5-1.1 POLICY OF THE DEPARTMENT OF JUSTICE
On October 10, 1995, Attorney General Janet Reno issued a memorandum reaffirming the position taken by the Department in 1992 which made "the aggressive prosecution of bankruptcy fraud a high priority of the Department of Justice." In the memorandum, General Reno stated "[i]t is imperative that the integrity of the bankruptcy system, an integral component of our national economy, be preserved and enhanced." She identified the basic components essential to a successful bankruptcy fraud effort--training; a team approach and coordination of all available resources; and prosecutorial discretion that focuses on the merits of a case rather than "a blanket declination policy based solely on dollar amounts." A complete copy of this memorandum is provided at Appendix 5-1.
5-1.2 DUTY TO INVESTIGATE AND REFER
5-1.2.1 United States Trustee, 28 U.S.C. § 586(a)(3)(F)
The United States Trustee has the duty of "notifying the appropriate United States attorney of matters which relate to the occurrence of any action which may constitute a crime under the laws of the United States and, on the request of the United States attorney, assisting the United States attorney in carrying out prosecutions based on such action." It is noteworthy that this section encompasses any crime, not just bankruptcy crimes, and imposes a duty to assist, as well as to report evidence of crimes.
5-1.2.2 Judges and Private Trustees, 18 U.S.C. § 3057(a)
A judge or private trustee "having reasonable grounds for believing that any violation under chapter 9 of this title or other laws of the United States relating to insolvent debtors, receiverships or reorganization plans has been committed, or that an investigation should be had in connection therewith, shall report to the appropriate United States attorney all the facts and circumstances of the case, the names of the witnesses and the offense or offenses believed to have been committed. Where one of such officers has made such report, the others need not do so."
5-1.2.3 Chapter 11 Trustees and Examiners, 11 U.S.C. §§ 1106(a)(3) & (4)
A chapter 11 trustee or examiner has the duty to "investigate the acts, conduct, assets, liabilities, and financial condition of the debtor"; to file a statement of any such investigation conducted "including any fact ascertained pertaining to fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity in the management of the affairs of the debtor"; and to transmit the statement to "any creditors' committee or equity security holders' committee, to any indenture trustee, and to such other entity as the court designates."