Mueller Expects More Corporate Fraud Cases
Director Mueller predicts agency will see "ripple effect" from subprime crisis.
April 18, 2008— -- The number of corporate fraud cases the FBI investigates is set to rise as part of the fallout from the subprime mortgage collapse, director Robert Mueller said today.
"We likely will see more corporate fraud cases in the months to come because of the ripple effect of the subprime crisis and its impact on the credit market," Mueller said in a speech to the American Bar Association.
During the wide-ranging speech on corruption and white collar crime, Mueller briefly expanded on remarks made the day before confirming that the FBI is investigating 19 institutions relating to the subprime lending crisis and the financial and investment vehicles used by those firms.
"We are targeting accounting fraud, insider trading and deceptive sales practices," Mueller said. "These investigations may well lead to other instances of fraud from investment banks and private equity firms to hedge funds."
The FBI director talked about his previous experience in the private sector as a defense lawyer before the ABA's litigation lawyers' annual conference in Washington, D.C.
"I saw executives who did not start out intending to break the law," he said. "They would argue they were playing by the same rules as everyone else. They began to believe their own explanations. But it is a slippery slope from behavior that skirts ethical or legal boundaries to behavior that crosses the line completely."
The FBI has begun to task more agents and field offices to work on financial crime matters. The bureau has about 200 agents working on mortgage fraud investigations.
Wednesday, members of the Senate Appropriations committee expressed concerns that the FBI was not providing enough resources to deal with the increasing number of mortgage fraud cases and the recent trend toward reverse mortgages, which are targeting the elderly and recent retirees.
In his remarks Thursday, Mueller also discussed the bureau's efforts to root out public corruption, the FBI's top criminal priority after counterterrorism and counterintelligence programs.
