FBI to crack down on financial fraud

To protect consumers against fraud associated with the current economic crisis, the FBI has increased its investigation into corporate financial crimes.

“The FBI has more than 530 open corporate-fraud investigations, including 38 corporate-fraud and financial-institution matters directly related to the current financial crisis,” FBI Deputy Director John Pistole said in his written testimony before the Senate Judiciary Committee’s hearing on financial fraud today.

“The increasing mortgage, corporate-fraud and financial-institution failure case inventory is straining the FBI’s limited White Collar Crime resources,” he said.

Mr. Pistole said that 240 agents are involved in investigating mortgage fraud, compared with the 1,000 agents and forensic experts who investigated the savings and loan crisis.

Judiciary Committee Chairman Patrick J. Leahy, D-Vt., called for more support for the bureau’s investigations in his hearing statement.

“We must give law enforcement agencies the tools and resources they need to root out fraud so that it can never again place our financial system at risk,” he said.

In an attempt to combat financial crime, Mr. Leahy and Charles E. Grassley, R-Iowa, introduced the Fraud Enforcement and Recovery Act last week, which would extend federal fraud laws to cover mortgages and authorize funds to hire additional federal prosecutors and agents.