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Obama Deploys Financial Fraud Task Force

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Obama Deploys Financial Fraud Task Force

Business

Obama Deploys Financial Fraud Task Force

Obama Deploys Financial Fraud Task Force

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The Obama administration has launched the Financial Fraud Task Force to investigate issues related to the economic crisis. The Department of Justice will lead the task force's efforts to combat fraud in such areas as mortgage lending, stimulus spending and the government's bailout of the financial sector. Host Liane Hansen talks with Department of Justice Associate Attorney General Tom Perrelli, who will be one of the leaders of the task force.

LIANE HANSEN, host:

This past week, the Obama administration announced the creation of a new Financial Fraud Enforcement Task Force. Its mission: to investigate and prosecute financial crimes and fraud. Tom Perrelli will be one of the leaders of the new task force. He's the associate attorney general at the Department of Justice, and he's in the studio. Welcome to the program.

Mr. TOM PERRELLI (Assistant Attorney General, Department of Justice): Thank you, Liane.

HANSEN: Tell us how this new task force is going to be organized.

Mr. PERRELLI: The new task force is going to bring together many federal agencies, prosecutors, investigators, regulators to work together in a coordinated way, share information and cooperate to investigate financial fraud, and not just the kind of corporate fraud that has been a focus in the past, but the kind of fraud that affects everyday people such as mortgage fraud and discrimination.

HANSEN: Give us the flowchart briefly. Department of Justice is at the top?

Mr. PERRELLI: The attorney general is the lead. Treasury and Housing and Urban Development and the Securities and Exchange Commission will be major parts of the task force. But we'll also involve other federal agencies like the Federal Trade Commission, other federal regulators and then cooperate with state attorneys general, local district attorneys.

HANSEN: The Obama administration took office almost a year ago, so why this task force now? Is there something about the timing of the announcement?

Mr. PERRELLI: We started working on these issues, really, on day one. Attorney General Holder announced from the very outset that he wanted to reinvigorate the department's mission in fighting traditional crime with fraud being a centerpiece of that. We worked to develop this larger interagency framework, really, one of the largest interagency task forces ever related to law enforcement. It took some time to put that together, but we haven't stood still while we've been building the task force.

HANSEN: You touched on some of the things the task force will investigate. Just give us a little list.

Mr. PERRELLI: Sure. Corporate fraud and securities fraud, mortgage fraud, discrimination - things like predatory lending - Recovery Act fraud, fraud against the government for stimulus-related funds, as well as fraud against individuals, which we've seen a good deal of that kind of fraud and loan modification scams, those kinds of things.

HANSEN: So, how much power does this task force have? I mean, is it symbolic or do you expect tangible results?

Mr. PERRELLI: We do expect tangible results. There are reservoirs of information in state and local authorities all across the government that we need to bring together to ensure that we identify the next kind of fraud that's going to be afflicting the American public and take steps as soon as possible to root it out.

What we learned, really, from the financial crisis was that if you're inattentive, if you don't take action early to root out the fraud, it can grow and grow and then have a much more devastating impact on the public.

HANSEN: Recidivists, people who find loopholes and are able to move from one kind of money-making scheme to another, what is your task force going to do about this?

Mr. PERRELLI: Well, hopefully through the information sharing we're going to be able to identify those individuals more quickly. We have had a lot of success in the area of health care fraud, of identifying patterns of schemes and going after them quickly in particular localities and then aggressively moving to the next locality when the fraud moves.

HANSEN: There was a major criminal trial held already that was tied to the financial crisis, and the U.S. government lost - two former Bear Stearns hedge fund managers were acquitted of securities fraud earlier this month. What kind of expectations should we have that this new task force is going to be more effective?

Mr. PERRELLI: I don't think you can - the result in any particular case doesn't tell you much about what this larger effort will succeed in achieving. I think that this effort is focused not just on prosecuting cases and bringing to justice individuals, but we're also focused on recovering funds for the American taxpayer, as well as particular individual victims.

We are working to train states and localities, inspector generals and even private companies on how to avoid fraud, how to detect it and how to prevent it in the future, so we have less fraud going forward.

HANSEN: Tom Perrelli is the associate attorney general at the Department of Justice. Thanks for coming in.

Mr. PERRELLI: Thank you very much.

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