CNN Justice Department Producer
The FBI has now launched 38 major corporate fraud investigations stemming from the nation's financial crisis, and that number could grow sharply, a top FBI official testified Wednesday.
The disclosure by FBI Deputy Director John Pistole (Pis-tul) reveals an increase of at least a dozen newly-opened investigations of large financial institutions since the FBI last year reported it was looking into about two dozen major firms. And the scope of the criminal probes is certain to grow.
"It could potentially rise into the hundreds. It is an exponential potential," Pistole told a Senate panel.
The undisclosed targets of the investigation were described as "significantly large" and "businesses we all know about".
Pistole said the total number of corporate fraud investigations nationwide, including some apparently unrelated to the current economic crisis, already totals 530.
Pistole's testimony to the Senate Judiciary Committee accompanied a warning from the panel of top federal law enforcement officials that the massive government expenditures being approved by Congress will make inviting targets for perpetrators of financial fraud.
"We're going to see the demand on law enforcement resources increase," said Rita Glavin,(GLAY-vun) Acting Assistant Attorney General of the Justice Department Criminal Division. Glavin cited the glut of fraud cases that followed government expenditures designed to help Katrina victims, which involved far less federal money. She said she welcomed Congressional offers to increase resources to help battle financial fraud.
Neil Barofsky, Special Inspector General for the TARP (Troubled Assets Relief Program), echoed the need for resources, but praised the FBI for its level of assistance in pursuing potential fraud with TARP funds.
Pistole promised the panel that if more funds were directed to the FBI to combat white collar crimes, they would be used only for that purpose. He said currently the FBI is trying to decide whether it can afford to move some of the 2,000 FBI agents and analysts who were shifted to counterterrorism following 9/11 to help fight fraudsters without harming national security.
On mortgage fraud investigations, Pistole said the FBI has 240 agents working cases along with roughly an equal number of task force members. But the FBI has opened more than 1,800 mortgage investigations, and is swamped as the number of mortgage-related probes continues to rise.
Glavin said the Justice Department was considering whether to form a National Mortgage Fraud Task Force. Her division already oversees the Hurricane Katrina Fraud Task Force and the National Procurement Fraud Task Force.
The officials said they are focusing mortgage-related investigative efforts almost entirely on licensed professionals because that provides the greatest deterrent.
"They have the most to lose, they're the most likely to flip and they make the best examples," Barofsky said.
Senators from both political parties expressed unanimous support for current efforts to fight white collar crime, and vowed to push proposed bipartisan legislation to curtail financial and mortgage fraudsters.
"Frankly, I want to see them go to jail," said Chairman Patrick Leahy, D-Vermont, as he concluded the hearing.
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