The Associated Press - April 10, 2009
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."