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it seems you're jumping to conclusions that fraud is occurring

Nope, not much of a jump. Not even a very small step. From the first post: The idea is to have the younger daughter purchase the car for the older daughter to use 100% of the time to avoid showing this debt on the older daughters record.

If younger sister is willing to buy the car and donate it to older sister to use 100% of the time while younger sister continues to pay for the car, then, I agree, there wouldn't be fraud. However, in that case, older sister should not be asking about 'writing off' expenses, since older sister wouldn't have any expenses - those expenses would be younger sister's. But given the way the post reads, I don't think it was the intent for younger sister to buy and donate the car to older sister.

Since older sister wants to 'write off' the car expenses, she must be intending to pay for those expenses, (and as you point out, older sister would be required to lease the car from younger sister, since older sister wouldn't own the car). If older sister didn't pay the expenses, or if she didn't have a lease, it would be tax fraud to write off those expenses.

In order to avoid tax fraud, if older sister is indeed paying for those expenses and has a lease agreement, and then fails to document those expenses and the lease obligation on the mortgage application because by having younger sister buy the car, the two have "avoid[ed] showing this debt on the older daughter's record" - that's mortgage fraud. And younger sister is aiding and abetting the occurrence of that fraud.

See, not much of a step to fraud (either tax or mortgage) at all.

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