U.S. Launches Multi-Agency Task Force to Prosecute Financial Fraud
November 18, 2009
The Obama administration said it is creating a Financial Fraud Enforcement Task Force to “investigate and prosecute significant financial crimes and other violations relating to the current financial crisis and economic recovery efforts” and recover proceeds of the frauds, the Bond Buyer reported.
The task force will be led by the Department of Justice and chaired by Attorney General Eric Holder Jr., but will also include senior officials from the Department of Treasury, the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Reserve System and other major federal agencies.
All told, the fraud investigation unit will include senior officials from more than 23 federal departments and agencies, including the Internal Revenue Service’s criminal investigation unit, the Bond Buyer reported.
The task force will convene for the first time within 30 days.
“We face unprecedented challenges in responding to the financial crisis that has gripped our economy for the past year,” Holder said at a press conference Tuesday. “Mortgage, securities, and corporate fraud schemes have eroded the public’s confidence in the nation’s financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street.”
The task force expands upon a corporate fraud task force created by President George W. Bush in 2002, in the wake of the Enron, Worldcom and other corporate accounting scandals.
This task force comes in the wake of the multibillion fleecing of long-term investors by Bernard L. Madoff, a former vice chairman of the National Association of Securities Dealers. As reported by Securities Industry News, Madoff and accomplices appear to have used an IBM AS/400 server known as House 17 to more or less as a sophisticated typewriter, to spew out false account records to clients.
But Holder said the new task force will feature broad coordination among various federal agencies as well as state and local law enforcement officials, including state attorneys general and district attorneys.
At the press conference, U.S. Treasury Secretary Timothy Geithner said the task force marks a “much more aggressive strategy of enforcement” to be coupled with financial regulatory reform that will give regulators new tools to better manage the failure of large and complex institutions.
Specifically, the task force will “provide advice” to the attorney general for the investigation and prosecution of cases of: bank, mortgage, loan, and lending fraud; securities and commodities fraud; ¬retirement plan fraud; mail and wire fraud; tax crimes; money laundering; False Claims Act violation; unfair competition; discrimination; and other financial crimes and violations, the executive order said.
The unit also will make recommendations for enhancing cooperation among “federal, state, local, tribal, and territorial” authorities that investigate and prosecute financial crimes and violations, the Obama Administration Executive Order establishiong the initiative stated.
