ATTORNEY GENERAL ERIC HOLDER SPEAKS AT SOUTHEASTERN REGIONAL INVESTOR FRAUD SUMMIT

FROM: U.S. DEPARTMENT OF JUSTICE

Attorney General Eric Holder Speaks at the Southeastern Regional Investor Fraud Summit

Miami ~ Friday, October 12, 2012

Thank you, Willy, for that kind introduction, and for the great work that you – and your team in the United States Attorney’s Office – are leading here in the Southern District of Florida.

It’s a pleasure to be back in Miami this afternoon, and a privilege to join with so many critical leaders – including the outstanding U.S. Attorneys for the Middle and Northern Districts of Florida, Robert O’Neill and Pamela Marsh; the many dedicated investigators, law enforcement leaders, attorneys, and support staff who stand on the front lines of our anti-fraud efforts every day; as well as a broad range of critical partners – from the FBI, to state and local authorities, to the Federal Trade Commission, the Securities and Exchange Commission, and other agencies – as we explore strategies for advancing the Justice Department’s efforts to prevent and combat investor fraud; and to protect the rights, interests, and security of the American people.

Thank you all for being here. I also want to thank President [Eduardo] Padron, and the Miami Dade College community, for hosting this important Summit. And I want you to know that this entire community – and, especially, the victims of this week’s tragic accident – are in our thoughts and prayers at this difficult time.

Today marks the last of six regional summits that have been convened over the last twelve days in fraud "hot spots" across the country. And I’m grateful that we have such a large and diverse group gathered here. I’d like to extend a special welcome to the experts and allies from the AARP, FINRA , and other private sector, non-profit, and advocacy organizations – who are here to help drive this conversation forward. Finally, I’d like to recognize, and thank, Dr. John Gentile and Manuel Comella for courageously sharing their personal stories with us, for teaching us about the devastating impact that fraud crimes can have, and for raising their voices to help prevent others from being victimized.

Especially today – as our nation continues to recover from once-in-a-generation economic challenges, and as we move to confront a recent, and troubling, rise in investment fraud schemes – the urgency of this work has been brought into stark focus. And, as you’ve been discussing, the need to move both aggressively and collaboratively to help the American people safeguard their homes, their investments, and their hard-earned savings – and to bring fraudsters to justice – has never been more clear.

Recent estimates reveal that, since 2011, more than $20 billion has been lost to investment fraud schemes – and that, between 2008 and 2011, the incidence of these crimes increased by more than 130 percent. The FBI has indicated that these offenses represent an astonishing 60 percent of all corporate and securities fraud investigations that are currently being conducted. And their scope and complexity continues to increase.

From illegal kickback and market manipulation plots, to Ponzi schemes, business opportunity scams, affinity fraud, and "strike it rich" scams – we’ve seen that these crimes are as diverse as the imaginations of those who perpetrate them, and as sophisticated as modern technology will permit. Their costs can be measured not only in dollars and cents – but in lives turned upside down.

Far more compelling than any statistics I can cite are the stories you heard this morning – and thousands like them that play out every day in cities and towns across the country. Heartbreaking stories of bankruptcies, foreclosures, forced moves, and unexpected debt; of individual lives and families shattered by fraud; and of entire communities devastated by the actions of those who violate the law to take advantage of their fellow citizens – and, all too often, their own neighbors, coworkers, and family members.

You’ve all heard these tragic stories – and some of you have seen and experienced the consequences of investor fraud crimes firsthand. Not only do you understand what we’re up against, you also recognize that this problem has reached crisis proportions – that fraud is most frequently committed by seemingly trustworthy individuals who prey upon their fellow community members; and that these schemes often target senior citizens and other vulnerable members of society.

Even more importantly, you know – as I do – that, despite our record of success, and despite the Justice Department’s commitment to fighting investor fraud, government won’t be able to make the progress we need – and attain the results that the American people deserve – on its own. By taking part in today’s Summit, you’ve proven your dedication to helping us confront these challenges. And I want to assure you that you’ll always have a strong partner – and a steadfast ally – in our nation’s Department of Justice, and in your local United States Attorney’s Office.

At every level, my colleagues and I have made the fight against financial fraud a top priority. We’re more determined than ever to eradicate these crimes – and, alongside more than two dozen additional federal government agencies and private sector partners, we’ve made an historic commitment to advancing this work at the national level. We’ve also made remarkable progress.

