Summary: Although criminal fraud, often involving real estate, has been a factor in the failure of many financial institutions, the Justice Department has not done all that it could with the authority it has to strengthen the government's financial institution fraud program. Fraud committed by officers, directors, and customers at banks and thrifts across the country has resulted in scores of failed financial institutions and heavy dollar losses. In "land flips," for example, related parties transferred land between themselves to inflate its value. They then used the fraudulently overvalued land as collateral to obtain loans, which typically greatly exceeded the land's actual value. The Attorney General has pledged to beef up the federal government's attack on bank and thrift fraud, and Congress has passed two major bills supporting the government's effort. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the Crime Control Act of 1990 provided the Justice Department with additional powers and resources to investigate and prosecute financial institution fraud. This report provides an overview of the government's efforts, with a particular focus on the implementation of certain provisions of the Crime Control Act, Justice's local enforcement efforts against criminal bank and thrift fraud, and the progress achieved to date.
