FBI Fighting Financial Fraud, Mueller Testifies

FBI Director Robert S. Mueller, III, testified before the Senate Judiciary Committee today and spoke about a number of important subjects, including many that interest us here at the Financial Fraud Law blog.  For example, Mueller stated that, “Internet fraud and identity theft remain a growing problem, as the Internet Crime Complaint Center (IC3) reported a 22 percent increase in reported offenses, with more than 330,000 complaints involving more than $550 million in losses. These cyber incidents and frauds undermine the integrity of the Internet, threatening the privacy and pocketbooks of all who use it.” 

To combat cyber threats, Mueller noted that the FBI has “cyber squads in each of our 56 field offices with more than 1,000 specially trained agents, analysts, and digital forensic examiners.” He added that the FBI has “also led the development of the National Cyber Investigative Joint Task Force, which now includes 17 intelligence and law enforcement partners working side-by-side to identify the source of national security threats and significant Internet schemes.”
 
Mueller added that financial crimes “ranging from major mortgage and corporate frauds to the scourge of large-scale health care frauds continue to pose a significant threat to our nation’s financial and health care systems.” These frauds “directly victimize millions of homeowners, shareholders, and those seeking health care.”
 
Mueller pointed out that the FBI “continues to uncover massive frauds and Ponzi schemes in the wake of the financial crisis.” He added that, in June, “Lee Bentley Farkas, former chairman of Taylor, Bean, and Whitaker, was charged with a $1.9 billion fraud that contributed to the failure of Colonial Bank, one of the 50 largest banks in the United Sates. Just this month, Nevin Shapiro, owner and former chief executive officer of Capitol Investments, was charged in an $880 million Ponzi scheme involving his firm in New Jersey. Over the past four months, the prosecutions of the Galleon insider trading case in New York and the Petters $3.9 billion Ponzi scheme in Minnesota continued with guilty pleas and significant sentences of top-level corporate executives.”
 
In his testimony, Mueller explained that the FBI has 23 mortgage fraud task forces and 67 mortgage fraud working groups nationwide and created the National Mortgage Fraud Team, which oversees the FBI’s mortgage fraud program.
 
The FBI’s focus on health care fraud “is no less important,” Mueller added. He noted that, two weeks ago, Medicare fraud strike forces in Miami, Baton Rouge, Brooklyn, Houston, and Detroit announced charges against 94 individuals involved in more than $251 million in alleged false claims to federal health care programs. These charges involved alleged fraud schemes that continue to plague the Medicare system related to billing for physical therapy, occupational therapy, home health care, durable medical equipment, and HIV infusion treatments. Mueller said that the number of pending FBI health care fraud investigations “has steadily increased to more than 2,500 cases,” adding that, in the past 18 months, “more than 1,600 defendants have been charged at both the federal and state level and more than 1,100 defendants have been convicted in these health care fraud investigations.”
 
Finally, Mueller said that the FBI recognizes “that fighting public corruption is vital to preserving public confidence in government, protecting our borders, and securing our communities.” He said that in the past two years, the FBI “has contributed to the successful prosecution of approximately 1,600 federal, state, and local officials in corruption matters which were prosecuted in both federal and state courts throughout the country.” That’s the tip of the iceberg; according to Mueller, another 3,200 public corruption investigations are pending, approximately 2,500 of which involve public officials.