Driving this effort forward is the Financial Fraud Enforcement Task Force, which constitutes the largest coalition ever assembled to combat financial fraud. I am honored to chair this Task Force – and we can all be encouraged by what it is enabling us to achieve. Since its inception in 2009, the Task Force has helped to leverage the tremendous strength of federal, state, local, and tribal partnerships; to streamline the investigative and enforcement efforts of multiple agencies that can operate across jurisdictions and state lines; and to advance cutting-edge strategies for recovering – and more effectively utilizing – precious taxpayer resources.

Already, this approach is paying dividends. In February, in cooperation with the Department of Housing and Urban Development, 49 state attorneys general, and other partners, the Justice Department reached the largest residential mortgage fraud settlement ever obtained – totaling $25 billion – with five of the nation’s top mortgage servicers. Earlier this year, the Financial Fraud Enforcement Task Force launched a Residential Mortgage-Backed Securities Working Group and a Consumer Protection Working Group to help take our comprehensive fraud-fighting efforts to a new level. On Tuesday of this week, I was proud to join HUD Secretary Donovan and other federal officials in announcing the results of an historic initiative that has helped tens of thousands of homeowners in distress. And just yesterday, I joined with Health and Human Services Secretary Kathleen Sebelius to convene the first-ever meeting of the interagency Elder Justice Coordinating Council – a group that will help guide national efforts to safeguard America’s seniors from neglect, abuse, and financial exploitation, including the fraud crimes we’ve gathered to discuss today.

All of this is only the beginning in our fight against investor fraud. As a result of the cooperation made possible by the Task Force – and thanks to the hard work of investigators, prosecutors, law enforcement officials, and analysts at every level of the Justice Department, in each of our U.S. Attorneys’ Offices, and across a variety of partner agencies and organizations, many of which are represented here – we’ve devoted substantial resources, and an unprecedented level of attention, to stemming the rise in investment fraud schemes. Since the beginning of last year, federal prosecutors have brought a total of roughly 500 cases involving approximately 800 defendants who have been charged, tried, pled, or sentenced because of their alleged involvement in these crimes. And we have secured a 97 percent rate of incarceration for convicted defendants, with many receiving sentences of 10 years or more.

These include a prison sentence of 50 years that was obtained against an individual who preyed on more than 400 elderly victims in a $40 million Ponzi scheme – as well as a sentence of 30 years against another perpetrator who used roughly $15 million that had been entrusted to him by more than 160 retirees to build a home for himself, buy jewelry and luxury cars, pay his friends and family, and make private investments of his own. Right here in the Southern District of Florida, just over two years ago, a high-profile attorney from Ft. Lauderdale pleaded guilty to running a massive $1.2 billion Ponzi scheme – for which he is currently serving a 50-year prison sentence. And last November, we secured a sentence of 20 years against another Florida man who orchestrated a $30 million fraud scheme that victimized more than 500 people.

Here in the Southern Florida, your United States Attorney’s Office has brought together a number of federal and state authorities to fight back against these crimes. To date, their efforts have resulted in charges against more than 100 defendants and over $1.5 billion in restitution ordered. And their work remains ongoing. In fact, just two days ago, Willy and his team – and their colleagues in the Consumer Protection Branch of the Justice Department’s Civil Division – announced yet another indictment charging 10 defendants with participating in a scam that allegedly defrauded thousands of victims – by persuading them to invest in a vending machine business, then failing to deliver on their promises.

Now, these are just a few examples of the significant results we’ve obtained – and the meaningful, measurable progress that’s been made – in our efforts to prevent, deter, and punish fraud targeting investors. Yet there’s no question that serious challenges remain before us. Significant threats are all too common. And it’s only by working together, engaging with relevant authorities at every level, and enlisting the support of an informed public – that we’ll be able to make the difference we need, and capitalize on the momentum we’ve built.

That’s why I made it a priority to be here this afternoon: not only to listen, to learn, and to hear from all of you – but also to pledge my strongest support, and my own best efforts, in carrying this extraordinary work into the future.

Today’s event may mark the last in this series of Regional Investor Fraud Summits – but it proves that our anti-fraud efforts are only just beginning. And, as I look out over this crowd – of dedicated colleagues and indispensible partners – that’s gathered here today, I can’t help but feel confident in where this work will lead us from here. Though this effort is the responsibility of us all, I pledge that this Department of Justice will do whatever is needed to ensure the outcome we want. Our work will not be easy and the completion of our task will take time. But if we remain focused, if we continue to work together, we can, and will, hold accountable those who would prey on our fellow citizens, bring relief to those who have been victimized, and make our nation more safe and more secure.

