[Senate Hearing 111-191]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-191
 
 THE NEED FOR INCREASED FRAUD ENFORCEMENT IN THE WAKE OF THE ECONOMIC 
                                DOWNTURN

=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 11, 2009

                               __________

                           Serial No. J-111-5

                               __________

         Printed for the use of the Committee on the Judiciary



                  U.S. GOVERNMENT PRINTING OFFICE
53-928                    WASHINGTON : 2009
-----------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001


                       COMMITTEE ON THE JUDICIARY

                  PATRICK J. LEAHY, Vermont, Chairman
HERB KOHL, Wisconsin                 ARLEN SPECTER, Pennsylvania
DIANNE FEINSTEIN, California         ORRIN G. HATCH, Utah
RUSSELL D. FEINGOLD, Wisconsin       CHARLES E. GRASSLEY, Iowa
CHARLES E. SCHUMER, New York         JON KYL, Arizona
RICHARD J. DURBIN, Illinois          JEFF SESSIONS, Alabama
BENJAMIN L. CARDIN, Maryland         LINDSEY O. GRAHAM, South Carolina
SHELDON WHITEHOUSE, Rhode Island     JOHN CORNYN, Texas
RON WYDEN, Oregon                    TOM COBURN, Oklahoma
AMY KLOBUCHAR, Minnesota
EDWARD E. KAUFMAN, Delaware
            Bruce A. Cohen, Chief Counsel and Staff Director
              Nicholas A. Rossi, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Grassley, Hon. Charles E., a U.S. Senator from the State of Iowa.     1
    prepared statement...........................................    89
Kaufman, Hon. Edward E., a U.S. Senator from the State of 
  Delaware.......................................................     4
Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont.     1
    prepared statement...........................................    99

                               WITNESSES

Barofsky, Neil M., Special Inspector General, Office of the 
  Special Inspector General for the Troubled Assets Relief 
  Program, Washington, D.C.......................................     7
Glavin, Rita M., Acting Assistant Attorney General, Criminal 
  Division, Department of Justice, Washington, D.C...............     9
Pistole, John S., Deputy Director, Federal Bureau of 
  Investigation, Washington, D.C.................................     5

                         QUESTIONS AND ANSWERS

Responses of Neil Barofsky to questions submitted by Senators 
  Grassley and Kaufman...........................................    27
Responses of Rita Glavin to questions submitted by Senator 
  Grassley.......................................................    34
Responses of John Pistole to questions submitted by Senator 
  Grassley.......................................................    41

                       SUBMISSIONS FOR THE RECORD

Barofsky, Neil M., Special Inspector General, Office of the 
  Special Inspector General for the Troubled Assets Relief 
  Program, Washington, D.C., statement...........................    46
Donohue, Kenneth M., Inspector General, Department of Housing and 
  Urban Development, Washington, D.C., statement.................    51
Gilligan, William R., Jr., Acting Chief Postal Inspector, United 
  States Postal Service, Washington, D.C., letter................    68
Glavin, Rita M., Acting Assistant Attorney General, Criminal 
  Division, Department of Justice, Washington, D.C., statement...    70
O'Dowd, Kyle, Associate Executive Director for Policy, National 
  Association of Criminal Defense Lawyers and Brian W. Walsh, 
  Senior Legal Research Fellow, Center for Legal and Judicial 
  Studies, The Heritage Foundation, Washington, D.C., joint 
  statement......................................................    91
Pistole, John S., Deputy Director, Federal Bureau of 
  Investigation, Washington, D.C., statement.....................   101


 THE NEED FOR INCREASED FRAUD ENFORCEMENT IN THE WAKE OF THE ECONOMIC 
                                DOWNTURN

                              ----------                              

               WEDNESDAY, FEBRUARY 11, 2009
                                       U.S. Senate,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:07 a.m., in 
room SD-226, Dirksen Senate Office Building, Hon. Patrick J. 
Leahy, Chairman of the Committee, presiding.
    Present: Senators Leahy, Whitehouse, Klobuchar, Kaufman, 
and Grassley.

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM 
                      THE STATE OF VERMONT

    Chairman Leahy. As we all know, we are in the middle of 
trying to put together the stimulus package. We have everybody 
being pulled five different ways.
    Senator Grassley is the Ranking Member of the Finance 
Committee, and the Finance Committee, of course, is an integral 
part of this. I am one of the senior members of the 
Appropriations Committee and may have to go, but I know you 
have to go to a meeting with the Majority Leader, Chuck. Why 
don't I yield to you so you can give your opening statement. 
You are going to be acting as Ranking on this thing, anyway. 
You are one of the cosponsors of the bill. Why don't you go 
ahead and then come back whenever you can.

STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR FROM THE STATE 
                            OF IOWA

