Mueller says FBI swamped by fraud

The Washington Times Weekly - - National - BY BEN CONERY

An ex­plo­sion of mort­gage fraud cases have stretched thin FBI re­sources for other white-col­lar in­ves­ti­ga­tions, ac­cord­ing to bureau of­fi­cials.

FBI Di­rec­tor Robert S. Mueller III on March 25 told the Se­nate Ju­di­ciary Com­mit­tee that the num­ber of agents in­ves­ti­gat­ing mort­gage fraud has more than dou­bled in the past two years. He said 250 agents are in­ves­ti­gat­ing such cases, up from 120 in 2007.

“We have been shift­ing per­son­nel within the crim­i­nal branch to the ex­tent pos­si­ble,” he said. “We have been us­ing new an­a­lyt­i­cal tech­niques to bet­ter iden­tify trends and vi­o­la­tors, and we have been build­ing up ex­ist­ing part­ner­ships to fur­ther en­rich ex­per­tise and re­sources.”

Af­ter the tes­ti­mony, an aide to Mr. Mueller said the bureau has had to shuf­fle the pri­or­i­ties of FBI’s 1,800-agent white-col­lar pro­gram to han­dle the crush of mort­gage-fraud cases. The bureau has been forced to scale back its in­ves­ti­ga­tions into other types of fraud, and the FBI now re­quires that the cases be more se­ri­ous to get in­volved.

The aide, who said the FBI has not pulled back in­ves­ti­ga­tions re­lated to ter­ror­ism and vi­o­lent crime, noted there are other law en­force­ment agen­cies that can han­dle fraud cases.

In Con­necti­cut, for ex­am­ple, some cases that would have been in­ves­ti­gated by the FBI are now han­dled by the Con­necti­cut Fi­nan­cial Crimes Task Force, which in­cludes the U.S. Postal In- spec­tion Ser­vice, the Se­cret Ser­vice, the State Depart­ment Diplo­matic Se­cu­rity Ser­vice, and state and lo­cal po­lice.

This rise in mort­gage-fraud in­ves­ti­ga­tions, par­tially the re­sult of the col­lapse in hous­ing val­ues and the eco­nomic re­ces­sion, comes as the FBI strug­gles to sta­bi­lize the Crim­i­nal Divi­sion, which in­ves­ti­gates white-col­lar of­fenses such as mort­gage fraud along with other fed­eral crimes. The Crim­i­nal Divi­sion lost 2,000 agents to the Na­tional Se­cu­rity Divi­sion as part of the bureau’s changed pri­or­i­ties af­ter the ter­ror­ist at­tacks of Sept. 11, 2001.

“But the log­i­cal con­se­quence of can­ni­bal­iz­ing our crim­i­nal re­sources to aug­ment our na­tional se­cu­rity ef­forts is that we have re­duced the abil­ity to surge re­sources within our crim­i­nal branch,” Mr. Mueller said. “Al­though we have be­gun an ef­fort to re­build our crim­i­nal re­sources back to our pre-9/11 lev­els, we still have a sub­stan­tial way to go.”

Mr. Mueller said the bureau hopes to hire 850 new agents in 2009.

There will cer­tainly be work wait­ing for them. Mr. Mueller said the caseload for mort­gage fraud has in­creased in the past three years from 700 to 2,000 ac­tive in­ves­ti­ga­tions. In the past two years, he said, the bureau has helped to suc­cess­fully pros­e­cute be­tween 800 and 900 mort­gage fraud cases, most of which are re­lated to prop­erty-flip­ping scams and peo­ple ly­ing on mort­gage applications.

“The pub­lic at­ten­tion is very brief, and it would be, I think, very help­ful to our over­all sys- tem in this eco­nomic cri­sis and give pub­lic as­sur­ance,” said Sen. Arlen Specter, Penn­syl­va­nia Repub­li­can. “I have the ques­tion all the time, ‘What’s go­ing on? Where is the ac­count­abil­ity? Who’s go­ing to go to jail?’”

Mr. Mueller re­sponded by say­ing some cases are on a “fast track” for prose­cu­tion.

In a writ­ten state­ment given to the com­mit­tee be­fore his testi- mony, Mr. Mueller said re­ports of mort­gage fraud in­creased 36 per­cent dur­ing 2008 for a to­tal of 63,173 re­ports. The bureau has al­ready re­ceived 28,873 com­plaints this year, he said.


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