Prosecutors examine new fraud tool
NEW YORK — Federal prosecutors are considering a new strategy for criminally charging Wall Street bankers who packaged and sold bad mortgage loans at the height of the housing bubble, according to a federal official familiar with the investigation.
The official said federal authorities are finding new evidence they say indicates intent to commit fraud over the packaging and sale of mortgage bonds backed by subprime home loans in some of the civil lawsuits plaintiffs' lawyers have filed against large banks.
They are exploring whether they can build criminal cases against bankers by using a 1984 law intended to punish individuals for scamming commercial banks.
The investigators are part of the Justice Department's Residential Mortgage-Backed Securities Working Group, a network of law enforcement agents and prosecutors — state and federal — working together to probe the mortgage market meltdown that helped trigger the 2008 financial crisis.
“The RMBS Working Group members are aggressively investigating both civil and criminal matters across the country,” said Adora Jenkins, a spokeswoman for the Justice Department. “RMBS Working Group members expect to announce more law enforcement actions in the future.”
The group keeps a close eye on every civil suit filed and holds regular conference calls to update its members on developments. It held a daylong meeting on Friday to discuss ongoing investigations and potential new targets, as well as legal strategies, according to the Justice Department.
The strategy involves a shift away from the more widely used securities fraud charge to a less common offense: bank fraud. The advantage is that perpetrators of bank fraud can be charged up to 10 years after their crimes, compared with the five-year statute of limitations on securities fraud, which has already run out on most events leading up to the 2008 crisis. A bank fraud conviction carries up to $1 million in fines and a maximum prison sentence of 30 years.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- After 90 years, Goodyear forces iconic blimp into retirement
- Trib Total Media puts 9 Western Pa. newspapers up for sale
- Bonuses on the rise, but fewer workers receive them, survey shows
- Crash-prevention technology changes face of auto industry
- Model T cross-country road trip provides lesson in simplicity
- Federal Reserve Vice Chairman Fischer in spotlight as meeting nears
- What’s gained at push of a button
- Mylan shareholders approve $34 billion hostile takeover bid for Perrigo
- Regulators expect lawsuit over oil, gas rules process
- Cabrio is lively, luxury alternative to muscle car
- Turbulent week on Wall Street leaves investors wondering what’s next