    Senator Grassley. It is my intention coming back, although 
I do not have any idea ahead of time how much Senator Reid 
wants of our time. But I should give him all the time he wants. 
So thank you very much, Mr. Chairman, for that courtesy. Thank 
you very much for holding this important hearing. It is very 
timely, particularly given the economic downturn, particularly 
the unprecedented amount of money from the Treasury that is 
going to be expended to shore up the banking system, retail 
lending institutions, and efforts to stabilize housing. In 
these times of Federal financial intervention in the 
marketplace, we need heightened awareness about how taxpayer 
dollars are being spent and what controls are in place to 
ensure that they are effectively used.
    Today's hearing is an opportunity to discuss the important 
work done by auditors, Federal agents, prosecutors, and others 
in their efforts to investigate and prosecute particularly 
mortgage fraud. The economic crisis that the country is 
experiencing began with problems that were related to the 
overleveraged, overpriced, and unsustainable housing bubble. 
Simply put, the housing market got too big, too fast, and there 
were not enough controls.
    With so much money in the housing market, unscrupulous 
individuals found a marketplace that was lax in regulation and 
enforcement, making it easy to commit fraud. I refer to a chart 
here that my staff will put up that is based upon information 
collected by FinCEN, the Financial Crimes Enforcement Network, 
in Treasury. This chart shows the number of ``suspicious 
activity reports'' filed by banks related to mortgage 
transactions.
    As you can see, the number of these SARs increased very 
dramatically between 1996 to 2007, with over 52,000 reports 
filed in 2007. While suspicious activity reports do not in 
themselves represent criminal wrongdoing, they are an indicator 
of potential criminal acts such as mortgage fraud, money 
laundering, identity theft, or even tax evasion.
    This hearing is not limited to mortgage fraud, and we have 
an opportunity to examine the impact that fraud and abuse are 
having on our entire economy. As I stated earlier, the problems 
in our housing market are the root. Each and every American has 
been impacted whether they have lost a job, whether they owe 
more on their home than it is worth, or even if they try to 
purchase a new car. The financial markets have experienced the 
most dramatic decline, and so have manufacturers, consumers, 
and small businesses.
    When Congress passed the TARP legislation, I pushed to 
ensure that we had a strong, independent Inspector General, and 
that led to the creation of the Special Inspector General for 
TARP. So I am pleased that that person is here, getting that 
office up and running, and helping us account for the 
taxpayers' money.
    Today I am interested in examining the prevention and 
recovery side of the TARP program and all efforts to stabilize 
the economy. Mainly, I want to know what we can do with our 
criminal laws to deter and prevent wrongdoing. I also want to 
focus on how our civil fraud laws can be used to recover 
taxpayers' money if it is fraudulently gotten.
    I think today's panel will help shed some light on 
potential criminal activity that has occurred in the housing 
market and things involved with the TARP program if it not used 
appropriately. They will also be able to discuss the danger 
that unscrupulous individuals pose to a successful recovery.
    Finally, this hearing provides an opportunity to discuss 
the important legislation that you, Chairman, and I have 
introduced under your leadership to provide important fraud-
fighting resources, and particularly an area I am interested 
in, strengthening the Federal False Claims Act. So I thank you 
for that and the courtesy in cooperating with me in that 
effort.
    Thank you very much, Mr. Chairman. I did not read my whole 
statement. I would like to put the whole statement in the 
record.
    Chairman Leahy. Of course, we will, and I appreciate your 
being here, and I know you are going to come back as soon as 
you can. I joined with you and Senator Kaufman to put this 
legislation. I think on the question of increased fraud 
enforcement, this is not a partisan issue. This is something 
that Republicans and Democrats should certainly agree on. More 
importantly, the American people agree on it.
    Senator Grassley. Absolutely.
    Chairman Leahy. We have to find out how you protect the 
money that is being spent on the road to recovery in this 
economy.
    We have already spent hundreds of billions of dollars to 
stabilize our banking system. We are going to spend hundreds of 
billions of dollars more. Staggering amounts of money. We toss 
the figures around, but it is a staggering, staggering amount 
of money. We finally approved the American Recovery and 
Reinvestment Act in the Senate to boost the economy and create 
jobs.
    I do not think we have paid enough attention to the 
mortgage and financial fraud that has so dramatically 
contributed to the economic downturn. I was here a couple 
decades ago when we had the savings and loan crisis. Just like 
then, we have to rebuild and strengthen the Justice 
Department's ability to enforce Federal fraud laws, partly to 
recover the billions of dollars lost in real estate and 
securities schemes, but also to set a deterrent factor so it 
does not happen again. We have to ensure against the diversion 
of money, especially the huge amounts of money that are going 
to be necessary to rebuild our economy and provide jobs.
    So many Americans have lost their jobs and subsequently 
lost their homes. They expect us to at least find out what 
happened. And we know that there have been unscrupulous 
mortgage brokers and some Wall Street financiers who 
contributed to this.
    As the crisis worsened last fall, I called upon Federal law 
enforcement to track down and punish those responsible for the 
financial and mortgage frauds. So we are going to learn more 
about what tools we actually need to do that and more about 
what the Justice Department might be able to do.
    As I said, this is not a partisan issue. Senator Grassley, 
who just spoke; Senator Kaufman is here; the three of us 
introduced the Fraud Enforcement and Recovery Act. We want to 
strengthen fraud enforcement at the Justice Department, the 
FBI, the Office of Inspector General at the Department of 
Housing and Urban Development, and even the Postal Inspection 
Service.
    One thing I learned as a prosecutor in an earlier career, 
you can all have the laws in the world on the books, but if you 
are unable to enforce them, if you do not have the resource to 
enforce the laws and actually go after people who have broken 
the laws, they are meaningless. Our bill would actually give 
new tools for prosecutors to use in their fight against fraud. 
Senators Schumer and Shelby introduced a complementary bill 
calling for additional FBI agents, Assistant U.S. Attorneys, 
and staff at the Securities and Exchange Commission.
    We do know that banks and mortgage companies relaxed their 
standards for loans, approving ever riskier mortgages with less 
and less due diligence. It is almost like opening the door and 
saying, ``Hey, come on in. Fraud is welcome.'' Private mortgage 
brokers and lending businesses came to dominate the home 
housing market. These companies did not have the same kind of 
banking oversight and internal regulations that had always been 
in place to help prevent fraud. Now we see what happened with 
this lax supervision, and we have problems that are rippling 
not only through our country but around the world.
    In the last 2 weeks, the Justice Department has announced 
prosecutions involving more than $100 million lost to mortgage 
and real estate frauds. The FBI estimates there may be as much 
as $2 billion lost to these frauds each year. In my own State 
of Vermont, we saw a crooked mortgage broker who was convicted 
of defrauding homeowners and banks of over $1 million in deals 
related to more than 200 homes in Vermont and rural upstate New 
York. A million dollars does not seem like a lot with all the 
things we are talking about. In a small area like mine, it is a 
huge amount of money, and 200 homes, it is a huge amount.
    It is not just mortgage fraud. We had home mortgages 
packaged together, and they were turned into securities that 
were bought and sold in largely unregulated markets on Wall 
Street. Of course, as the value of the mortgages started to 
decline with falling housing prices, these securities 
unraveled. Some on Wall Street were not honest about these 
securities; that led to more fraud and victimizing investors 
nationwide--I might say, in some instances worldwide.
    So we have an unprecedented collapse in the mortgage- 
backed securities market. In the past year, banks and financial 
institutions in the United States alone have suffered more than 
$500 billion in losses associated with the subprime mortgage 
industry. Some of our Nation's largest financial institutions 
collapsed as a result. And that is not even going to things 
like the Madoff scandal, a $50 billion Ponzi scheme. If you 
were writing a book about something like this, everybody would 
say it would be too far-fetched to be real.
    So let us give our law enforcement agencies the tools and 
resources they need. After all, ordinary Americans who have 
suffered the brunt of this want to know that we are doing 
everything possible to find those who committed the fraud.
    Our witnesses this morning are Deputy FBI Director John 
Pistole, and Rita Glavin, the Acting Head of the Justice 
Department's Criminal Division. Neil Barofsky is the new 
Special Inspector General for the Troubled Assets Relief 
Program. You are going to be a busy person.
    Senator Kaufman, did you want to add anything to this 
before we start?
    Senator Kaufman. Yes, I just have a longer statement I will 
ask to be put in the record, but----
    Chairman Leahy. And I will put my full statement in the 
record, too.
    [The prepared statement of Senator Leahy appears as a 
submission for the record.]

