Through the manipulation of financial data, the share price of a corporation remains artificially inflated based on fictitious performance indicators provided to the investing public. While the number of cases involving the falsification of financial information remains relatively stable, the FBI has recently observed a spike in the number of corporate fraud cases involving sub prime lending institutions, brokerage houses, home building firms, hedge funds, and financial institutions, as a result of the financial crisis partly caused by the collapse of the sub-prime market in the fall of 2007.In addition to significant financial losses to investors, corporate fraud has the potential to cause immeasurable damage to the U. As a result of the current financial crisis, trillions of dollars in shareholder value has been lost; several prominent companies, i.e., Lehman Brothers, have gone out of business; several prominent banks, i.e., Indy Mac Bank and Washington Mutual, have failed; and the federal government has provided over a trillion dollars in relief to keep other companies from failing, i.e., American Insurance Group, General Motors, and Citi Group.
In addition, before these companies’ stocks rapidly declined in value, executives with insider information sold their equity positions and profited illegally. However, the current financial crisis resulted in the exposure of several large Ponzi schemes perpetrated not on an individual community level, but on a corporate national level by executives of what were once considered legitimate investment brokerages, i.e., Bernard L. Corporate fraud remains the highest priority of the Financial Crimes Section and the FBI is committed to dealing with this significant crime problem.As of the end of FY 2008, 545 corporate fraud cases are being pursued by FBI field offices throughout the U.As publicly traded companies suffered financial difficulties due to sub-prime market, analyses of company financials have identified instances of false accounting entries, and fraudulently inflated assets and revenues. In addition to the sub-prime market issue, corporate fraud matters involving seal-dealing by corporate executives, particularly utilizing companies to perpetrate large scale Ponzi fraud schemes, continue to be an issue of concern.Investigations have determined that many of these companies manipulated their reported loan portfolio risks and used various accounting schemes to inflate their financial reports. Traditionally, Ponzi schemes were perpetrated by individuals or small groups within a community environment.A sub prime lender is a business that lends to borrowers who do not qualify for loans from mainstream lenders.
Once the sub-prime loans have been issued, they are bundled and sold as securities, a process known as securitization.The Federal Bureau of Investigation (FBI) investigates matters relating to fraud, theft, or embezzlement occurring within or against the national and international financial community.These crimes are characterized by deceit, concealment, or violation of trust, and are not dependent upon the application or threat of physical force or violence.Based upon field office crime surveys, current trends in the white collar crime arena, and directives established by the president, the attorney general, the Director, and the Criminal Investigative Division, the following national priorities for the White Collar Crime Program (WCCP) have been established: public corruption, corporate fraud/securities fraud, health care fraud, financial institution fraud (to include bank failures and mortgage fraud), money laundering, insurance fraud and mass marketing fraud.Although public corruption is a national priority within the WCCP, it will not be addressed in this report.The mission of the National Mortgage Fraud Team is to identify, target, disrupt, and dismantle criminal organizations and individuals who engage in fraud schemes which impact financial institutions particularly in the areas of mortgage fraud and bank failures.