Thank you.

U.S. ATTORNEY GENERAL ERIC HOLDER SPEECH AT COLUMBIA LAW SCHOOL ON FINANCIAL FRAUD

The following excerpt is from the Department of Justice website:

“Attorney General Eric Holder Speaks at Columbia University Law School on Preventing and Combating Financial FraudNew York ~ Thursday, February 23, 2012
As prepared for delivery

Thank you, President [Lee] Bollinger.   I appreciate your kind words, and I want to thank you and Dean [David] Schizer for the outstanding leadership that you provide to an institution and an academic community that mean a great deal to me.   I’d also like to thank the distinguished faculty members, staff, and alumni who are here with us – as well as the law students, graduate students, and undergraduates who continue to make Columbia such an extraordinary place.

It’s a privilege to join with so many members of the Columbia family.   And, as always, it’s good to be home.   Like many of you, I was born, raised, and educated in New York.   I count the seven years that I spent here in Morningside Heights to be among the great blessings of my life.

 Here on this campus, my interest in the law, my understanding of its remarkable power for good, and my desire to serve our nation’s justice system first took hold.   And although more than 35 years have passed since I completed my law degree – and started my “dream job” as a prosecutor in the United States Department of Justice – my time at Columbia shaped and enriched my life in ways that I am still realizing, and continue to appreciate.

That’s why – throughout my career, and especially during my tenure as Attorney General – I’ve returned to this campus often.   And, tonight, as we turn our attention to some of the most urgent and complex challenges facing our nation, I am grateful to be among so many current and future leaders – and fellow beneficiaries – of the culture of service, of excellence, and of optimism that has always distinguished this institution – and continues to reflect this country’s highest ideals.

In particular, I’d like to discuss something that another Columbia alumnus recently described – when he delivered last month’s State of the Union Address – as “the defining issue of our time.”  That issue – as President Barack Obama, a proud member of the College Class of ’83, stated – is “how to keep the basic American promise alive.”   For more than two centuries, this promise – that hard work is rewarded; that misconduct is punished; that the American economy is an engine of progress; that our institutions are worthy of the public trust; and that doors to opportunity, and to prosperity, are open for all citizens – has brought the American people together and made our nation an example for all the world.   But this promise must constantly be reaffirmed and renewed.

Tonight, I’d like to tell you about some of the ways in which today’s Justice Department is working to do just that – to hold accountable those who have violated our laws and abused the public trust; to restore faith in our financial markets and institutions; and to support and seek justice for those who’ve been devastated by our nation’s recent economic crisis.

Here in New York, and in cities and communities nationwide, the signs – and the scars – of this crisis are not hard to find.   Millions of hardworking Americans have lost their jobs and their homes, as well as their hard-earned savings and financial security.   Just as tragically, many of our fellow citizens have lost faith.   Although a range of contributing forces brought us to this point, the roots of our recent economic collapse can – in many ways – be traced to instances of unethical and reckless misconduct that took place in major financial centers like Wall Street.  These abuses have driven away many who were once willing to invest in our economy, and destroyed once-thriving communities.   And some of the practices that have been uncovered have placed unprecedented – and unfair – challenges before cash-strapped governments, local police departments, small businesses, and American workers and consumers.

In response, over the last three years, the Justice Department – and a host of our federal, state, and local partners – have come together in an unprecedented national effort to combat and prevent a wide range of financial-fraud crimes.   From securities, bank, and investment fraud; to mortgage, consumer, and health-care fraud – we’ve found that these schemes are as diverse as the imaginations of those who perpetrate them, and as sophisticated as modern technology will permit.   Yet, I am pleased to report that our record of success has been nothing less than historic.   And, this evening, I’m proud to be joined by some of the leaders who are on the front lines of this work, including:   United States Attorney David Fein, of the District of Connecticut; U.S. Attorney Paul Fishman, of the District of New Jersey; U.S. Attorney Loretta Lynch, of the Eastern District of New York; and U.S. Attorney for the Southern District of New York – and a fellow Columbia Law alumnus – Preet Bharara.

Many of you may also recognize Preet from the cover of last week’s TIME Magazine, where he was featured as the man who is “busting Wall Street.”   But, as the article lays out in black and white, Preet is more than just the face of this work.   He, Loretta, Paul, David – and their colleagues all across our U.S. Attorneys’ community and throughout the Justice Department’s Civil and Criminal Divisions – are making meaningful, measurable progress in this fight to ensure stability, accountability, and – above all – justice in the wake of once-in-a-century financial challenges.

