she was like it's they're never going to catch it"

"I ended up working for a company that was a subprime lender and those people didn't have a lot of options By Honestly by the time they got to that to Eagle lending their options were over"

"I told myself that right up until that those loans were solid and I was helping those people out right up until I went to prison and and I was in prison and I had to write the government asked me to write an ethics and fraud course"

"some people should not own an house they shouldn't be allowed to borrow they're not in a position financially"

"every time I changed something it wasn't gray area I just committed I just committed fraud at this level you're either you either meet the guidelines or someone has massaged it in such a way that they've committed fraud that's it"

"the first time the credit bureau has ever heard about you was you told them the first time you applied for a credit card you they created a credit profile at that moment prior to that they had no idea"

"so there's a temptation to take the shortcut and the shortcut is often going to be illegal"

"I figured out how to create a birth certificate you know I ordered the security paper you know when where you make a copy it says you know void if copied so I ordered had to order a bunch of that and I went online and figured out how to make a a fake birth certificate"

"they're looking for the low hanging fruit of crappy fraud right yeah this stuff was right through"