The staff internal auditor for the bank frowned and said to the auditor-in-charge, “The Smith loan was $175,000, but the credit limit was $100,000. The file contained no explanation for granting a loan in excess of the credit limit. And the Jones loan for $150,000 was well within the borrower’s credit limit, but the documentation is missing!”

The auditor-in-charge replied, “Fortunately the Smith loan was paid off shortly after date of the loan listing, so there was no need for further follow-up. As for the Jones loan, we’ll follow up on that at the next audit. If we followed up on every little exception, we would never finish all our audits.”

Follow-up at the next audit revealed that the Jones loan had been paid off with funds from outside the bank. What the auditors did not realize was that both loans had been paid off with the proceeds of fictitious loans made in the names of other borrowers. Later it was determined that both loans were part of a fictitious loan scheme. Losses exceeded $5,000,000. Fraudulent loans totaled less than $2,000,000 at the time the auditors failed to follow through.

“I just needed to get control of it,” Barnum, 52, said Tuesday, adding that she was in over her head with a $2,169 monthly house bill. “I was being hasty. I just wanted a quick fix.”

Florida Attorney General Bill McCollum says the owner of FHA All Day, Jason Vitulano, 34, scammed Barnum and hundreds of others nationwide with several businesses operated out of South Florida that preyed on the vulnerable — people who were facing foreclosure.

McCollum sued Vitulano and his businesses on Monday in Palm Beach County Circuit Court, seeking an injunction to shut down the companies. McCollum also is seeking restitution for consumers he says were scammed out of millions of dollars. Criminal charges are being considered.

“This is the worst type of thing,” McCollum said Tuesday, “taking advantage of the people who are most in trouble.”

A home telephone number for Vitulano has been disconnected. His company’s Web site, http://www.FHAALLDAY.com, says the business is “no longer accepting any new applications.” No one answered the phone there Tuesday, and the voicemail wouldn’t accept messages.

No attorney was listed for Vitulano in court records.

McCollum said Vitulano’s businesses would solicit clients, in part, through recorded calls, some that included the voice of President Barack Obama.

One recorded call began with a man saying, “Message from our president,” followed by Obama’s voice.

“All across this state, there are families who have done everything right, but are now facing foreclosure or are seeing their home values plummet,” the president can be heard saying.

It was all part of the scam, McCollum said, using the president’s voice to lure potential customers into a false sense of security.

“He clearly targeted the most vulnerable,” the attorney general said.

Authorities say the businesses promised to lower monthly mortgage payments by working directly with banks, and in some cases, to dissolve the loans, altogether. Customers had to first pay up to $5,000 for the services, but McCollum said nothing was ever done.

“He promised a lot of things,” McCollum added. “Some of these are ridiculous claims, but people who are desperate believe it.”

He said his office has received more than 300 complaints from across the country, including New York, California, Virginia, North Carolina and Florida.

It is believed Vitulano was bringing in up to $1 million a month for at least eight months through the companies.

An emergency court hearing is set for Friday.

It’s little comfort for people like Barnum.

The Port St. Lucie woman said she is now dealing directly with her bank and still struggling with her mortgage.

“I won’t make that mistake again,” Barnum said.