As prepared for delivery
Thank you, President [Lee] Bollinger. I appreciate your kind words, and I want to thank you and Dean [David] Schizer for the outstanding leadership that you provide to an institution and an academic community that mean a great deal to me. I’d also like to thank the distinguished faculty members, staff, and alumni who are here with us – as well as the law students, graduate students, and undergraduates who continue to make Columbia such an extraordinary place.
It’s a privilege to join with so many members of the Columbia family. And, as always, it’s good to be home. Like many of you, I was born, raised, and educated in New York. I count the seven years that I spent here in Morningside Heights to be among the great blessings of my life.
Here on this campus, my interest in the law, my understanding of its remarkable power for good, and my desire to serve our nation’s justice system first took hold. And although more than 35 years have passed since I completed my law degree – and started my “dream job” as a prosecutor in the United States Department of Justice – my time at Columbia shaped and enriched my life in ways that I am still realizing, and continue to appreciate.
That’s why – throughout my career, and especially during my tenure as Attorney General – I’ve returned to this campus often. And, tonight, as we turn our attention to some of the most urgent and complex challenges facing our nation, I am grateful to be among so many current and future leaders – and fellow beneficiaries – of the culture of service, of excellence, and of optimism that has always distinguished this institution – and continues to reflect this country’s highest ideals.
In particular, I’d like to discuss something that another Columbia alumnus recently described – when he delivered last month’s State of the Union Address – as “the defining issue of our time.” That issue – as President Barack Obama, a proud member of the College Class of ’83, stated – is “how to keep the basic American promise alive.” For more than two centuries, this promise – that hard work is rewarded; that misconduct is punished; that the American economy is an engine of progress; that our institutions are worthy of the public trust; and that doors to opportunity, and to prosperity, are open for all citizens – has brought the American people together and made our nation an example for all the world. But this promise must constantly be reaffirmed and renewed.
Tonight, I’d like to tell you about some of the ways in which today’s Justice Department is working to do just that – to hold accountable those who have violated our laws and abused the public trust; to restore faith in our financial markets and institutions; and to support and seek justice for those who’ve been devastated by our nation’s recent economic crisis.
Here in New York, and in cities and communities nationwide, the signs – and the scars – of this crisis are not hard to find. Millions of hardworking Americans have lost their jobs and their homes, as well as their hard-earned savings and financial security. Just as tragically, many of our fellow citizens have lost faith. Although a range of contributing forces brought us to this point, the roots of our recent economic collapse can – in many ways – be traced to instances of unethical and reckless misconduct that took place in major financial centers like Wall Street. These abuses have driven away many who were once willing to invest in our economy, and destroyed once-thriving communities. And some of the practices that have been uncovered have placed unprecedented – and unfair – challenges before cash-strapped governments, local police departments, small businesses, and American workers and consumers.
In response, over the last three years, the Justice Department – and a host of our federal, state, and local partners – have come together in an unprecedented national effort to combat and prevent a wide range of financial-fraud crimes. From securities, bank, and investment fraud; to mortgage, consumer, and health-care fraud – we’ve found that these schemes are as diverse as the imaginations of those who perpetrate them, and as sophisticated as modern technology will permit. Yet, I am pleased to report that our record of success has been nothing less than historic. And, this evening, I’m proud to be joined by some of the leaders who are on the front lines of this work, including: United States Attorney David Fein, of the District of Connecticut; U.S. Attorney Paul Fishman, of the District of New Jersey; U.S. Attorney Loretta Lynch, of the Eastern District of New York; and U.S. Attorney for the Southern District of New York – and a fellow Columbia Law alumnus – Preet Bharara.
Many of you may also recognize Preet from the cover of last week’s TIME Magazine, where he was featured as the man who is “busting Wall Street.” But, as the article lays out in black and white, Preet is more than just the face of this work. He, Loretta, Paul, David – and their colleagues all across our U.S. Attorneys’ community and throughout the Justice Department’s Civil and Criminal Divisions – are making meaningful, measurable progress in this fight to ensure stability, accountability, and – above all – justice in the wake of once-in-a-century financial challenges.