 STATEMENT OF HON. EDWARD E. KAUFMAN, A U.S. SENATOR FROM THE 
                       STATE OF DELAWARE

    Senator Kaufman. Mr. Chairman, the behavior of Wall Street 
executives, investment bankers, the credit agencies, mortgage 
brokers, and other players in the recent financial meltdown was 
complicated, tangled, a confluence of many factors--and in the 
end, devastating to the financial and economic well-being of 
millions of Americans.
    For the purpose of the hearing, I just have really one 
overriding question, and that is, was any of this behavior 
illegal? The question itself has a complicated answer, so I 
think one of the things we really want to work on is to ensure 
that the Justice Department, the FBI, and the regulatory 
agencies have all the resources and tools they need.
    As Attorney General Holder said at his swearing-in, ``Only 
by drilling down can Federal law enforcement understand the 
various transactions that took place, investigate the actions 
and behaviors of persons and firms who engaged in suspected 
illegal activity, and prosecute those whom the Justice 
Department or regulatory agents believe to have engaged in 
criminal activity.''
    I hope this hearing and I am convinced this hearing will 
help move the ball forward in trying to answer the question, 
and that is, during this time was any of this behavior illegal?
    Thank you. I am looking forward to your testimony.
    [The prepared statement of Senator Kaufman appears as a 
submission for the record.]
    Chairman Leahy. Thank you.
    Our first witness will be John Pistole, who began working 
with the FBI as a Special Agent in 1983. He served in 
Minneapolis, New York, and FBI hearing before becoming a Field 
Supervisor of the White-Collar Crime and Civil Rights Squad in 
Indianapolis, Indiana. There he created a Health Care Fraud 
Task Force and a Public Corruption Task Force. He then served 
as Assistant Special Agent in Charge in Boston where he had 
oversight of all white-collar crime investigations in 
Massachusetts, Maine, New Hampshire, and Rhode Island. He also 
helped lead the Information Security Working Group following 
the Robert Hannsen espionage case, something that I recall 
being fully briefed both in open aspects of it and the 
classified aspects of an intriguing case. After 9/11, he served 
in various leadership capacities in the FBI's Counterterrorism 
Division, including Executive Assistant Director. He was 
promoted to be Deputy Director of the FBI in October 2004. He 
got his undergraduate degree from Anderson University, his J.D. 
from the Indiana University School of Law in Indianapolis.
    Please go ahead, Mr. Pistole.

 STATEMENT OF JOHN S. PISTOLE, DEPUTY DIRECTOR, FEDERAL BUREAU 
               OF INVESTIGATION, WASHINGTON, D.C.

    Mr. Pistole. Thank you, Chairman Leahy, Senator Kaufman, 
other members of the Committee that may be here. I appreciate 
the invitation to be here today to talk on these critical 
issues of mortgage fraud and other economic crimes. Today, what 
I would like to do is just give a very brief overview of the 
law enforcement challenge facing us and describe the FBI's 
current efforts in this regard.
    Since 2005, we have addressed a significant increase in 
mortgage fraud and related cases. In fact, we had 721 
investigations in that year, and now we have over 1,800 
investigations currently. Of course, we expect an upward trend 
to continue.
    Our work in mortgage fraud and related crimes generally 
appear in two distinct areas, the first being fraud for profit, 
of course, which Senator Kaufman and, Chairman, you were 
referring to. These are individuals who false inflate the value 
of the property or issue loans relating to fictitious 
properties. These schemes rely, of course, on ``industry 
insiders,'' those appraisers, accountants, mortgage brokers, 
and other professionals who override lender controls designed 
to prevent this type of crime from happening.
    The second area we refer to is fraud for housing, which an 
individual borrower, typically with the assistance of a real 
estate professionals, acquires a house under false pretenses. 
This usually involves a borrower who misrepresented his or her 
income or employment history to qualify for a loan, which they 
would not normally obtain. Obviously, many of these loans end 
up in default, and there is a resulting financial loss, 
sometimes substantial, to the institutions involved and, as we 
have seen, ultimately the taxpayer.
    The FBI is currently working to address this environment in 
several ways. First, we have shifted resources such that over 
240 FBI agents are currently assigned to mortgage fraud and 
related investigations, and another 100-plus agents working 
corporate fraud matters. We sponsor 55 mortgage task forces or 
working groups to further leverage available resources in our 
communities. We established an FBI headquarters-based National 
Mortgage Fraud Team to coordinate and prioritize the FBI 
efforts across the country, and to provide tools to identify 
the most egregious fraud perpetrators, and to work even more 
effectively with our counterparts in law enforcement, 
regulatory, and industry leaders. Even before the creation of 
this national initiative, we received results from our 
increased focus in this area.
    For example, last June, completed the initial phases of 
what we called ``Operation Malicious Mortgage'' involving the 
arrest of more than 400 defendants nationwide believed to be 
responsible for over $1 billion in estimated losses. This 
initiative has focused on three types of mortgage fraud: 
lending, of course; mortgage rescue schemes; and mortgage-
related bankruptcy schemes. To date, there have been 164 
convictions and forfeitures or seizures of more than $60 
million in assets. Our work in that initiative, and others, 
continues.
    In closing, it is clear to Director Mueller and me and our 
law enforcement partners that more must be done to protect our 
country and our economy from those who try to enrich themselves 
through illegal financial transactions. We are committed to 
doing so, and thank you for your support.
    [The prepared statement of Mr. Pistole appears as a 
submission for the record.]
    Chairman Leahy. Thank you very much, Deputy Director.
    Neil Barofsky is the Special Inspector General for the 
Troubled Assets Relief Program at the Treasury Department. He 
was confirmed by the Senate at the beginning of last December, 
I believe unanimously. Prior to his position as Special 
Inspector General, he worked as a Federal prosecutor in the 
United States Attorney's Office for the Southern District of 
New York. While in New York, Mr. Barofsky was a senior trial 
counsel heading the office's Mortgage Fraud Group. He had 
extensive experience as a line prosecutor in the office's 
Securities and Commodities Fraud Unit where his successful 
prosecution of the president and CEO of Refco earned him the 
Attorney General's John Marshall Award. He graduated magna cum 
laude from New York University School of Law.
    Mr. Barofsky, we are glad to have you here. Please go 
ahead, sir.

