Legislation & Lobbying

Feds to Target Lawyers in Fraud Cases

Lawyers and other “gatekeepers,” such as mortgage and real estate brokers, should be prime targets in upcoming criminal prosecutions of widespread fraud underlying the current economic crisis, officials said at a Senate Judiciary Committee hearing today.

“They have the most to lose, they’re the most likely to flip, and they make the best examples,” testified Neil Barofsky. He is special inspector general for the Troubled Assets Relief Program, reports a Blog of Legal Times post on the hearing.

However, prosecutorial resources are stretched thin after an exponential increase in mortgage fraud, and the hearing was primarily focused on how these resources can be enhanced, Bloomberg reports.

The FBI now has more than 1,800 open mortgage fraud investigations, double the number in the 2006 fiscal year, the news agency writes.

The proposed Fraud Enforcement and Recovery Act would both expand the potential scope of federal criminal law and provide another $500 million to boost prosecutions, reports Pro Publica.

The bill would broaden the 1863 False Claims Act to permit prosecution of any fraudulent claim for government money or property, even if no government official or employee is directly implicated, and regardless of the defendant’s intent to defraud the government, Government Executive reports.

It is co-sponsored by Sen. Patrick Leahy (D-Vt.) who chairs the committee, and Sen. Charles Grassley (R-Iowa).

Additional coverage:

Associated Press: “FBI may shift counterterror agents to anti-fraud”

CFO: “FBI: 530 Corporate Fraud Probes in Progress”

ABAJournal.com: “FBI Probes 530 Corporate Fraud Cases; 38 Are Tied to the Financial Crisis “

We welcome your comments, but please adhere to our comment policy and the ABA Code of Conduct.

Commenting is not available in this channel entry.