Like the federal prosecutors that many of you are hoping to – and, no doubt, will – become, they are aggressive. They are committed. And they have proven their willingness to perform the exhaustive, time-consuming, and unglamorous but essential work – which often takes place far from the public eye – that allows us to move our anti-fraud efforts forward. Thanks to them, and to many other key leaders – including Lanny Breuer, the head of the Department’s Criminal Division and yet another Columbia Law alumnus – we’ve found that much of the conduct that led to the financial crisis was unethical and irresponsible. But we also have discovered that some of this behavior – while morally reprehensible – may not necessarily have been criminal.
Believe me, I understand – and I often hear about – the public desire to, as one pundit put it, “see the handcuffs come to Wall Street.” So, let me assure you: whenever and wherever we do uncover evidence of criminal wrongdoing, we will not hesitate to bring prosecutions. When we don’t, we will continue to use other tools available to us – such as civil sanctions – to hold people and institutions accountable.
Our track record makes this clear. And it’s a record I’m proud of. Since the beginning of this Administration, the Justice Department has taken bold, unprecedented steps to address the causes and consequences of our economic crisis – largely through the collaboration made possible by the interagency Financial Fraud Enforcement Task Force. I am honored to chair this initiative. Since President Obama launched it in 2009, the Task Force has been a model of success. It represents the largest coalition ever assembled to combat financial fraud. Not only has it streamlined the investigative and enforcement efforts of multiple agencies and offices, it also has allowed us to make the most of increasingly limited resources – and to recover, and more effectively utilize, precious taxpayer dollars.
So far, this approach is paying dividends. Since its creation, the work of the Task Force has resulted in charges – and sentences – against CEOs, CFOs, corporate owners, board members, presidents, general counsels, and other executives of Wall Street firms, hedge funds, and banks involved in financial-fraud activities.
In just the last six months, the Justice Department has achieved prison sentences of up to 60 years in a variety of cases charging securities fraud, bank fraud, and investment fraud. We obtained a conviction – and record prison sentence – in the largest hedge-fund insider-trading case in U.S. history. And we’ve secured lengthy prison terms for the architects of multimillion-dollar Ponzi schemes involving hundreds of investors.
In addition to advancing these and other successful prosecutions, the Task Force has helped us to identify and focus on priority areas. For example, in recent weeks, it has given rise to two important working groups that will help take our comprehensive anti-fraud efforts to the next level.
As some of you know, last month, I convened the first-ever meeting of the Residential Mortgage-Backed Securities Working Group, which brings together a variety of partners – including New York State’s Attorney General, Eric Schneiderman – and other key leaders, in order to marshal and strengthen current state and federal efforts to investigate and prosecute abuses in the residential mortgage-backed securities market.
And, through another multi-level partnership between the Departments of Justice and Housing and Urban Development, other agencies, and 49 state attorneys general – we recently achieved a landmark $25 billion agreement with the nation’s top five mortgage servicers. This marked the largest joint federal-state settlement in our nation’s history. And it will provide significant assistance to struggling homeowners and communities – and to those who lost their homes due to unfair and improper mortgage practices. Of course, this settlement will not – by itself – cure all that ails our housing market. But – combined with other measures we are taking – it is a step in the right direction, toward the housing recovery that our nation so badly needs.
This settlement underscored the essential work being led by U.S. Attorneys like Loretta – whose office issued multiple subpoenas, reviewed more than two million documents, and interviewed numerous witnesses over the course of a three-year investigation that paved the way for this agreement. But – as I know her team would be quick to point out – this is only the beginning. Through the newly-formed Residential Mortgage Backed Securities Working Group, we intend to build on these efforts. In fact, already, as part of current investigations, the Department has issued civil subpoenas to 11 different financial institutions. And, although I can’t go into detail about ongoing investigations, I can tell you that we expect more to follow.
In addition, we continue to bring the full resources of the Task Force to bear in combating other types of financial fraud. For example, over the last two fiscal years, we’ve indicted more than 2,100 individuals for mortgage-fraud related crimes.
In 2011, the Civil Rights Division – through its new Fair Lending Unit – settled or filed a record number of cases – including a $335 million settlement, the largest fair lending settlement in history – to hold financial institutions accountable for discriminatory practices directed at African and Hispanic Americans.
This type of collective action – across all levels of government, state boundaries, and even party lines – is precisely what the challenges before us demand. It’s also what the American people deserve. And it’s why we’re bringing the same approach to our fight against financial fraud schemes that target consumers.
