FBI officials struggle to handle wave of finance cases
White-collar crime agents cut amid terror focus
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WASHINGTON - The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country's economic crisis, according to current and former bureau officials.
The bureau slashed its criminal investigative workforce to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas such as white-collar crime, which has taken on urgent importance in recent weeks because of the nation's economic woes.
The pressure on the FBI has recently increased with the disclosure of criminal investigations into some of the largest players in the financial collapse, including
So depleted are the ranks of the FBI's white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau's attention in cases involving possible frauds of millions of dollars. Some companies victimized by fraud have begun turning to private investigators and accountants to do the legwork in the cases before turning their work over to the FBI.
Since 2004, FBI officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism.
According to previously undisclosed internal FBI data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes such as mortgage fraud, with a loss of 625 agents, or 36 percent of its 2001 levels.
Overall, the number of criminal cases that the FBI has brought to federal prosecutors - including a wide range of crimes such as drug trafficking and violent crime - dropped 26 percent in the last seven years, going from 11,029 cases to 8,187, Justice Department data showed.
"Clearly, we have felt the effects of moving resources from criminal investigations to national security," said the FBI's assistant director, John Miller. "In white collar crime, while we initiated fewer cases overall, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims."
But Justice Department data, which include cases from other agencies, such as the Secret Service and Postal Service, illustrates the impact. Prosecutions of frauds against financial institutions dropped 48 percent from 2000 to 2007, insurance fraud cases plummeted 75 percent, and securities fraud cases dropped 17 percent.
Statistics from a research group at Syracuse University, the Transactional Records Access Clearinghouse, using different methodology and looking only at the FBI, show an even steeper decline of nearly 50 percent in overall white-collar crime prosecutions during the same period.
In addition to the investigations into Fannie Mae and Freddie Mac, the FBI is carrying out investigations of
No one has suggested that a quicker response would have averted the mortgage meltdown, but some officials said a faster reaction might have deterred more of the early schemes.
"They were very late to the game," Representative Zoe Lofgren, a Democrat from California. "They were not on top of this, and they're just now starting to really do something."
