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Holder: Financial Fraud Threatens Our Security

By Dan Weil   |   Tuesday, 12 Jan 2010 12:53 PM

The explosion of financial fraud over the past few years puts the nation’s security at risk, says Attorney General Eric Holder.

Fraud in the securities and investment banking industries has reached the highest level in history, he said in a recent speech.

“One of the greatest … threats facing our economy is the presence of … fraud, particularly in our securities and financial markets,” Holder said.

Video — Eric Holder: Financial Fraud Threatens Our Security

“Threats to our economic system must be addressed with the same seriousness and sense of purpose that guide our efforts to protect the American people.”

The crimes of Ponzi scheme artist Bernard Madoff represent a much larger problem, Holder says.

The Justice Department is investigating more than 5,000 cases of financial fraud, he notes.

“We need a bold strategy equal to the challenge . . . that strikes at the core of financial fraud schemes wherever they may be found.”

He said a newly established Justice Department task force will achieve just that.

“Critical information will be shared in real time across the federal government and with our state and local partners as well, so we can stop fraud schemes in their tracks.”

Holder says the task force will focus on four major types of financial crimes:

• Mortgage fraud: “From the simplest of flip schemes to systematic lending fraud in our nationwide housing market.” The FBI is now investigating more than 2,800 such cases, up most 400 percent from five years ago, Holder said.

• Securities fraud: “From traditional insider trading to Ponzi schemes to
accounting fraud to misrepresentations to investors.”

• Recovery Act and rescue fraud: “That includes the theft of federal stimulus funds and the illegal use of taxpayer dollars intended to shore up our financial institutions.”

• Financial discrimination: “Predatory lending practices in minority communities and the sale of financial products that exploit the elderly and disadvantaged.”

Increased funding in the 2010 budget will boost these efforts, Holder says.

“The budget represents the largest ever single year enhancement to support the Justice Department financial fraud program.”

The efforts are geared to restore investor confidence in the U.S. financial system, punish wrong doing and to get the economy back on track, Holder said.

“I’m confident …we can and we will make measurable, meaningful progress,” Holder said. “We will succeed in restoring the integrity of our markets.”

Holder warned that anyone who uses financial fraud or other types of crime “as an avenue to wealth” is “writing your own ticket to jail.”

Video — Eric Holder: Financial Fraud Threatens Our Security

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The explosion of financial fraud over the past few years puts the nation s security at risk, says Attorney General Eric Holder. Fraud in the securities and investment banking industries has reached the highest level in history, he said in a recent speech. One of the...
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