U.S. authorities disclosed $ 10 billion fraud scheme

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$10 Billion Fraud Scheme

U.S. authorities disclosed $ 10 billion fraud scheme

U.S. authorities reported the results of “Operation Broken Trust,” to stop scams targeting individual investors. As U.S. Attorney General Eric Holder said on Monday, December 6, FBI, IRS and other Federal agencies, working together, were able to identify more than 500 suspects in the fraud scheme.

The Justice Department grouped the cases together under the name “Operation Broken Trust,” but many of the cases were in progress before that operation started in August. In all, officials said that between Aug. 16 and Dec. 1 they have indicted 158 defendants and secured convictions of 104 individuals.

Monday’s announcement comes as federal agencies and the Obama administration are facing pressure to punish big-name companies and individuals for their role in the financial crisis. So far, the U.S. has won few high-profile cases, compared with the aftermath of the savings-and-loan crisis and the dot-com bust.

Some cases make big headlines; some perpetrators are high-profile. Many of the cases today do not share those characteristics,” Securities and Exchange Commission Enforcement Chief Robert Khuzami said at a news conference at the Justice Department to announce the results of the probe.

The cases highlighted Monday mainly targeted what officials said were fraud figures and Ponzi-scheme operators around the country who victimized the elderly and other vulnerable people with pump-and-dump and other scams.

Officials said the schemes harmed more than 120,000 people and that criminals stole thousands and sometimes millions of dollars from victims. The losses from just the criminal cases total $8.3 billion, while losses from the civil cases amount to $2.1 billion.

“These are staggering, staggering numbers,” U.S. Attorney General Eric Holder said at the news conference.

Victims, in many cases, were preyed upon by people they knew well, including their neighbors or members of their church, officials said.

Mr. Khuzami said scams targeting individual investors are on the rise “as more and more people look to third parties to invest their money through intermediaries, money managers and the like.”

Already, 87 defendants have been sentenced for wrongdoing uncovered by the probe, with several people receiving sentences of more than 20 years. One person was sentenced to 85 years behind bars, Mr. Holder said. Meanwhile, civil charges have been filed against 189 people.

FBI Executive Assistant Director Shawn Henry, speaking at the news conference, said officials also aimed to put the public on alert. “The American people need to understand the threat that they face and their responsibility to remain vigilant,” he said.

President Obama set up an interagency task force in November 2009 to investigate financial fraud. Officials across the U.S. government, including from the U.S. Postal Service, the Commodity Futures Trading Commission, the SEC and the Internal Revenue Service, coordinated.

Mr. Henry said 48 out of the FBI’s 56 field offices across the country were involved in the sweep. He added the number of FBI agents assigned to securities-fraud cases has increased nearly 50% during the past three years. Since January 2009, the FBI has opened more than 200 Ponzi-scheme cases, he said.

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