Like the federal prosecutors that many of you are hoping to – and, no doubt, will – become, they are aggressive.   They are committed.   And they have proven their willingness to perform the exhaustive, time-consuming, and unglamorous but essential work – which often takes place far from the public eye – that allows us to move our anti-fraud efforts forward.   Thanks to them, and to many other key leaders – including Lanny Breuer, the head of the Department’s Criminal Division and yet another Columbia Law alumnus – we’ve found that much of the conduct that led to the financial crisis was unethical and irresponsible.   But we also have discovered that some of this behavior – while morally reprehensible – may not necessarily have been criminal.

Believe me, I understand – and I often hear about – the public desire to, as one pundit put it, “see the handcuffs come to Wall Street.”   So, let me assure you: whenever and wherever we do uncover evidence of criminal wrongdoing, we will not hesitate to bring prosecutions.   When we don’t, we will continue to use other tools available to us – such as civil sanctions – to hold people and institutions accountable.

Our track record makes this clear.   And it’s a record I’m proud of.   Since the beginning of this Administration, the Justice Department has taken bold, unprecedented steps to address the causes and consequences of our economic crisis – largely through the collaboration made possible by the interagency Financial Fraud Enforcement Task Force.   I am honored to chair this initiative.   Since President Obama launched it in 2009, the Task Force has been a model of success.   It represents the largest coalition ever assembled to combat financial fraud.   Not onlyhas it streamlined the investigative and enforcement efforts of multiple agencies and offices, it also has allowed us to make the most of increasingly limited resources – and to recover, and more effectively utilize, precious taxpayer dollars.

So far, this approach is paying dividends.   Since its creation, the work of the Task Force has resulted in charges – and sentences – against CEOs, CFOs, corporate owners, board members, presidents, general counsels, and other executives of Wall Street firms, hedge funds, and banks involved in financial-fraud activities.

In just the last six months, the Justice Department has achieved prison sentences of up to 60 years in a variety of cases charging securities fraud, bank fraud, and investment fraud.   We obtained a conviction – and record prison sentence – in the largest hedge-fund insider-trading case in U.S. history.   And we’ve secured lengthy prison terms for the architects of multimillion-dollar Ponzi schemes involving hundreds of investors.

In addition to advancing these and other successful prosecutions, the Task Force has helped us to identify and focus on priority areas.   For example, in recent weeks, it has given rise to two important working groups that will help take our comprehensive anti-fraud efforts to the next level.

As some of you know, last month, I convened the first-ever meeting of the Residential Mortgage-Backed Securities Working Group, which brings together a variety of partners – including New York State’s Attorney General, Eric Schneiderman – and other key leaders, in order to marshal and strengthen current state and federal efforts to investigate and prosecute abuses in the residential mortgage-backed securities market.

And, through another multi-level partnership between the Departments of Justice and Housing and Urban Development, other agencies, and 49 state attorneys general – we recently achieved a landmark $25 billion agreement with the nation’s top five mortgage servicers.   This marked the largest joint federal-state settlement in our nation’s history.   And it will provide significant assistance to struggling homeowners and communities – and to those who lost their homes due to unfair and improper mortgage practices.   Of course, this settlement will not – by itself – cure all that ails our housing market.   But – combined with other measures we are taking – it is a step in the right direction, toward the housing recovery that our nation so badly needs.

This settlement underscored the essential work being led by U.S. Attorneys like Loretta – whose office issued multiple subpoenas, reviewed more than two million documents, and interviewed numerous witnesses over the course of a three-year investigation that paved the way for this agreement.   But – as I know her team would be quick to point out – this is only the beginning.  Through the newly-formed Residential Mortgage Backed Securities Working Group, we intend to build on these efforts.   In fact, already, as part of current investigations, the Department has issued civil subpoenas to 11 different financial institutions.   And, although I can’t go into detail about ongoing investigations, I can tell you that we expect more to follow.

In addition, we continue to bring the full resources of the Task Force to bear in combating other types of financial fraud.   For example, over the last two fiscal years, we’ve indicted more than 2,100 individuals for mortgage-fraud related crimes.

In 2011, the Civil Rights Division – through its new Fair Lending Unit – settled or filed a record number of cases – including a $335 million settlement, the largest fair lending settlement in history – to hold financial institutions accountable for discriminatory practices directed at African and Hispanic Americans.

This type of collective action – across all levels of government, state boundaries, and even party lines – is precisely what the challenges before us demand.   It’s also what the American people deserve.   And it’s why we’re bringing the same approach to our fight against financial fraud schemes that target consumers.

