FBI Warns Of Bailout Fraud

By Phil Villarreal June 3, 2009

It’s not just monolithic corporations, financial institutions, state governments and the like that are benefiting from bailout funds. Scam artists stand to make a killing also, the FBI says:

“These funds are inherently vulnerable to bribery, fraud, conflicts of interest and collusion. There is an old adage, that where there is money to be made, fraud is not far behind, like bees to honey,” FBI director Robert Mueller told an afternoon gathering of business executives.

Law enforcement agencies faced a similar scenario after Hurricane Katrina, with a task force created in the wake of the 2005 storm so far convicting 246 people of fraud and other crimes related to relief funds in Mississippi and Louisiana, Mueller said.

Given the trillions and trillions of dollars involved in the government’s current moves to stem the economic crisis, “from the purchase of troubled assets to improvements in infrastructure, health care, energy and education — even a small percentage of fraud would result in substantial taxpayer losses,” said Mueller, a former U.S. attorney who had specialized in white-collar crime litigation while a lawyer in private practice.

It’s a not-so-surprising yet still chilling horror story from one of the nation’s top law enforcement authorities. Mueller goes on to say that the FBI doesn’t have the resources to track down “every criminal threat,” meaning he’s worried that some fraud will never be discovered.

FBI Director Anticipates New Crime Wave Of Financial Fraud [Morning Star] (Photo: peasap)

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Comments

  1. bloggerX says:
    June 3, 2009 at 4:08 pm

    Oh, so that “Government Funds Are Available to You” e-mail I recieved is fraud???

  2. moosetoga says:
    June 3, 2009 at 4:19 pm

    Man, sounds like fraud is a good option for the unemployed. Best benefit: All wages are under the table.

    • shepd says:
      June 3, 2009 at 4:54 pm

      @moosetoga:

      Another benefit: If you can’t make enough money to pay for your house, you can just turn yourself in and get free room and board. Good deal.

  3. HiPwr says:
    June 3, 2009 at 4:24 pm

    Pales to the bailout fraud perpetrated on the taxpayers by George Bush, Congress, and Barack Obama.

  4. Aphex242 says:
    June 3, 2009 at 4:33 pm

    Yeah there’s a lot of radio commercials I’ve heard lately that start with “Because of the bailout authorized by the U.S. Government, you could stand to save (insert dollar amount here) on (taxes, your credit card bills, mortgage, etc). Call now!”

    It’s deceptive advertising. While that’s a little outside the scope of the article, it’s no less an example.

  5. Possinator says:
    June 3, 2009 at 4:52 pm

    “Financial Institutions” “Scam Artists” what’s the difference?

  6. starrion says:
    June 3, 2009 at 5:57 pm

    Yes. The problem is that so many people are looking for the easy way out, that the ethical base of people that normally wouldn’t take advantage will do so now.

  7. SacraBos says:
    June 3, 2009 at 7:24 pm

    You mean like the AIG bonuses, banks wanting bailout funds to buy their own toxic (and maybe many not so toxic) assets, and the like?

  8. HogwartsAlum says:
    June 3, 2009 at 8:50 pm

    I get emails from the FBI and this was in one of them. They’re going to be very busy.

  9. Skaperen says:
    June 4, 2009 at 1:56 am

    Frauds like these are more and more attractive BECAUSE law enforcement agencies like the FBI and FTC won’t do their job. If it’s an issue of money, they should be explaining these frauds to Congress directly. Get on TV testifying before Congress. Then if Congress doesn’t allocate the funds, the big finger of blame can be redirected at Congress.

  10. econobiker says:
    June 4, 2009 at 1:52 pm

    So basically some of the scum who scammed mortgages with straw buyers etc are now going to be scamming the government on the foreclosed homes etc…

    Great cycle of criminal activity…