Personal Injury Law

White Collar Wall Street Fraud May Go Unpunished

By Jane Akre

If we rely on the Federal Bureau of Investigation to uncover the factors that led to our country's House of Cards financial collapse, we may have a long wait.

That is the assessment of the FBI as it reveals it is struggling to find enough agent to investigate financial criminal wrongdoing.

Back on September 11 2001, the bureau shifted the focus of 1,800 investigators to national security.  That is nearly one-third of all agents put together.  The move has left a huge hole in the financial crimes investigation capacity of the bureau.

The FBI is under pressure to uncover who knew what in the collapse including a probe into Fannie Mae, Freddie Mac and Lehman Brothers.  Several hundred agents will be reassigned, reports the New York Times.

For four years, FBI officials have reportedly been asking the Bush administration for money to replenish the ranks of those put into terrorism investigation, and specifically into the area of mortgage fraud. Each year those requests have been denied. 

"Clearly, we have felt the effects of moving resources from criminal investigations to national security," John Miller, an assistant director at the F.B.I, told the newspaper.

"In white-collar crime, while we initiated fewer cases over all, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims."

Reporter, Susan Filan of MSNBC says time is of the essence for prosecutors.

"It's imperative and has to happen quickly, because most of these cases are going to depend on paper trails, they are going to have to be reconstructed.  So the empanelling of a grand jury it's to put up a freeze, a halt on anyone who might want to delete the hard drives on their computers, get rid of potentially incriminating e-mails, shred all kinds of inter-office  memos."

Investigators will have to determine if this was business as usual, complicated by some bad decision making, or something more ominous.

Filan says, "Was it outright fraud, and somebody knew it was not worth it and continued to sell it, to continued to peddle bad debt? That's where you need to find smoking gun e-mails."

Comments to the Times include a suggestion to move the SEC's Division of Enforcement under the umbrella of the FBI.  One Certified Public Accountant volunteers to help investigation. "Where do I sign up? Emily says.   #

Full post as published by InjuryBoard on October 21, 2008 (boomark / email).