Just ten days ago, I convened the first meeting of another newly-formed Task Force component – the Consumer Protection Working Group – which will enhance civil and criminal enforcement of consumer fraud.   This Working Group will also focus on raising public awareness about common schemes – and ways to report them – so that potential victims have the information they need to fight back.   Such prevention efforts are vital.   As we’ve seen all too clearly, consumer fraud schemes can cause extensive losses, financially cripple vulnerable Americans, and – in some instances – even threaten the safety and soundness of our financial institutions.

For instance, we recently identified an individual who victimized more than 350,000 small businesses and – by placing unauthorized charges on the phone bills of unsuspecting consumers – caused over $75 million in losses.   We also uncovered and shut down a telemarketing fraud scheme that spanned 46 states – and resulted in more than $25 million in consumer injuries; as well as a business-opportunity scheme that victimized more than 87,000 people by selling worthless training and job referral services to those who were desperately in need of work – causing $6 million in additional losses to cash-strapped consumers.

Fortunately, the perpetrators behind these schemes now have a few things in common: they’ve all been caught, convicted, and sentenced to lengthy terms in prison.   And I’m confident that the recent efforts we’ve launched will allow the Justice Department – and our law enforcement partners – to build on the momentum we’ve created in combating financial fraud.

There is perhaps no better illustration of this progress than our groundbreaking work to combat health-care fraud.   Over the last fiscal year alone – in cooperation with the Department of Health and Human Services and other partners, and by utilizing authorities provided under the False Claims Act and other critical statues – we were able to recover nearly $4.1 billion in funds that were stolen or taken improperly from federal health-care programs.   This is an unprecedented achievement – and it represents the highest amount ever recovered in a single year.

At the same time, we opened more than 1,100 new criminal health-care fraud investigations, secured more than 700 convictions, and initiated nearly 1,000 new civil health-care fraud investigations.   And our investments in this work are yielding extraordinary returns.   In fact, over the last three years, for every dollar we spent combating health-care fraud, we’ve been able to return an average of seven dollars to the U.S. Treasury, the Medicare Trust Fund, and others.

These numbers are stunning.   Despite this progress, I realize that this is no time to become complacent.   And I can assure you that for me, for President Obama, and for our colleagues across the Administration, the fight against all types of financial fraud will continue to be a top priority.

From our financial markets to our most critical health-care programs, we know that unscrupulous individuals and organizations will always be there to try and game the system, to steal from taxpayers, and to take advantage of the most vulnerable among us.   And no matter how aggressive or wide-ranging our efforts become, it simply won’t be possible to stop or prevent every instance of fraud across the country.

I know that, for some, that’s a sobering thought.   But, for the Justice Department, it’s also a call to action – and a challenge that we keep before us each day.

As we continue working to identify and implement the solutions we need to advance our fight against financial fraud, I’m certain that we’re on the right path.   This struggle in which we are engaged is about fairness.   It is about opportunity.   And it is about accountability.   We will be aggressive – yet measured – in our efforts.   We will be comprehensive in our investigations – yet realistic in the solutions we seek.   If we are successful – and we will be – this approach will help to strengthen our economy, by encouraging investment and by providing a level playing field to drive growth.

I am convinced that the impact of our recent economic catastrophe can be reversed, but only if the means by which economic gains are created are appropriately regulated.   This will not, as some might claim, stifle competition or investment – it will encourage them.   The perception and reality of fairness – and the existence of clear rules – are boons to growth.   The absence of them keeps potential stakeholders on the sidelines – and allows insiders to dominate in a way that adversely affects our larger society.   Recent history demonstrates that this is not mere theory.   The lack of appropriate and meaningful regulation was, without question, a primary contributor to the economic decline we’re now struggling to overcome.
 
However, as I look out over this crowd – at the colleagues and partners gathered here, and especially at the future leaders who will soon take up this fight – I cannot help but feel confident about where we’re heading.

Each one of you, as members of the Columbia community, are part of a long and celebrated tradition – of individuals who are unwilling to sit on the sidelines of history or miss an opportunity to work toward, and fight for, justice.   Though we may be separated generationally, we are united by this legacy – as well as the critical responsibilities that we share: to safeguard our nation’s progress, to restore its prosperity, to ensure its security and strength, and to help keep that most basic American promise – of opportunity, of fairness, and of justice for all.

Thank you for your commitment to this work – and thank you for allowing me to discuss it with you today.”