Amid Recession, FBI Makes New Push on Financial Crimes
In the age of Bernie Madoff, agents are scrambling to focus on white-collar criminals
Ever since 9/11, the Federal Bureau of Investigation has focused its investigatory might overwhelmingly on fighting terrorism. But in a sign of these troubled economic times, the FBI is reviving an old priority: white-collar crime. More specifically, in the age of Bernie Madoff, officials want to nab criminals who helped to create, or are now exploiting, the financial crisis.
In the past five weeks alone, the FBI has opened more than 200 mortgage-fraud cases and 36 corporate-fraud investigations, and the number is expected to grow exponentially, top FBI officials say. More than 250 agents are now on the fraud beat, up 75 since October. And FBI Director Robert Mueller told Congress last week that the thousands of new fraud cases involving individuals and businesses are straining the bureau's assets devoted to other crimes, like terrorism and a skyrocketing number of public corruption cases.
Congress is already weighing an increase to the FBI's budget to address the spike in frauds specifically related to the economic crisis. It may not come a moment too soon. "The increasing mortgage, corporate fraud, and financial institution failure case inventory is straining the FBI's limited white-collar crime resources," FBI Deputy Director John Pistole told lawmakers last month.
That's a significant shift in resources and, some say, a welcome change from the short shrift that white-collar crimes received from law enforcement over the past eight years. After the 9/11 attacks, the FBI reassigned more than 1,800 agents—about a third of its investigative force—from criminal probes to national security and terrorism-related assignments.
Federal prosecutions for crimes related to terrorism did spike briefly in 2002, but they have declined in each successive year. They are now at their lowest levels since September 2001. What's more, government statistics show that the number of terrorism cases that law enforcement agencies investigated, only to have prosecutors decline to take them to trial, has continued to rise over the past eight years. "It suggests that there's pressure on law enforcement to make cases that simply aren't there," says one veteran federal agent who spent more than two decades investigating violent crime.
Some of the skills the FBI developed to investigate terrorism, particularly on the financing side, can also be used against white-collar criminals. Undercover agents are going after unscrupulous lenders, for instance, while FBI accountants are tracking illicit securities deals. "The skills and knowledge base that an agent uses to track terrorist financing are the same as tracing other kinds of transactions through the global financial system," says John O'Connor, a retired FBI agent who supervised white-collar investigations.
Still, changing gears takes time. White-collar crimes generate oceans of paper and electronic records and can take years to investigate, let alone prosecute. Craig Dotlo, an FBI retiree, investigates private fraud for banks. He says the cases demand patience both from agents and from a public eager for justice. "They are incredibly labor-intensive cases," he says, "especially if the criminals were educated at the country's best business schools."
Reader Comments
White color crimes/red collar crimes
It is true that USDOJ and FBI refuse and block any investigations regarding corrupt USTP and their appointed private Trustees/Attorneys and/or Judges regardless how egrigious the crimes are. FBI recommends "private civil law suits", USTP simply states "no violations occured", DOJ does not respond at all, leaving the victims to the highly organized
"pack of attack dogs" of the enormously wealthy and influential criminals.
The public MUST review murder of attorney Dexter Jacobsen in connection with corrupt operations of Northen California Bankruptcy Courts (Santa Rosa, CA) in 1991. Same operators
not only go unpunished, but are rewarded with highest fees
in millions of dollars. Domestic terrorism and corruption are the cause of the US economic crisis, but are still ignored by the same equally corrupt enforcers.
Dept of Justice Cover Up $1 Billion in Fraud just like Madoff's
The WSJ reported on potentional conflicts of interest in the eToys Federal case July 25, 2005.
Paul Traub and his firm confessed to the DE FEderal Court in explicit detail that he planted his paid associate in eToys without informing the Court deliberately.
The perpetration of Fraud on the Court vis-a-vis more than 34 False Affidavits by Officers of the Court transpired from 2001 until currently.
Initially - the SEC was recommending an Official Investigation and akin to Madoff - other personnel in the Dept of Justice asked the SEC to back off.
Paul Traub also had a threat delivered to whistle blower Laser Haas to "back off" or not only would Haas not be paid and his company who had earned $3.1 million in fees, Traub would make Haas's career suffer and implied he had the power to come after fees and expenses from previous cases.
When Haas refused and reported this to the Dept of Justice - instead of prosecuting the case - the Wilmington DE Dept of Justice circled the wagons to protect Paul Traub's firm and gave him illicit, implied, blanket, immunity and the promise of future willful blindness by the Dept of Justice.
Armed with this impunity Traub, his paid associate and another firm commit another $100 million deception in another Federal case.
Whistle BLower Laser Haas informs the Court and again the Dept of Justice petitions the Court to Strike & Expunge the documents - Including an affidavit from the Chairman of the Creditors Committee - that documents the Perjury and Fraud.
Traub and his cohorts submit a pleading to the DE Federal Courts stating that the whistle blower does not have standing as he simply Waived all rights to be Paid the $3.7 million and the Dept of Justice adopted the premise asking the 3rd Circuit to dismiss the case.
Regardless - whether or not anyone is inane enough to believe that the Whistle Blower simply gave away his life's work - the fact of the matter is Traub confessed to supplication of false affidavits to the Court - as an officer of the Court - doing so deliberately to deceive the Court. By Law both the Judge and the US Trustee's office has to submit a briefing on the felony violations to the US Attorney per 18 USC 3057(a) that is further corroborated by the Congressional mandate of US Trustee's under 28 USC 586(a)(3)(F).
When Laser Haas informed the CA Dept of Justice Public Corruption unit that he had discovered the US Attorney in DE was a partner with one of the Law firms he was refusing to prosecute - the only response that seems to have transpired is the US Attorney summarily disbanded the public corruption unit and threatened career prosecutors to keep silent.
Germane is the issue that additional crimes are transpiring as we this banter occurs.
Also relevant to anyone with common sense is the fact that Paul Traub was both a partner with Tom Petters and Marc Dreier.
This case can test the "real" resolve of the FBI, SEC and DOJ to do the Right Thing as it is not too late
Schools of crime?
What does it say about the best business schools whose alumni make the best white collar crooks?
advertisement