   STATEMENT OF NEIL M. BAROFSKY, SPECIAL INSPECTOR GENERAL, 
OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSETS 
                RELIEF PROGRAM, WASHINGTON, D.C.

    Mr. Barofsky. Thank you, Chairman, and thank you for that 
kind introduction. Chairman Leahy, Senator Kaufman, it is an 
honor to appear before you today.
    My office, the Office of the Special Inspector General for 
the Troubled Asset Relief Program--or, as we call it, 
``SIGTARP''--began operations on December 15, 2008, the day I 
was sworn into office. And as we indicated in our initial 
report, which we delivered to each of you and each Member of 
Congress earlier this week, nearly $300 billion has already 
gone out the door on TARP. And yesterday, Secretary Geithner 
outlined Treasury's plans for the remaining balance of the $700 
billion in TARP funds. The total amount of Government money at 
risk in this program, as well as the other programs operated by 
the Federal Reserve, will total in the trillions. These huge 
investments of taxpayer money, made over a relatively short 
period of time, will require close oversight and will 
invariably provide an incentive to those seeking to criminally 
profit.
    Responding to these challenges has been and will continue 
to be a focus of my office. Of the four primary oversight 
bodies born from the Economic Recovery Act, we stand alone as 
the sole TARP oversight body charged with criminal law 
enforcement authority--the cop on the beat--and this is one of 
our most important functions.
    As we expand our Investigations Division, we have focused 
on building essential relationships with law enforcement and 
prosecutorial agencies. For example, I have joined the 
President's Corporate Fraud Task Force, and we have initiated 
relationships and cases with the FBI, the IRS, the Criminal 
Division of the Department of Justice, the New York State 
Attorney General's Office, and numerous U.S. Attorney's Offices 
around the country. Through the TARP-IG Council which I have 
formed and chair, we coordinate with the other Inspectors 
General whose responsibilities include oversight of TARP-
related matters. We have already opened several criminal 
investigations, and we have teamed up with the SEC, recently 
helping them to shut down a securities fraud scam in Tennessee, 
where someone was illegally trading on the TARP name and reaped 
millions of dollars of ill-gotten profits.
    We have begun outreach to potential whistleblowers and 
those who may have tips about ongoing fraud, waste, and abuse. 
Our hotline and website are up and running, and plans are being 
formulated to help develop a ``fraud awareness program'' to let 
potential whistleblowers know who we are, how they can reach 
us, and how we can protect them. This proactive cooperation and 
coordination that is the heart of our investigative strategy is 
resource intensive, and we cannot shoulder this burden alone. 
We must work closely with our law enforcement partners.
    Based on my experience as an Assistant United States 
Attorney in the Southern District of New York from 2000 to 
2008, where I prosecuted securities fraud cases and founded and 
built our district's Mortgage Fraud Group, I saw firsthand the 
understandable shift, since September 11, 2001, in law 
enforcement resources away from white-collar crimes to 
terrorism. We saw areas of coverage shrink and prosecutorial 
thresholds rise. The Department of Justice's recent shift of 
focus to resource-intensive mortgage fraud investigation has 
further left other white-collar investigative efforts 
underfunded and underprosecuted.
    Now, with trillions of dollars going out the door under 
TARP, associated Federal Reserve facilities, and potentially 
more through the proposed stimulus bill, we stand on the 
precipice of the largest infusion of Government funds over the 
shortest period of time in our Nation's history. And, 
unfortunately, our history teaches us that spending so much 
money in such a short period of time will inevitably draw those 
who seek to profit criminally. One need not look any further 
than the recent outlay for Hurricane relief, Iraq 
reconstruction, or the savings and loan meltdown to learn 
important lessons. To fully address this potential criminal 
vulnerability, it is essential that the appropriate resources 
be dedicated to meet the challenges of both deterring and 
prosecuting fraud. As a taxpayer who is heavily invested in 
these programs, as a former Federal prosecutor who got a 
firsthand look at corporate greed, and in my current position, 
I applaud the efforts of this Committee to introduce bipartisan 
legislation, such as the Chairman and Senator Kaufman's Fraud 
Enforcement Recovery Act and Senator Schumer and Senator 
Shelby's Safe Markets Act. These will help ensure that law 
enforcement has the necessary resources to meet the daunting 
challenges that lay ahead. Such measures will greatly assist us 
and our partners as we engage in this historic effort to deter 
and prosecute those who would seek to criminally profit from a 
national crisis.
    Chairman Leahy, members of the Committee, this concludes my 
statement, and I would be happy and look forward to answering 
any questions that you may have.
    [The prepared statement of Mr. Barofsky appears as a 
submission for the record.]
    Chairman Leahy. Well, thank you very much.
    Our next witness will be Rita Glavin, who is currently the 
Acting Assistant Attorney General for the Criminal Division at 
the Department of Justice. She joined the Criminal Division as 
Acting Principal Deputy Assistant Attorney General in June of 
last year. She began her tenure with the Department in 1998 as 
a trial attorney in the Public Integrity Section, where she 
prosecuted public corruption cases for 5 years. She then became 
an Assistant United States Attorney in the Southern District of 
New York where she conducted complex white-collar 
investigations, trials, and appeals. Ms. Glavin received her 
Bachelor of Arts degree from Middlebury College, which, of 
course, is in Middlebury, Vermont, one of our finest 
institutions--my daughter-in-law graduated from there, too--and 
her J.D. from Fordham University School of Law, where she 
served as editor in chief of the Fordham Law Review.
    Ms. Glavin, glad to have you here. Please go ahead.

STATEMENT OF RITA M. GLAVIN, ACTING ASSISTANT ATTORNEY GENERAL, 
CRIMINAL DIVISION, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, D.C.

