U.S. Attorneys Host Investor Fraud Summits to Educate Consumers

October 2, 2012

In recent years, the Department of Justice has made the fight against financial fraud – particularly fraud targeting consumers and investors – a top priority.  That’s why, starting this week and continuing over the next two weeks, the department – in conjunction with a number of United States Attorneys – will convene a series of regional Investor Fraud Summits across the country.  In Stamford, Conn.; Nashville, Tenn.; Walnut Creek, Calif.; Beachwood, Ohio; Denver; and Miami, these summits will provide a unique educational opportunity, providing information on how investors can avoid becoming victims of common fraud schemes; offering useful strategies for identifying fraudsters; and showcasing new and proactive approaches that can help the American people protect their savings and investments.

As our nation continues to recover from once-in-a-generation economic challenges, and faces an unprecedented rise in investment fraud schemes, these summits are coming at a critical time.  By bringing together Justice Department prosecutors, representatives of the U.S. Securities and Exchange Commission, experts from the Federal Trade Commission, and committed partners from a variety of other federal agencies – as well as consumer advocates and investor fraud victims themselves – these events will provide an important opportunity to share knowledge and expertise relating to a diverse array of devastating – and increasingly common – investment fraud crimes.

Since 2011, estimates suggest that more than $20 billion has been lost to such schemes.  From 2008 to 2011, the FBI saw an overall increase of 136 percent in investment fraud crimes alone.  Currently, these offenses represent 60 percent of all corporate and securities fraud investigations conducted by the FBI. 

As U.S. Attorney David Fein of Connecticut, who hosted this week’s summit has said:

Behind the statistics are individual cases of betrayal that are tragic, cases of lost savings and dreams, of bankruptcies, forced moves and foreclosures, of seniors losing their hard-earned retirement savings having to search for jobs to survive, of medical care no longer affordable.  We approach these cases in a victim-centric way.  We react quickly – and direct our limited resources – to cases involving ongoing fraud.  We look for every opportunity to recover assets for victims.  And, perhaps most importantly, we give voice to victims, by making sure they are heard by the Court.  

U.S. Attorney Melinda Haag of the Northern District of California, who is hosting the summit in Walnut Creek, California on October 9th added:

The U.S. Attorneys and the Department of Justice do not hesitate to bring the full force of federal law enforcement down on those who seemingly without conscience steal everything from some of the most vulnerable people in our society.  In our perfect world, however, fraud schemes, however clever and creative, are simply no longer successful and no one is victimized because people are armed with the information and resources they need to recognize scams and avoid being duped.  These regional summits will help educate communities and assist us in realizing our goal of reducing investor fraud across the country.     

As we have seen in recent years, these crimes not only financially cripple some of our nation’s most vulnerable consumers – they also erode faith in our markets.  They can threaten the stability and soundness of our nation’s financial institutions, undermining the strength of our ongoing economic recovery.  In many cases, their costs can be measured not only in dollars and cents – but in lives and communities turned upside down.

Fortunately, today’s Justice Department has made an historic commitment to fighting back against these crimes – in bold, innovative, and collaborative ways.  In recent years, thanks in large part to the cooperation made possible through the Financial Fraud Enforcement Task Force – which was created in 2009 – we have devoted substantial resources to investigating and deterring fraud crimes that target consumers.  Already, this approach is yielding significant results.

Alongside the Department’s Criminal Division, our U.S. Attorney’s offices have helped to make meaningful progress in ensuring justice for victims of financial fraud schemes.  Since early 2011, roughly 800 defendants have been charged, tried, pled guilty, or sentenced in approximately 500 federal prosecutions involving investor fraud.  We have  secured a 97 percent rate of incarceration for the convicted defendants, with many receiving sentences of 10 years or more.  And in February of this year, in cooperation with the Department of Housing and Urban Development, 49 state attorneys general, and other partners, we reached the largest residential fair lending settlement ever obtained – totaling $25 billion – with five of America’s top mortgage servicers.

Of course, despite these achievements – and the record of success established by the Financial Fraud Enforcement Task Force and its partners across the country – significant challenges remain before us.  Our work is anything but finished.  And government will never be able to address this crisis alone. 

In fact, as Attorney General Eric Holder noted just last month, “in the fight against financial fraud, we cannot simply prosecute our way out of this problem.”  That’s why we are enhancing our public education efforts at every opportunity, and working to equip – and empower – ordinary citizens to identify and stop these crimes.

The Investor Fraud Summits we kick off this week will help to open a new chapter in this ongoing work.  And – thanks to the engagement and vigilance of the American people – there is no question that we stand poised to take our anti-fraud efforts to a new level.

For more information, please visit www.stopfraud.gov  or contact your local FBI office.