FBI released in February 2012 its financial fraud report highlighting an increase in securities, corporate, and commodities fraud cases. The report was called “Financial Crimes Report to the Public.”
In fiscal year 2011, corporate fraud cases resulted in 242 indictments or informations and 241 convictions. The FBI’s securities and commodities fraud cases resulted in 520 indictments or informations and 394 convictions. The report covers the period from October 1, 2009 to September 30, 2011. The report is available on the Department of Justice website, and details different types of fraud schemes.
On corporate fraud, the FBI “focused its efforts on cases which involve accounting schemes, self-dealing by corporate executives, and obstruction of justice.” The FBI noted the “majority of corporate fraud cases pursued by the FBI involve accounting schemes designed to deceive investors, auditors, and analysts about the true financial condition of a corporation or business entity.”
As to self-dealing by corporate insiders, such as officers and directors, the FBI investigated insider trading, kickbacks, the misuse of corporate property for personal gain, and tax violations. Corporate cases included the subprime-related corporate fraud investigation regarding Beazer Homes, a subprime-related conspiracy committed by senior executives at Colonial Bank and Taylor, Bean & Whitaker, and the Galleon Group insider trading cases, where a multibillionaire ended up being sentenced years in prison.
The FBI reported an increase in securities and commodities fraud cases, resulting from investors seeking investment opportunities ways to improve their returns. The FBI emphasized a rise of Ponzi schemes, and foreign-based reverse merger market manipulation schemes. The FBI identified investment fraud schemes, including affinity fraud, where the perpetrators and victim share similarities, such as religion or ethnic identity, pyramid schemes, Prime Bank investment fraud, advance fee fraud, promissory notes issued by unknown or nonexistent entities, Foreign Currency Exchange fraud, and precious metals fraud. The FBI reported on broker embezzlement and late-day trading.
The financial fraud report also detailed fraud based on subjects other than financial, such health care and mortgage. The report gave tips on how the public could protect itself from the financial crimes.
Detailed in the report, also, were recent initiatives that would attempt to crack down on financial crimes. One such initiative would be the Financial Intelligence Center which would provide in depth analysis of intelligent data to identify potential scams or financial criminal systems.
Sam Maker is a general law blogger and a contributor to Consumer Fraud Online