    Ms. Glavin. Good morning, Mr. Chairman, Senator Kaufman, 
and other members of the Committee. Thank you for your 
invitation to address the Committee today. The Justice 
Department welcomes this opportunity to testify on fraud 
enforcement and in support of the Fraud Enforcement and 
Recovery Act of 2009, which I will be referring to as ``FERA'' 
or ``the Act.'' It is also a pleasure for me to be here 
testifying with FBI Deputy Director John Pistole and alongside 
my good friend and former colleague from New York, Neil 
Barofsky.
    This Nation's economic crisis, as you know, has had 
devastating effects on mortgage markets, credit markets, 
commodities and securities markets, and the banking system. The 
financial crisis demands an aggressive and comprehensive law 
enforcement response, including vigorous fraud investigations 
and prosecutions of any entities and individuals that have 
defrauded their customers and the American taxpayer or 
otherwise placed billions of dollars of private and public 
money at risk. Furthermore, a strategic and proactive approach 
for detecting and preventing fraud is needed.
    The Department, through its Criminal Division, the FBI, the 
U.S. Attorney community, and other components, has been 
investigating and prosecuting financial crimes aggressively. As 
the Attorney General has stated, we still must reinvigorate the 
traditional missions of the Department, and we must embrace the 
Department's historic role in fighting crime and ensuring 
fairness in the marketplace.
    This proposed FERA legislation gives us some of the tools 
we need to aggressively fight fraud in the current economic 
climate, and the Department thanks this Committee and Senators 
Leahy and Grassley for their leadership on this bill. The 
proposed legislation will provide key statutory enhancements 
that will assist in ensuring that those who have committed 
fraud are held accountable. FERA will also provide needed 
resources to investigate and prosecute those responsible for 
such misdeeds.
    It is clear that, along with widespread mortgage 
delinquencies and foreclosures, lender failures, massive losses 
by investors in mortgage-backed securities, and turbulence in 
the credit markets, there has been an alarming increase in 
mortgage fraud. Yet even before this current crisis, the 
Department was responding to such fraud. For years, we have 
been waging an aggressive campaign against mortgage fraudsters 
through vigorous investigation and prosecution, and we have 
deployed a broad array of enforcement strategies that ensured 
optimal use of our investigative and prosecutorial resources to 
maximize deterrence. We have conducted nationwide sweeps in 
mortgage fraud cases, formed local and regional task forces and 
working groups, and engaged in major undercover operations. We 
are also working to uncover rescue scams that target desperate 
homeowners trying to avoid foreclosure.
    As just one example, which Deputy Director Pistole just 
mentioned, in partnership with the FBI and numerous other law 
enforcement agencies, last year the Department conducted a 
nationwide sweep, ``Operation Malicious Mortgage,'' that 
resulted in charges against more than 400 defendants across the 
country, and it was brought by many of the more than 45 local 
and regional task forces and working groups currently targeting 
mortgage fraud. By fully utilizing these task forces and 
working groups, we have leveraged our limited resources by 
joining forces with Federal, State, and local law enforcement 
and regulatory partners, and we have ensured a coordinated and 
comprehensive response.
    Because of the complexity and creativity of these criminal 
schemes, the Department has embraced a collaborative approach. 
We work closely with many different law enforcement agencies to 
bring these prosecutions. For example, in a case investigated 
by the Secret Service and the FBI and prosecuted by the U.S. 
Attorney's Office for the Northern District of Georgia, a 
defendant agreed to purchase properties from true owners, 
assumed their identities, obtained further mortgages on the 
properties, used the identities of the homeowners and others to 
purchase vehicles, open bank accounts, and obtain passports 
which he then used to travel to Jamaica, Italy, and Greece 
while a Federal fugitive. His crimes resulted in clouded 
property titles in several States, a trail of over 100 victims, 
and millions of dollars in losses. That defendant was sentenced 
to 26 years in prison, ordered to pay restitution of almost $6 
million, and the Government obtained a forfeiture judgment of 
$6 million, access to the defendant's book and movie rights, 
and the right to sell the defendant's paintings on eBay in 
order to restore money to the victims.
    In a very recent example of the Department's collaborative 
efforts, just last week my colleagues in the Southern District 
of New York, working with the FBI, the New York City Police 
Department, and the U.S. Department of Homeland Security's 
Office of Immigration and Customs Enforcement, obtained a 
conviction of an attorney involved in a multi-million-dollar 
mortgage fraud scam that used the kind of fraudulent property-
flipping practices that have become common with mortgage fraud. 
Twenty-five other people have pleaded guilty in connection with 
that same massive mortgage fraud scheme.
    But not just the criminal prosecutions did the Justice 
Department focus on. The Department is also addressing fraud 
through vigorous civil enforcement, including under the False 
Claims Act. The Department's recoveries under the FCA, with the 
assistance of private whistleblowers, have reached record 
levels. In 8 of the last 9 years, the Department's recoveries 
have exceeded $1 billion. Moreover, since 1986, the Department, 
working with Government agencies and private citizens, has 
returned more than $21 billion in public monies to Government 
programs and the Treasury.
    The Department has always been committed to fighting fraud, 
and as we suffer through the current economic crisis, we are 
committed to redoubling our efforts. This Act is an important 
and timely step in the process, and we applaud the initiative 
of this Committee in proposing this Act.
    I would be happy to answer any questions from the 
Committee.
    [The prepared statement of Ms. Glavin appears as a 
submission for the record.]
    Chairman Leahy. Thank you. I found interesting the idea of 
selling the paintings of the defendant on eBay.
    Ms. Glavin. We get creative.
    Chairman Leahy. Well, we did not have such things back when 
I was prosecuting cases. I may want to talk to you privately 
more about that.
    Deputy Director Pistole, we have seen, obviously, this wave 
of mortgage and securities fraud. It makes the whole method of 
recovery that much more difficult. I understand the number of 
suspicious activity reports filed by banks alleging mortgage 
and other fraud has climbed considerably. The notes I have is 
that in 2002 there were fewer than 6,000 reports alleging 
mortgage fraud; in 2008, there were 60,000 such reports--a 
tenfold increase; and since the collapse of some of the large 
Wall Street investment banks, a spike in securities fraud as 
well.
    You were involved in investigating the savings and loan 
crisis of the 1980s. How serious is the crisis today to put 
that in perspective?
    Mr. Pistole. Thank you, Mr. Chairman. The savings and loan 
crisis obviously went on for a number of years, from roughly 
1986 to 1995, depending on who you talk to, and obviously 
involved hundreds of millions of dollars of losses in a number 
of institutions. This obviously dwarfs that in terms of 
potential fraud, and that is what we are trying to identify in 
the stages we are right now.
    What we have seen is that the potential that has been 
referenced to in terms of the billions, the tens of billions, 
