[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 386 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                 S. 386

 To improve enforcement of mortgage fraud, securities fraud, financial 
 institution fraud, and other frauds related to federal assistance and 
 relief programs, for the recovery of funds lost to these frauds, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 5, 2009

 Mr. Leahy (for himself, Mr. Grassley, and Mr. Kaufman) introduced the 
 following bill; which was read twice and referred to the Committee on 
                             the Judiciary

_______________________________________________________________________

                                 A BILL


 
 To improve enforcement of mortgage fraud, securities fraud, financial 
 institution fraud, and other frauds related to federal assistance and 
 relief programs, for the recovery of funds lost to these frauds, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fraud Enforcement and Recovery Act 
of 2009'' or ``FERA''.

SEC. 2. AMENDMENTS TO IMPROVE MORTGAGE, SECURITIES, AND FINANCIAL FRAUD 
              RECOVERY AND ENFORCEMENT.

    (a) Definition of Financial Institution Amended To Include Mortgage 
Lending Business.--Section 20 of title 18, United States Code, is 
amended--
            (1) in paragraph (8), by striking ``or'' after the 
        semicolon;
            (2) in paragraph (9), by striking the period and inserting 
        ``; or''; and
            (3) by inserting at the end the following:
            ``(10) a mortgage lending business (as defined in section 
        27 of this title) or any person or entity that makes in whole 
        or in part a federally-related mortgage loan as defined in 12 
        U.S.C. 2602(1).''.
    (b) Mortgage Lending Business Defined.--
            (1) In general.--Chapter 1 of title 18, United States Code, 
        is amended by inserting after section 26 the following:
``Sec. 27. Mortgage lending business defined
    ``In this title, the term `mortgage lending business' means an 
organization which finances or refinances any debt secured by an 
interest in real estate, including private mortgage companies and any 
subsidiaries of such organizations, and whose activities affect 
interstate or foreign commerce.''.
            (2) Chapter analysis.--The chapter analysis for chapter 1 
        of title 18, United States Code, is amended by adding at the 
        end the following:

``27. Mortgage lending business defined.''.
    (c) False Statements in Mortgage Applications Amended To Include 
False Statements by Mortgage Brokers and Agents of Mortgage Lending 
Businesses.--Section 1014 of title 18, United States Code, is amended 
by--
            (1) striking ``or'' after ``the International Banking Act 
        of 1978),''; and
            (2) inserting after ``section 25(a) of the Federal Reserve 
        Act'' the following: ``or a mortgage lending business whose 
        activities affect interstate or foreign commerce, or any person 
        or entity that makes in whole or in part a federally-related 
        mortgage loan as defined in 12 U.S.C. 2602(1)''.
    (d) Major Fraud Against the Government Amended To Include Economic 
Relief and Troubled Asset Relief Program Funds.--Section 1031(a) of 
title 18, United States Code, is amended by--
            (1) inserting after ``or promises, in'' the following: 
        ``any grant, contract, subcontract, subsidy, loan, guarantee, 
        insurance or other form of Federal assistance, including 
        through the Troubled Assets Relief Program, an economic 
        stimulus, recovery or rescue plan provided by the Government, 
        or the Government's purchase of any preferred stock in a 
        company, or''; and
            (2) striking ``the contract, subcontract'' and inserting 
        ``such grant, contract, subcontract, subsidy, loan, guarantee, 
        insurance or other form of Federal assistance,''.
    (e) Securities Fraud Amended To Include Fraud Involving Options and 
Futures in Commodities.--
            (1) In general.--Section 1348 of title 18, United States 
        Code, is amended--
                    (A) in the caption, by inserting ``and 
                commodities'' after ``Securities'';
                    (B) by inserting ``any commodity for future 
                delivery, or any option on a commodity or a commodity 
                for future delivery, or'' after ``any person in 
                connection with'' ; and
                    (C) by inserting ``any commodity for future 
                delivery, or any option on a commodity or a commodity 
                for future delivery, or'' after ``in connection with 
                the purchase or sale of''.
            (2) Chapter analysis.--The item for section 1348 in the 
        chapter analysis for chapter 63 of title 18, United States 
        Code, is amended by inserting ``and commodities'' after 
        ``Securities''.
    (f) Money Laundering Amended To Define Proceeds of Specified 
Unlawful Activity.--Section 1956(c) of title 18, United States Code, is 
amended--
            (1) in paragraph (8), by striking the period and inserting 
        ``; and''; and
            (2) by inserting at the end the following:
            ``(9) the term `proceeds' means any property derived from 
        or obtained or retained, directly or indirectly, through the 
        commission of a specified unlawful activity, including the 
        gross receipts of such specified unlawful activity.''.
    (g) Making the International Money Laundering Statute Apply to Tax 
Evasion.--Section 1956(a)(2)(A) of title 18, United States Code, is 
amended by--
            (1) inserting ``(i)'' before ``with the intent to 
        promote''; and
            (2) adding at the end the following:
                            ``(ii) with the intent to engage in conduct 
                        constituting a violation of section 7201 or 
                        7206 of the Internal Revenue Code of 1986; 
                        or''.

