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DOJ, FBI admit they inflated claims about mortgage fraud crackdown last year

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Aug. 12, 2013: Attorney General Eric Holder speaks to the American Bar Association Annual meeting. (AP)

The Justice Department and FBI have quietly acknowledged they grossly overstated the scope of a mortgage fraud crackdown, which the administration heralded with much fanfare a few weeks before last year's presidential election. 

According to a memo circulated by the FBI and a correction posted online by the Justice Department, the number of defendants, the number of victims and the size of the losses are, in reality, a fraction of what officials claimed last October. 

Attorney General Eric Holder and other law enforcement officials claimed in early October that the initiative charged 530 criminal defendants on behalf of 73,000 victims who suffered over $1 billion in losses. The so-called Distressed Homeowner Initiative, which targeted fraud schemes against distressed homeowners, was highlighted in a press release and press conference at the time. 

Holder, talking to the cameras on Oct. 9, called it "a groundbreaking, year-long mortgage fraud enforcement effort." 

The real numbers, it turns out, were far smaller. The feds now admit that the number of criminal defendants charged was more like 107, not 530. The number of victims was 17,185 -- still a large number, but roughtly one fourth the size of the original headcount. And the losses totaled $95 million -- not $1 billion, as originally claimed. 

The DOJ and FBI had long been dogged by claims that their numbers were inflated. Bloomberg has been reporting since October that the cases cited by Holder included charges filed during the George W. Bush administration. 

Bloomberg continued to press for clarification. The administration went dark on the issue until Friday, when the FBI acknowledged in a memo that it had conducted an "extensive review" and found problems. The original figures included defendants who "were the subject of other prosecutive actions," as well as defendants charged in cases that did not fall under the anti-mortgage fraud program in question, according to the memo, obtained by FoxNews.com. 

"As a result, the public announcement overstated the number of defendants that should have been included as part of the Distressed Homeowner Initiative, as well as the corresponding estimated loss amount and number of victims," the memo said. 

The Justice Department also updated its own October release -- as well as the transcript for remarks delivered by Holder -- with a correction, saying prior versions "inadvertently contained inaccurate numbers." 

The administration is still getting hammered for the revisions, though. Bloomberg columnist Jonathan Weil called on Holder to apologize, and explain how this happened. 

"He used a press conference with the cameras rolling to give out numbers that proved to be false -- and they appear to have been willfully false," Weil wrote. "He should be just as eager to hold another press conference to set the record straight, answer any questions about his apparent sleight of hand when it comes to financial-fraud metrics and apologize to the American people."