the hundreds of billions of dollars that is already out there 
under TARP, the $300 billion and additional money that is being 
made available, makes it a significant challenge.
    To give you some kind of context, during the height of the 
S&L crisis, the FBI had approximately 1,000 agents and 
analysts, financial analysts and others, working on the S&L 
crisis through a series of 27 strike forces around the country, 
as you are familiar with. Today, as I mentioned, we have about 
240 agents, and then there is another equivalent number of task 
force officers from other agencies, such as the others have 
mentioned, so probably around 500. But in terms of the FBI, 
around 240-plus agents just on the mortgage fraud-related 
matters.
    When we add in the additional financial analysts, the 
intelligence analysts, and things, it is a higher number, but 
you can see the challenge that we have.
    Chairman Leahy. It is only a fraction of what you had 
before.
    Mr. Pistole. It is a fraction. That is right.
    Chairman Leahy. What do you think is being lost to mortgage 
and security fraud annually?
    Mr. Pistole. In terms of a dollar amount?
    Chairman Leahy. Yes.
    Mr. Pistole. It is really impossible for us to say. The 
SARs that you mentioned obviously only represent a small 
portion of the overall potential fraud out there. It is just 
those institutions, financial institutions, that have 
depository requirements and obligations that are required to 
file the SARs. So there is a number of other institutions that 
are not required to file, and, of course, when they file, many 
times they do not know either the exact amount of fraud or the 
potential fraud involved.
    So it is very difficult to give you any type of number in 
terms of potential, other than to say the larger the dollar 
amount that is being funneled in through, for example, the $300 
billion, the higher the potential there.
    Chairman Leahy. It certainly dwarfs the savings and loan.
    Mr. Pistole. It certainly does.
    Chairman Leahy. In fact, Inspector General Barofsky, you 
work on these mortgage fraud cases. Did the fraud itself 
contribute to the instability and near collapse of some of our 
markets and banking system?
    Mr. Barofsky. I think that is a difficult question to 
answer. Certainly a lot of the----
    Chairman Leahy. That is why I asked it.
    [Laughter.]
    Mr. Barofsky. I am getting used to difficult questions. But 
I think that if you look at the collapse of mortgage-backed 
securities, obviously the collateral underlying those 
securities are mortgages. And the extent of mortgage fraud, I 
think it is difficult to put a number on it, but then you have 
to take that number and multiply it, because whatever the 
actual dollar amount of pure fraud, the bigger impact that it 
has on communities and surrounding areas, dealing with victims 
when I was head of the Southern District Mortgage Fraud Group, 
you would see that when a fraud hit a neighborhood, if it took 
out eight or nine properties that ended up getting foreclosed 
because of a foreclosure rescue scam where they steal the 
houses out from under homeowners, the ripple effect it has on 
the community is tremendous. It is a cyclical effect. It is a 
chain reaction of foreclosures because properties get 
overvalued in the community, then they are abandoned and 
foreclosed, and you have abandoned houses, squatters, 
neighborhoods deteriorate. All of this contributed to the 
financial crisis and a reduction in the value of those 
securities and ultimately the housing crisis.
    So, Mr. Chairman, I am not an economist and just really do 
not have the scope and breadth that my colleagues do here. But, 
yes, I think it has contributed.
    Chairman Leahy. Well, last--my time is up--I do want to ask 
this one question of Ms. Glavin. We are talking about the 
legislation that Senator Grassley, Senator Kaufman, and I have 
introduced, and I realize the Justice Department is still 
studying it. It does authorize additional resources for Justice 
and the FBI and the Inspector General at the Department of 
Housing and Urban Development, Postal Inspection Service, and 
so on. Do you have any preliminary views on it? And I will at 
least ask you this part, I do not want to get you ahead of your 
own Department, but do we need these additional resources? 
Senator Schumer and Senator Shelby have also proposed 
additional resources.
    Ms. Glavin. Senator, we are going to see the demands on law 
enforcement over the next few years really increase when you 
see $700 billion outlaid through the TARP program and you see 
the economic stimulus package. The demands are going to 
increase, and with the demands that are going to increase on 
law enforcement and the Justice Department to follow up and 
investigate, we are going to need resources.
    And so, to the extent this Committee is wanting to give 
resources to law enforcement, we are always appreciative of 
those efforts and welcome those efforts and support those 
efforts.
    Chairman Leahy. I am going to be discussing the legislation 
with Attorney General Holder, also, but I just--most people are 
honest. The ones who are not honest in this field are creating 
economic havoc. And I want to make sure that we are able to go 
after them, and I want to make sure that, one, we can recover 
whatever assets we can; but I want to see people prosecuted, 
and I want to see people who have committed such fraud and the 
havoc it has caused to this country--frankly, I want to see 
them go to jail.
    Senator Kaufman.
    Senator Kaufman. Mr. Pistole, clearly you do not have 
enough FBI agents. Can you tell me a little bit about the fact 
that this is a very different kind of a crime than what most of 
the FBI is? What is your capability and how do you see ramping 
up to get the FBI to have sufficient knowledge of financial 
markets and these kinds of things?
    Mr. Pistole. Thank you, Senator. I think I would respond in 
two ways.
    One is we have had a long history, obviously, of financial 
institution frauds, bank frauds, and things like that. The 
Enron type investigations also helped hone and refine our 
investigative abilities, along with our partner agencies and, 
obviously, the U.S. Attorney's Offices, in terms of 
investigating and prosecuting complex financial frauds, a 
number of other corporate frauds involved also. So I think our 
cadre of people are well prepared in dealing with some of these 
complex investigations. It is really a scope and breadth of 
really trying to manage expectations of the American people of 
what we can do with what we are currently addressing.
    Now, we have done a scrub of all our criminal investigative 
resources, and as you know, after 9/11, we moved almost 2,000 
criminal investigative resources over to national security 
matters, particularly counterterrorism. We have been gradually 
moving those back and have done that in terms of priority areas 
such as this mortgage fraud and the corporate fraud area, which 
is potential as significant in terms of the long-term complex 
investigations.
    We are taking a slightly different approach than we did, 
for example, on Enron, which involved trying to decipher every 
potential illegal transaction, and looking at it more, for 
example, like a traditional organized crime or even a drug 
investigation. We were trying to identify people in different 
levels and eliciting their cooperation and then moving along, 
as opposed to trying to prove every single transaction that may 
be illegal.
    Senator Kaufman. Great.
    Mr. Barofsky, let me go back and not in your present 
position but kind of when you were a prosecutor. It seems to me 
you believe that there was fraud that went on. If you were 
starting to prosecute cases, what is kind of the low-hanging 
fruit, what do you think are the most obvious cases that you 
