Jim Kouri
December 6, 2005
White collar crime is not victimless
By Jim Kouri

Since the 1990s, tremendous growth of and involvement in the securities and commodities markets at the institutional, corporate, and private investor levels have led to great numbers of individuals involved in intentional corporate fraud and misconduct, particularly senior corporate executives. For example, the FBI is currently investigating over 189 major corporate frauds, 18 of which have losses over $1 billion. The erosion of public confidence in the management of public companies will, if left unchecked, have a negative impact on the stock markets and capital raising, which will in turn have a negative impact throughout the US economy.

Because government fraud is inextricably linked to the FBI's obligation to combat public corruption and national security threats, the FBI focuses efforts on major schemes with those links. Because serious public health and safety concerns relate to environmental crime, the FBI will enhance its working relationships with federal, state, and local investigative and regulatory agencies to address this crime problem. The FBI will also focus on bankruptcy and antitrust offenses having the greatest negative economic impact.

Health care fraud continues to plague the United States, with losses exceeding $50 billion annually. Frauds involving durable medical equipment, staged auto accidents, and medical transportation services are examples of this pervasive crime problem. In addition to Medicare/Medicaid and private insurers, state providers lose billions of dollars per year to blatant fraud schemes in every sector of the health care industry. As health care spending increases over the coming years with the aging of the "baby boom" generation and Medicare prescription drug coverage, health care fraud is expected to have a corresponding increase.

Financial institution fraud continues to be a significant white collar crime problem throughout the country. Since 9/11, the FBI has refocused its FIF program and is now investigating higher-priority cases to a much greater degree. Large-scale mortgage fraud and identity theft operations, many perpetrated by organized criminal enterprises, also continue to plague the United States.

Aggressive use of anti-money laundering statutes and forfeiture of ill-gotten assets are integral parts of nearly every financial crime prosecution. Many top executives involved in corporate scandals have been charged with money laundering in addition to other criminal violations. Additionally, corrupt money launderers introduce illegal proceeds into the financial community, and this asset flow must be reduced through aggressive prosecution, seizure, and forfeiture.

The ability of the US Government and industry to function effectively is likewise threatened by complex frauds. The amount of taxpayer funds involved in the government procurement process is staggering, as billions of dollars are spent each year on everything from highways to rockets. The GAO estimates that as much as 10 percent of appropriated funds for domestic programs may be lost to fraud in the government procurement and contracting process, and this type of crime is critically linked to public corruption imperatives.

Insurance, telemarketing, and investment frauds often operate across jurisdictional and international boundaries. When losses to individual victims are aggregated, the economic impact can be dramatic. Additionally, antitrust offenses and bankruptcy fraud have a significant negative affect on the US economy, and environmental crimes represent a serious threat to the public health and natural resources of our nation.

The FBI will continue its successful efforts in the white collar crime arena by using its expertise, broad criminal investigative resources, and strong relationships with regulatory agencies to maintain public confidence in the country's financial institutions and markets, ensure the integrity of government expenditures of taxpayer funds, and protect individuals and businesses from catastrophic economic loss.

Fraud by company executives and those in positions of trust not only damages stockholders, but also erodes public confidence in the corporate community at large. The FBI will continue increasing its efforts in this area by using agents and analysts with high degrees of expertise in financial investigations. The sheer complexity of illegal corporate transactions require extraordinary time and commitment to investigate.

Telemarketing fraud typically targets the elderly, one of the most vulnerable segments of our society. The FBI will focus on major telemarketing enterprises, recognizing the difficulties faced by state and local investigators because criminal operations typically cross jurisdictional lines often internationally. Insurance and investment fraud have similar multi-jurisdictional attributes, making enterprises difficult to investigate and prosecute by state and local agencies.

Sources: Federal Bureau of Investigation, US Attorney's Office New York Southern District, National Association of Chiefs of Police, National Security Institute

© Jim Kouri


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Jim Kouri

Jim Kouri, CPP is currently fifth vice-president of the National Association of Chiefs of Police... (more)


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