USA TODAY 12/16/09 Fraud prosecutions fell as crisis loomed
By Brad Heath, USA TODAY WASHINGTON — Federal prosecutions for serious financial crime plummeted as the nation headed toward one of the worst economic meltdowns in U.S. history, a USA TODAY examination of Justice Department records shows. That drop in enforcement touched everything from stock-trading schemes and corporate wrongdoing to fraud aimed at individual consumers, according to the records. From the fiscal years 2003 to 2009, the number of federal corporate fraud cases plunged 55%; securities fraud charges dropped 17%; and bankruptcy fraud cases fell by 44%. Justice Department officials, under pressure from lawmakers, have promised to reverse that trend, and have launched thousands of new criminal probes targeting financial crimes. But while the number of new cases filed in federal courts has increased slightly in recent months, it remains a fraction of what it was a few years ago. "There's no doubt that if we got started two years ago, we would have gotten a lot more of these guys. Because we didn't, there are people who are going to get away with it," said Sen. Ted Kaufman, D-Del. "We should never have left ourselves naked when it comes to financial fraud." Associate Attorney General Tom Perrelli said federal investigators are moving as quickly as they can to prosecute crimes linked to the financial crisis. "The administration is very much focused on the prevention and deterrence side of this," he said. Federal prosecutors charged 91 people in corporate fraud cases in the fiscal year that ended Sept. 30, Justice Department figures show. In 2003 — the first year for which reliable figures were available — they charged 313. They charged 82 people with bankruptcy fraud, fewer than before the recession caused a surge in bankruptcies. Those figures are consistent with separate reports from the office that oversees federal courts, and from TRAC, a Syracuse University research group. The drop in enforcement came as the Bush administration pushed the FBI and federal prosecutors to focus on terrorism and national security, said Ellen Podgor, a Stetson University law professor who studies white-collar crime. Better enforcement might have deterred some of the worst abuses, said Bill McLucas, a former head of enforcement for the Securities and Exchange Commission. But it would not have prevented the financial collapse; "it's a myth that there are five or 10 people who are responsible for all this," he said. Prosecutors have brought charges in numerous cases linked to the financial crisis, including financier Bernard Madoff, and executives of Stanford Financial Group. Indictments were also announced Tuesday in New York against Galleon founder Raj Rajaratnam in what U.S. prosecutors described as the biggest hedge fund insider trading case ever. Congress has approved extra money to target financial crime, and Attorney General Eric Holder last month announced a task force to target financial fraud. "I think we're headed in the right direction, but I want to see some tangible results," said Sen. Arlen Specter, D-Pa. The FBI has more than 2,800 open mortgage fraud cases, Perrelli said. http://www.usatoday.com/news/washington/2009-12-15-prosecute-fraud_N.htm Copyright 2009 USA TODAY, a division of Gannett Co. Inc. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
