Looks like fraud on a massive scale ... so theF.B.I. and Mueller to investigate.
--mindbowler
September 24, 2008
New York Times
F.B.I. Looks Into 4 Firms at Center of the Economic Turmoil
By ERIC LICHTBLAU
WASHINGTON — The Federal Bureau of Investigation, under pressure to look at possible criminal activity in the financial markets, is expanding its corporate fraud inquiries in the wake of the tumult in the last 10 days, officials said Tuesday.
The F.B.I. has now opened preliminary investigations into possible fraud involving the four giant corporations at the center of the recent turmoil — Fannie Mae and Freddie Mac, Lehman Brothers and the American International Group, The Associated Press reported.
A government official, speaking on condition of anonymity because he was not authorized to discuss the issue publicly, said it was “logical to assume” that those four companies would come under investigation because of the many questions surrounding their recent collapse.
F.B.I. officials said Tuesday that the total number of corporate fraud investigations at the bureau was 26, an increase from the 24 open cases cited just a week ago by Robert S. Mueller III, director of the F.B.I. That number stood at 21 as recently as July, but the bureau has not named most of the targets.
Mr. Mueller told members of the Senate Judiciary Committee that the major corporate investigations are aimed at companies that “may have engaged in misstatements in the course of what transpired during this financial crisis.”
He added that “the F.B.I. will pursue these cases as far up the corporate chain as is necessary to ensure that those responsible receive the justice they deserve.”
In addition to the major corporate cases, the bureau said it had about 1,400 open investigations into smaller companies and individuals suspected of mortgage fraud.
Nonetheless, the bureau and the Justice Department have come under pressure from some critics who assert that investigators need to take a broader and more comprehensive approach to the financial inquiries. But Attorney General Michael B. Mukasey has rejected calls for the Justice Department to create the type of national task force that it did in 2002 to respond to the collapse of Enron.
Mr. Mukasey said in June that the mortgage crisis was a different “type of phenomena” that was a more localized problem akin to “white-collar street crime.”
Officials at the Justice Department declined to comment on Tuesday on which companies were under investigation by the bureau. “As part of our investigative responsibility, the F.B.I. conducts corporate fraud investigations,” Brian J. Roehrkasse, spokesman for the department, said in a statement. “The number of cases fluctuates over time. However, we do not discuss which companies may or may not be the subject of an investigation.”
In a major case in June, federal prosecutors in Brooklyn brought conspiracy and securities fraud charges against two portfolio managers at Bear Stearns, which nearly collapsed in June before it was bought for a fire-sale price.
When that prosecution was announced, Deputy Attorney General Mark R. Filip acknowledged that the mortgage crisis “includes a wide variety of criminal acts that have proved devastating to American families.”
Still, several senators at last week’s hearing by the judiciary committee made it clear that they wanted to see the F.B.I. take aggressive steps to investigate possible criminal wrongdoing in connection with the crisis.
Senator Patrick J. Leahy, the Vermont Democrat who leads the committee, told Mr. Mueller that “obviously everybody’s concerned where the U.S. government’s on the hook” for up to $1 billion in bailout costs.
“And if people were cooking the books, manipulating, doing things they were not supposed to do, then I want people held responsible. And I suspect every American taxpayer — I don’t care what their political background is — would like them held responsible,” he said.
