Senate To Consider Leahy-Grassley Anti-Fraud Measure During Wednesday’s Session

On Wednesday, April 22, the Senate will consider S.386, the Fraud Enforcement and Recovery Act of 2009 (FERA).  The bill was introduced by Senator Patrick Leahy (D-Vt.), Senator Charles Grassley (R-Iowa), and Senator Ted Kaufman (D-Del.) on February 5, and was reported by the Judiciary Committee on March 5.  The legislation has received broad, bipartisan support and is cosponsored by Senators Arlen Specter (R-Pa.), Charles Schumer (D-N.Y.), Olympia Snowe (R-Maine), Amy Klobuchar (D-Minn.), Tom Harkin (D-Iowa), Carl Levin (D-Mich.), Byron Dorgan (D-N.D.), Sheldon Whitehouse (D-R.I.), Patty Murray (D-Wash.), Jeanne Shaheen (D-N.H.), John Rockefeller (D-W.Va.), Evan Bayh (D-Ind.), Debbie Stabenow (D-Mich.), and Bernie Sanders (I-Vt.).

The Fraud Enforcement and Recover Act will increase the tools available to help prosecutors combat fraud by authorizing funding and amending federal law to give law enforcement enhanced tools for fighting fraud.  More than 60,000 cases of mortgage fraud were reported in 2008, nearly 10 times as many as in 2002.  The bill authorizes funding to increase the number of federal agents, prosecutors, and forensic analysts tasked with investigating and prosecuting fraud. 

FERA has received support from organizations including the National Association of Assistant U.S. Attorneys, Federal Law Enforcement Officers Association, National Fraternal Order of Police, Taxpayers Against Fraud, Association of Certified Fraud Examiners, and the U.S. Department of Justice.  On April 20, the administration released a Statement of Administration Policy stating that it “strongly supports enactment of S.386.”

Leahy, Kaufman, and Klobuchar will speak about the legislation at a press conference Wednesday on Capitol Hill in the Radio-Television Gallery at 10:00 a.m.

Fraud Enforcement and Recovery Act (S.386)
Protecting and Recovering Taxpayer Money

The Fraud Enforcement and Recovery Act (FERA) will rebuild the nation’s capacity to investigate and prosecute the mortgage and corporate frauds that have so severely undermined the economy and hurt so many working people.

Just as Congress responded to the Savings and Loan crisis two decades ago, we must take every step necessary to hold accountable those who have done damage to the economy in this current crisis.

The number of fraud cases is skyrocketing, but because resources were shifted away from fraud investigations after 9/11, investigative agencies are drastically understaffed and thousands of fraud allegations are going unexamined.

The Fraud Enforcement and Recovery Act provides new tools for law enforcement to prosecute those responsible for these frauds, and will deter any future fraud exploiting the bank bailout and economic recovery efforts.

·         FERA provides resources for the FBI to bring on 160 additional special agents and more than 200 professional staff and forensic analysts to rebuild its “white collar” investigative program.

·         FERA provides resources for the Justice Department to add up to 200 prosecutors and civil enforcement attorneys nationwide, as well as 100 support staff, to focus on fighting fraud.

·         FERA provides resources for the U.S. Postal Inspection Service, the U.S. Secret Service, and the Inspector General for the Housing and Urban Development Department to hire more than 200 additional fraud agents, analysts and investigators to combat fraud.

The Fraud Enforcement and Recovery Act makes straightforward, important improvements to fraud and money laundering statutes to strengthen prosecutors’ ability to combat this growing wave of fraud.

·         FERA fills statutory gaps to account for modern types of fraud and corrects erroneous court decisions.

·         FERA updates the definition of “financial institution” in federal fraud statutes to include mortgage lending businesses that are not directly regulated or insured by the federal government.  These companies were responsible for nearly half the residential mortgage market before the economic collapse, yet remain largely unregulated and outside the scope of traditional federal fraud statutes.

·         FERA protects funds expended under the Troubled Assets Relief Program (TARP) and the economic stimulus package, including any government purchases of preferred stock in financial institutions.

·         FERA focuses on reaching unregulated conduct and addressing flawed court decisions.

The Fraud Enforcement and Recovery Act strengthens the False Claims Act, one of the best civil tools we have for rooting out fraud in government.  It reverses recent court decisions which have undermined the effectiveness of the Act to recover funds and impose penalties for proven frauds.

These added resources, as well as the bills legal tools, will result in significant increases in recovery of the proceeds of fraud for the government and for victims.  The legislation will not only pay for itself, but bring in money.

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Press Contact

David Carle: 202-224-3693