would move on quickly to try to get the most number of 
prosecutions and put most of the bad people away?
    Mr. Barofsky. Well, when I started up the Mortgage Fraud 
Group in the Southern District, we focused to have--what I 
believe would have the greatest and quickest impact not only on 
putting people in jail but, as importantly, creating deterrence 
was going after the licensed professionals. For most of your 
fraud-for-profit schemes, which because of limited resources we 
focused on exclusively, the gatekeepers--the lawyers, the 
appraisers, the licensed mortgage brokers--the trial conviction 
that Ms. Glavin just referred to was a case that came out of 
our group, and the person who was convicted was an attorney. 
And making examples of those and letting their colleagues know 
that criminal behavior in these types of mortgage frauds is 
unacceptable, because they have the most to lose. Your run-of-
the-mill fraudster will go from fraud to fraud. We see 
securities fraud defendants who are convicted and did their 
time, they are all over the mortgage fraud markets, and 
especially the unregulated side.
    But where you could have, I think, the biggest impact is 
focusing on those licensed professionals. They have the most to 
lose, they are the most likely to flip, and they make the best 
examples.
    Senator Kaufman. Thank you.
    Ms. Glavin, there are people that say--I have talked to a 
number of people that say, look, this is very complex, and, you 
know, really we should leave it to the regulatory agencies; you 
know, the criminal justice is kind of a blunt instrument to use 
in these kinds of cases. There are going to be opportunities 
that people are going to get hurt and the rest of that.
    Would you comment on that kind of a thought in terms of how 
we should be proceeding and dealing with this whole area?
    Ms. Glavin. The criminal justice system has been out in the 
forefront on white-collar crimes and financial fraud since the 
early part of this decade. In 2002, you had the Corporate Fraud 
Task Force. In 2003, we had the Enron Fraud Task Force. We have 
the prosecutions coming out of the WorldCom collapse, 
accounting fraud, corporate fraud. We saw it in Refco, which my 
colleague Mr. Barofsky prosecuted.
    Regulation works to one extent, but criminal law 
enforcement sends a very, very powerful message, and it also 
has tools that regulatory agents do not have. And I want to 
refer back to what Chairman Leahy said a few moments ago. One 
of the big deterrent effects is people go to jail, and in the 
criminal justice system, when you steal and when you leave 
people penniless and there are thousands of victims from a 
crime that you committed with criminal intent, prosecutors are 
in the best place to handle that. And we have been equipped to 
do that and have been doing that for the last 10 years when we 
have seen some of these major frauds happen.
    I also want to point out we were there at the forefront 
with Hurricane Katrina. We had our task force ready to go 
because we knew the fraud that was going to happen. The 
National Procurement Fraud Task Force was also ready to go. 
When we saw Government money going out, we were ready to 
prosecute the people that were going to misuse it.
    Senator Kaufman. Thank you. I totally agree with you.
    Chairman Leahy. Senator Klobuchar.
    Senator Klobuchar. Thank you very much, Mr. Chairman.
    Thank you to all of you. As I was getting ready for this 
hearing, I pulled out testimony that I had given to our State 
legislature many years ago when I was a local prosecutor and we 
were seeing some increase in white-collar crime. I used this 
John Kenneth Galbraith quote that I think is so--from the book 
``The Great Crash of 1929,'' which is so applicable. He said, 
``In good times, people are relaxed, trusting, and money is 
plentiful. But even though money is plentiful, there are always 
many people who need more. Under these circumstances, the rate 
of embezzlement grows, and the rate of discovery falls off. In 
depression, all this is reversed. Money is watched with a 
narrow, suspicious eye. The man who handles it is assumed to be 
dishonest until he proves himself otherwise. Audits are 
penetrating and meticulous. Commercial morality is enormously 
improved.''
    So you have a big job, to improve all of commercial 
morality.
    My question, first, I was reading your testimony, Mr. 
Barofsky, and you talked about--which I experienced after 
September 11th--this great shift which was necessary to the 
U.S. Attorney's Office working on terrorism, and it actually 
shifted down to the local units. Our Hennepin County Attorney's 
Office doubled our white-collar group, and it was actually a 
great experience, and we did a good job. But as the cases got 
more complicated, as we got into the mortgage fraud areas and 
some of these complicated computer crimes and frauds, I found 
that we did not have the resources in law enforcement on the 
local level to really do a good job of investigating those.
    So I thought maybe you could talk about this as you look at 
these partnerships. We never really got the Federal resources 
we needed for the computer analysis and the kinds of things as 
local prosecutors to handle those cases. How are we going to 
fix that?
    Mr. Barofsky. Resources, resources, resources. I mean, it 
is a real problem. And we saw in our district--and we are 
fortunate. The New York field office is, I assume, one of the 
largest field offices for the FBI. We have two districts in New 
York City, Southern and Eastern District, and we had, 
comparatively speaking, an abundance of resources compared to a 
lot of my colleagues I worked with in other districts. But even 
then, once the--you know, before the mortgage fraud focus, 
after 9/11, you just saw a drop-off of the number of cases that 
we were able to do across the board on white-collar fraud. And 
the focus on mortgage fraud--and we had, I think, 20--when I 
left, there were 20-something agents who were working with us 
in the Eastern District on our Mortgage Fraud Group and their 
Mortgage Fraud Task Force. But that necessarily drew down on 
other types of white-collar criminal activity--types of bank 
fraud, computer crime, intellectual property crime. And that is 
just on the Federal level.
    I am not really an expert on the local level, but from our 
task force and working group relationships, there is a need for 
these types of combined and leveraging of resources to address 
these problems because they are severe.
    Senator Klobuchar. And maybe, Mr. Pistole and Ms. Glavin, 
you want to comment. But one of these ideas was to have these 
computer centers where we could use the expertise of the FBI 
and forensic analysis that we did not have on the local level, 
because as your threshold levels went up, we were handling more 
and more complicated cases.
    Mr. Pistole. Yes, Senator. And, obviously, in the FBI we 
look at the State and local task forces as that force 
multiplier, not just for the Federal Government but for State 
and local task forces and law enforcement across the board. For 
example, in Minnesota, there are some Indian reservations, so 
we have Safe Trails Task Forces to deal with some of the crimes 
on Indian reservations, and Safe Streets Task Forces in 
Minneapolis and St. Paul.
    In the same fashion, these mortgage fraud task forces and 
working groups are designed to leverage the collaborative 
efforts of everybody in a way that brings more than the sum of 
the individual parts.
    In terms of the computer forensic lab, we have 16 of those 
across the U.S. and try to really use those in a fashion that 
does enhance the greatest needs across the country, not just 
the Federal or State or local, but looking collectively. And it 
is our goal to have many more of those as we progress and get 
funding.
    Senator Klobuchar. Very good. How about international 
