Monday, January 11, 2010

Financial Fraud Enforcement Task Force Cornerstone Of Anti-Fraud Effort

In remarks last week at the Forum Club of the Palm Beaches, U.S. Attorney General Eric Holder reiterated the importance of the interagency Financial Fraud Enforcement Task Force, which will act to prevent the kinds of fraud perpetrated in the South Florida area and beyond by convicted Ponzi schemer Bernard L. Madoff, and other types of financial fraud.

Invoking the names of Allen Stanford, Tom Petters and Scott Rothstein, alleged to have committed billions of dollars in financial crimes, Holder noted the DOJ and other agencies had taken them - and hundreds of other criminals - "out of the game."

He emphasized: "The Department of Justice, working in concert with the White House and a network of government agencies, will use every tool at our disposal – including new resources, advanced technologies and communications capabilities, and the very best talent we have – to prevent, prosecute and punish financial fraud."

Holder added that the "cornerstone" of this coordinated effort will be the new interagency Financial Fraud Enforcement Task Force. Closely tracking the original interagency announcement of the formation of the task force on Nov. 17, 2009, (which noted the new task force replaces the Corporate Fraud Task Force formed in 2002), Holder told the Palm Beach group:

We will focus on four key types of financial crime:

Mortgage fraud -- from the simplest of “flip” schemes to systematic lending fraud in our nationwide housing market;

Securities fraud – from traditional insider trading, to Ponzi schemes, to accounting fraud, to misrepresentations to investors;

Recovery Act and rescue fraud – including the theft of federal stimulus funds and the illegal use of taxpayer dollars intended to shore up our financial institutions; and

Financial discrimination – including predatory lending practices in minority communities and the sale of financial products that exploit the elderly and disadvantaged.

The Executive Order signed by President Barack Obama on November 17 establishing the task force, specified that the task force would be led by the U.S. Attorney General, and would hold its first meeting within 30 days of the executive order.

According to US DOJ spokesperson Hannah August, the first meeting of the task force took place on December 15, and served as opportunity for the agencies to come together to talk about the work of the task force and set short and long term goals.

Holder emphasized the level of support offered by Congress in pursuit of financial crime. He told the Palm Beach group:
The recently-enacted federal budget for 2010 will enhance these efforts. This budget represents the largest-ever, single-year enhancement to support and expand the Justice Department’s financial fraud programs. This will allow for additional FBI agents, prosecutors and support staff to aggressively pursue mortgage fraud, corporate fraud and other economic crimes. Congress has also stepped up by providing the federal prosecutors with new tools to help investigate and prosecute financial fraud. Our task force will take full advantage of the legislative authorities Congress gave us last year in the Fraud Enforcement and Recovery Act of 2009.

I’m confident that with new authorities, new resources and a bold new plan of action, we can and will make measurable, meaningful progress. And we will succeed in restoring the integrity of our markets, preserving taxpayers’ resources and protecting the vast majority of workers, consumers, investors and corporate executives who play by the rules and adhere to the law.

See also related remarks of SEC Enforcement Director Robert Khuzami at the original press conference (Nov. 17) when the interagency task force was first announced, and testimony given by Khuzami, Assistant Attorney General Lanny Breuer, and FBI Assistant Director Kevin Perkins at the Senate Judiciary Committee hearing on Dec. 9 on "Mortgage Fraud, Securities Fraud, and the Financial Meltdown: Prosecuting Those Responsible"

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