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Cases against Wall Street lag despite Holder's vows to target financial fraud
"Not every case can be brought, and it's very easy for people to want to see heads roll and sometimes understandable when they do. But it's not possible to roll the head if you don't have the evidence," said Preet Bharara, the U.S. attorney in Manhattan, who sources said is overseeing some of the highest-priority investigations. He added: "We have never been working harder, have never put so many resources into investigating and prosecuting corporate fraud in this office. . . . If there is anything to get to the bottom of, we will."
Kevin L. Perkins, assistant director for the FBI's Criminal Investigative Division, said Wall Street and other corporate investigations involve "very highly paid, educated and sophisticated" targets who argue that they warned investors of potential risks. Prosecutors must prove a deliberate intent to defraud.
"Is that a valid defense that makes it hard? From a criminal standpoint, it is, yes," Perkins said.
The political imperative to bring cases shows no sign of weakening, with the administration pushing for financial reform legislation and key senators calling for prosecutions.
The administration has also raised expectations. The Justice Department, which secured a 12 percent budget increase to fight financial fraud this year, is requesting 23 percent more in 2011. Neil H. MacBride, the U.S. attorney in Alexandria, recently announced a Virginia financial fraud task force.
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When Holder unveiled the broader task force with some fanfare in November, he embraced the administration's message that "Wall Street does not play by the same rules as Main Street." In his prepared remarks, still posted on the Justice Department's Web site, he warned "unscrupulous executives" and others that "we will investigate you, we will prosecute you, and we will incarcerate you."
The task force is run by Executive Director Robb C. Adkins, 39, a former Enron prosecutor who was chief of the U.S. attorney's office in Orange County, Calif. Adkins works out of the fourth floor of department headquarters.
The administration calls the panel the broadest government coalition ever assembled to combat fraud. More than 20 agencies, from the Securities and Exchange Commission to the Treasury Department's Financial Crimes Enforcement Network, share information and coordinate cases.
The task force also aims to help fraud victims. It has hosted mortgage-fraud "summits" and the Web site, http:/
The administration has brought major cases, including Tuesday's arrest of Lee Bentley Farkas, who led Florida-based Taylor, Bean & Whitaker. He is charged in federal court in Alexandria in a $1.9 billion fraud scheme that led to the failure of a large regional bank.
But in two Wall Street cases, both filed in the Bush administration, the record is mixed. Obama Justice Department prosecutors convicted two former Credit Suisse brokers in a $1 billion subprime mortgage fraud, but the two former Bear Stearns executives accused of lying to investors were acquitted.
Among the companies under investigation, law enforcement sources said, are Deutsche Bank, UBS, Goldman Sachs, Morgan Stanley and the former Lehman Brothers.