SEC. 3. ADDITIONAL FUNDING FOR INVESTIGATORS AND PROSECUTORS FOR 
              MORTGAGE FRAUD, SECURITIES FRAUD, AND OTHER CASES 
              INVOLVING FEDERAL ECONOMIC ASSISTANCE.

    (a) In General.--
            (1) Authorization.--There is authorized to be appropriated 
        to the Attorney General, to remain available until expended, 
        $155,000,000 for each of the fiscal years 2010 and 2011, for 
        the purposes of investigations, prosecutions, and civil 
        proceedings involving federal assistance programs and financial 
        institutions, including financial institutions to which this 
        Act and amendments made by this Act apply.
            (2) Allocations.--With respect to fiscal years 2010 and 
        2011, the amount authorized to be appropriated under paragraph 
        (1) shall be allocated as follows:
                    (A) Federal Bureau of Investigation: $65,000,000.
                    (B) The offices of the United States Attorneys: 
                $50,000,000.
                    (C) The criminal division of the Department of 
                Justice: $20,000,000.
                    (D) The civil division of the Department of 
                Justice: $15,000,000.
                    (E) The tax division of the Department of Justice: 
                $5,000,000.
    (b) Additional Appropriations for the Postal Inspection Service.--
There is authorized to be appropriated to the Postal Inspection Service 
of the United States Postal Service, $30,000,000 for each of the fiscal 
years 2010 and 2011 for investigations involving federal assistance 
programs and financial institutions, including financial institutions 
to which this Act and amendments made by this Act apply.
    (c) Additional Appropriations for the Inspector General for the 
Housing and Urban Development Department.--There is authorized to be 
appropriated to the Inspector General of the Department of Housing and 
Urban Development, $30,000,000 for each of the fiscal years 2010 and 
2011 for investigations involving Federal assistance programs and 
financial institutions, including financial institutions to which this 
Act and amendments made by this Act apply.
    (d) Use of Funds.--The funds authorized to be appropriated under 
subsections (a), (b), and (c), shall be limited to cover the costs of 
each listed agency or department for investigating possible criminal, 
civil, or administrative violations and for prosecuting criminal, 
civil, or administrative proceedings involving financial crimes and 
crimes against Federal assistance programs, including mortgage fraud, 
securities fraud, financial institution fraud, and other frauds related 
to Federal assistance and relief programs
    (e) Report to Congress.--Following the final expenditure of all 
funds appropriated under this section that were authorized by 
subsections (a), (b), and (c), the Attorney General, in consultation 
with the United States Postal Inspection Service and the Inspector 
General for the Department of Housing and Urban Development, shall 
submit a joint report to Congress identifying--
            (1) the amounts expended under subsections (a), (b), and 
        (c) and a certification of compliance with the requirements 
        listed in subsection (d); and
            (2) the amounts recovered as a result of criminal or civil 
        restitution, fines, penalties, and other monetary recoveries 
        resulting from criminal, civil, or administrative proceedings 
        and settlements undertaken with funds authorized by this Act.

SEC. 4. CLARIFICATIONS TO THE FALSE CLAIMS ACT TO REFLECT THE ORIGINAL 
              INTENT OF THE LAW.

