Obama creates task force to probe financial crimes

McClatchy Newspapers

WASHINGTON — The Obama administration announced Tuesday a renewed crackdown on financial crimes, establishing a task force of top federal officials to work with state and local authorities to prosecute cases stemming from the crash of the housing market and the Wall Street meltdown.

“Mortgages, 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,” Attorney General Eric H. Holder Jr. said at a Washington news conference. “Unscrupulous executives, Ponzi-scheme operators and common criminals alike have targeted the pocketbooks and the retirement accounts of middle-class Americans and, in many cases, devastated entire families’ futures.”

“We will not allow these actions to go unpunished,” he continued. “By punishing criminals for their actions, we will send a strong message to anyone looking to profit from the misfortunes of others.”

Holder was joined by Treasury Secretary Timothy F. Geithner, Housing and Urban Development Secretary Shaun Donovan and Robert Khuzami, the enforcement director for the Securities and Exchange Commission, in announcing the new Financial Fraud Enforcement Task Force.

President Barack Obama created the panel by executive order, and it will take advantage of new anti- fraud funding and powers enacted by Congress this spring in the Fraud Enforcement and Recovery Act. The legislation authorized $245 million annually in 2010 and 2011 to hire hundreds of new prosecutors, agents and other federal officials to go after financial fraud. It also strengthened and expanded money laundering and other laws to apply to fraud committed by private mortgage lenders.

Obama’s task force replaces a similar high-profile panel created by former President George W. Bush in 2002 after the Enron accounting scandal to investigate fraud and corruption at U.S. corporations. As of April 2008, the Bush task force had obtained almost 1,300 corporate-fraud convictions, including those of more than 200 chief executives.

Holder said the mandate of the earlier task force was not broad enough to go after all the types of crimes involved with the financial crisis. The new task force will include officials from 25 federal agencies, who will work with state attorneys general and district attorneys on a wide variety of cases, including mortgage fraud, securities fraud and misuse of economic- stimulus money, he said.

“It is a way for us to mount an even better organized and more collaborative response to the pain and losses caused by the financial crisis,” Khuzami said. “The task force will improve our chances of identifying wrongdoers and thus restoring confidence in our markets.”

Although the scope of the financial crisis was clear when Obama took office in January, Holder said it took time to coordinate an effort spread across numerous agencies and states.

“We’ve all been doing things in the interim,” he said. “But we thought that by putting our forces together, that we can be even more effective than we have been ... over these past eight or nine months.”