Just ten days ago, I convened the first meeting of another newly-formed Task Force component – the Consumer Protection Working Group – which will enhance civil and criminal enforcement of consumer fraud. This Working Group will also focus on raising public awareness about common schemes – and ways to report them – so that potential victims have the information they need to fight back. Such prevention efforts are vital. As we’ve seen all too clearly, consumer fraud schemes can cause extensive losses, financially cripple vulnerable Americans, and – in some instances – even threaten the safety and soundness of our financial institutions.
For instance, we recently identified an individual who victimized more than 350,000 small businesses and – by placing unauthorized charges on the phone bills of unsuspecting consumers – caused over $75 million in losses. We also uncovered and shut down a telemarketing fraud scheme that spanned 46 states – and resulted in more than $25 million in consumer injuries; as well as a business-opportunity scheme that victimized more than 87,000 people by selling worthless training and job referral services to those who were desperately in need of work – causing $6 million in additional losses to cash-strapped consumers.
Fortunately, the perpetrators behind these schemes now have a few things in common: they’ve all been caught, convicted, and sentenced to lengthy terms in prison. And I’m confident that the recent efforts we’ve launched will allow the Justice Department – and our law enforcement partners – to build on the momentum we’ve created in combating financial fraud.
There is perhaps no better illustration of this progress than our groundbreaking work to combat health-care fraud. Over the last fiscal year alone – in cooperation with the Department of Health and Human Services and other partners, and by utilizing authorities provided under the False Claims Act and other critical statues – we were able to recover nearly $4.1 billion in funds that were stolen or taken improperly from federal health-care programs. This is an unprecedented achievement – and it represents the highest amount ever recovered in a single year.
At the same time, we opened more than 1,100 new criminal health-care fraud investigations, secured more than 700 convictions, and initiated nearly 1,000 new civil health-care fraud investigations. And our investments in this work are yielding extraordinary returns. In fact, over the last three years, for every dollar we spent combating health-care fraud, we’ve been able to return an average of seven dollars to the U.S. Treasury, the Medicare Trust Fund, and others.
These numbers are stunning. Despite this progress, I realize that this is no time to become complacent. And I can assure you that for me, for President Obama, and for our colleagues across the Administration, the fight against all types of financial fraud will continue to be a top priority.
From our financial markets to our most critical health-care programs, we know that unscrupulous individuals and organizations will always be there to try and game the system, to steal from taxpayers, and to take advantage of the most vulnerable among us. And no matter how aggressive or wide-ranging our efforts become, it simply won’t be possible to stop or prevent every instance of fraud across the country.
I know that, for some, that’s a sobering thought. But, for the Justice Department, it’s also a call to action – and a challenge that we keep before us each day.
As we continue working to identify and implement the solutions we need to advance our fight against financial fraud, I’m certain that we’re on the right path. This struggle in which we are engaged is about fairness. It is about opportunity. And it is about accountability. We will be aggressive – yet measured – in our efforts. We will be comprehensive in our investigations – yet realistic in the solutions we seek. If we are successful – and we will be – this approach will help to strengthen our economy, by encouraging investment and by providing a level playing field to drive growth.
I am convinced that the impact of our recent economic catastrophe can be reversed, but only if the means by which economic gains are created are appropriately regulated. This will not, as some might claim, stifle competition or investment – it will encourage them. The perception and reality of fairness – and the existence of clear rules – are boons to growth. The absence of them keeps potential stakeholders on the sidelines – and allows insiders to dominate in a way that adversely affects our larger society. Recent history demonstrates that this is not mere theory. The lack of appropriate and meaningful regulation was, without question, a primary contributor to the economic decline we’re now struggling to overcome.
However, as I look out over this crowd – at the colleagues and partners gathered here, and especially at the future leaders who will soon take up this fight – I cannot help but feel confident about where we’re heading.
Each one of you, as members of the Columbia community, are part of a long and celebrated tradition – of individuals who are unwilling to sit on the sidelines of history or miss an opportunity to work toward, and fight for, justice. Though we may be separated generationally, we are united by this legacy – as well as the critical responsibilities that we share: to safeguard our nation’s progress, to restore its prosperity, to ensure its security and strength, and to help keep that most basic American promise – of opportunity, of fairness, and of justice for all.
Thank you for your commitment to this work – and thank you for allowing me to discuss it with you today.