    (a) Clarification of the False Claims Act.--Section 3729 of title 
31, United States Code, is amended--
            (1) by striking subsection (a) and inserting the following:
    ``(a) Liability for Certain Acts.--
            ``(1) In general.--Subject to paragraph (2), any person 
        who--
                    ``(A) knowingly presents, or causes to be 
                presented, a false or fraudulent claim for payment or 
                approval;
                    ``(B) knowingly makes, uses, or causes to be made 
                or used, a false record or statement to get a false or 
                fraudulent claim paid or approved;
                    ``(C) conspires to commit a violation of 
                subparagraph (A), (B), (D), (E), (F), or (G) or 
                otherwise to get a false or fraudulent claim paid or 
                approved;
                    ``(D) has possession, custody, or control of 
                property or money used, or to be used, by the 
                Government and knowingly delivers, or causes to be 
                delivered, less than all of that money or property;
                    ``(E) is authorized to make or deliver a document 
                certifying receipt of property used, or to be used, by 
                the Government and, intending to defraud the 
                Government, makes or delivers the receipt without 
                completely knowing that the information on the receipt 
                is true;
                    ``(F) knowingly buys, or receives as a pledge of an 
                obligation or debt, public property from an officer or 
                employee of the Government, or a member of the Armed 
                Forces, who lawfully may not sell or pledge property; 
                or
                    ``(G) knowingly makes, uses, or causes to be made 
                or used, a false record or statement to conceal, avoid, 
                or decrease an obligation to pay or transmit money or 
                property to the Government, or knowingly conceals, 
                avoids, or decreases an obligation to pay or transmit 
                money or property to the Government,
        is liable to the United States Government for a civil penalty 
        of not less than $5,000 and not more than $10,000, as adjusted 
        by the Federal Civil Penalties Inflation Adjustment Act of 1990 
        (28 U.S.C. 2461 note; Public Law 104-410), plus 3 times the 
        amount of damages which the Government sustains because of the 
        act of that person.
            ``(2) Reduced damages.--If the court finds that--
                    ``(A) the person committing the violation of this 
                subsection furnished officials of the United States 
                responsible for investigating false claims violations 
                with all information known to such person about the 
                violation within 30 days after the date on which the 
                defendant first obtained the information;
                    ``(B) such person fully cooperated with any 
                Government investigation of such violation; and
                    ``(C) at the time such person furnished the United 
                States with the information about the violation, no 
                criminal prosecution, civil action, or administrative 
                action had commenced under this title with respect to 
                such violation, and the person did not have actual 
                knowledge of the existence of an investigation into 
                such violation,
        the court may assess not less than 2 times the amount of 
        damages which the Government sustains because of the act of 
        that person.
            ``(3) Costs of civil actions.--A person violating this 
        subsection shall also be liable to the United States Government 
        for the costs of a civil action brought to recover any such 
        penalty or damages.'';
            (2) by striking subsections (b) and (c) and inserting the 
        following:
    ``(b) Definitions.--For purposes of this section--
            ``(1) the terms `knowing' and `knowingly' mean that a 
        person, with respect to information--
                    ``(A) has actual knowledge of the information;
                    ``(B) acts in deliberate ignorance of the truth or 
                falsity of the information; or
                    ``(C) acts in reckless disregard of the truth or 
                falsity of the information, and no proof of specific 
                intent to defraud is required;
            ``(2) the term `claim'--
                    ``(A) means any request or demand, whether under a 
                contract or otherwise, for money or property and 
                whether or not the United States has title to the money 
                or property, that--
                            ``(i) is presented to an officer, employee, 
                        or agent of the United States; or
                            ``(ii) is made to a contractor, grantee, or 
                        other recipient if the United States 
                        Government--
                                    ``(I) provides or has provided any 
                                portion of the money or property 
                                requested or demanded; or
                                    ``(II) will reimburse such 
                                contractor, grantee, or other recipient 
                                for any portion of the money or 
                                property which is requested or 
                                demanded; and
                    ``(B) does not include requests or demands for 
                money or property that the Government has paid to an 
                individual as compensation for Federal employment or as 
                an income subsidy with no restrictions on that 
                individual's use of the money or property; and
            ``(3) the term `obligation' means a fixed duty, or a 
        contingent duty arising from an express or implied contractual, 
        quasi-contractual, grantor-grantee, licensor-licensee, fee-
        based, or similar relationship, and the retention of any 
        overpayment.'';
            (3) by redesignating subsections (d) and (e) as subsections 
        (c) and (d), respectively; and
            (4) in subsection (c), as redesignated, by striking 
        ``subparagraphs (A) through (C) of subsection (a)'' and 
        inserting ``subsection (a)(2)''.
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