crimes, which we started to see a lot of when I was leaving, 
and are there plans to address that in a better way, where we 
have these schemes that go across internationally and it is 
very hard to track those people?
    Mr. Pistole. Yes, many of our investigations, both on the 
criminal side but also in cyber, of course, involve 
international partners because many of the crimes are committed 
by people overseas. There is recent publicity about a $10 
million fraud being committed by a group of individuals in 
Russia against a particular bank, where people are just using 
the ATM as their personal wallet, just going up and getting 
money out and just draining them there, $10 million across the 
world.
    So we have 61 offices around the world, plus 15 sub-
offices, 76 offices that act as that liaison with a host of law 
enforcement and intelligence services to make sure that we have 
quick exchange of information, chain of custody issues, if we 
are trying to prosecute back here, to work with the host 
governments to try to prosecute there if that is appropriate. 
So we have really had an expanded international focus, 
particularly since 9/11.
    Senator Klobuchar. Thank you.
    Senator Whitehouse. A couple of different questions. John, 
good to see you again. Pleased to be with you, sir.
    Mr. Pistole. Good to see you, sir.
    Senator Whitehouse. You referenced that the FBI has around 
1,600 mortgage fraud investigations that are currently open. I 
would like you to--obviously, you are not going to be able to 
be very specific about it, but characterize those to some 
degree, because you can have everything from the one-off 
fraudster who comes in and files his disclosure sheet 
improperly in order to get a mortgage, to somebody who is kind 
of a repeat offender and is a known fraudster and is going to 
do this over and over again to somebody who is involved in an 
organized criminal effort to defraud. And a number like this 
can look good, but if it is 1,600 ordinary folks who do not 
lead professional lives of crime but did violate the law on 
their application by filling out the form fraudulently, that is 
a very different response than 1,600 investigations that are 
really targeting people who are systemic wrongdoers.
    How would you characterize those 1,600 prosecutions along 
that spectrum?
    Mr. Pistole. Thank you, Senator. And good to see you again, 
sir. Actually, the updated figures are over 1,800 
investigations now, and they are largely based on the systemic 
fraud that we have seen at the professional level that Neil 
made reference to. There is a small number of those who the 
individual who was trying to obtain housing and commit fraud to 
obtain that, that is very small because we just do not have the 
resources to address that.
    But, for example, in Rhode Island, it is a matter of 
looking at those professionals, whether lawyers or mortgage 
brokers or real estate professionals, appraisers and others, 
that are systemically trying to defraud the system and getting 
up not only in the millions, but the tens of millions, perhaps 
hundreds of millions of fraud. So the majority of our 1,800-
plus current investigations are focused on that, to look at 
that systemic fraud and try to take out those rings, if you 
will.
    We do see some limited involvement, if you want to call 
organized crime--there is almost any ethnic group, of course, 
you can put that name in front of it, whether it is Italian or 
Sicilian or Russian or Albanian or whatever. And we have seen 
some instances of that in terms of an enterprise, if you want 
to look at it for purposes of the RICO statute, a group of 
individuals associated, in fact, who are perpetrated these 
types of frauds. That is where we are trying to focus our 
resources right now as we try to leverage those resources 
through the various task forces and working groups we have. The 
key is using some fairly sophisticated software tools and 
working with HUD and others to try to use--to be an 
intelligence-based and an intelligence-driven approach rather 
than just reacting to SARs coming in and saying, OK, here is a 
fraud, potential fraud.
    So we are really trying to leverage that information that 
FinCEN puts out through the SARs, taking that, crunching the 
numbers, doing the analysis to say what is going on. And going 
back to Minneapolis, there has actually been a very focused 
effort in that regard looking at a small group of individuals, 
really, who have purchased hundreds of properties and used 
fraudulent documentation and a number of individuals involved 
in that to perpetrate a significant fraud. And so the same 
thing we are trying to do across the country to work smarter, 
more efficiently with what resources we have.
    Senator Whitehouse. And you mentioned 38 matters that are 
open directly related to the current financial crisis. That 
sounds like a number that would be small even for the Southern 
District of New York alone by the time this all shakes itself 
out. Where do you expect that number to go in the next year or 
two? And where would you like to see it? And what resources are 
needed to meet that demand? I mean, I would assume that number 
will be in the hundreds before very long.
    Mr. Pistole. It very likely could, Senator. And the numbers 
can be misleading, and, of course, as--who was it, Disraeli who 
said, the thing with numbers you have to watch out, ``There's 
lies, damn lies, and statistics.'' In terms of context, those 
38 are significant. These are companies, businesses that 
everybody knows about. I just cannot comment on them publicly, 
but these are significantly large, complex investigations, not 
dissimilar to the Enron investigation. We just use a different 
approach.
    But to specifically answer your question, we see that 
number potentially rising into the hundreds, and as the number 
of bank failures--there have been nine thus far this year--as 
those increase, the potential for fraud involved in some of 
those increases. So it is an exponential potential there.
    Senator Whitehouse. Mr. Barofsky, you have to deal with an 
awful lot of agencies. Coordinating with the Inspector General 
might not be their highest priority. Do you feel you have all 
the authorities that you need by statute in order to generate 
the cooperation, the support, and the information that you need 
to do your job?
    Mr. Barofsky. Yes, Senator. I think we do have the 
appropriate authorities, and the response and reaction has been 
very positive and favorable, from other Inspectors General, 
from--the FBI has been tremendously supportive, and we thank 
them especially as we are building up. I want to thank all of 
you for supporting the Special Inspector General Act for the 
TARP of 2009, which passed the Senate unanimously. And I look 
forward to the House also approving that bill, which will help 
us meet some of our immediate hiring needs and apply some of 
our authorities. But so far the reaction has been tremendous 
from other law enforcement agencies.
    Senator Whitehouse. Good. Mr. Chairman, my time has 
expired. If we are going to do a second round, I do have one 
more question.
    Chairman Leahy. Go ahead and ask the question.
    Senator Whitehouse. Ms. Glavin, I just wanted to ask how 
the Department is structuring itself to meet this need. Is 
there a task force model, a working group? Are there any--from 
a structure point of view, are you setting anything up to meet 
this anticipated bulge of effort?
    Ms. Glavin. There are a couple of things that we are doing 
right now. I think one of the most important things that we are 
doing is that the Department has been actively engaged in 
discussions with Mr. Barofsky about the best ways that we can 
help in terms of getting referrals from Mr. Barofsky through 
the investigations and what he is uncovering and then how we go 
about prosecuting. So the first thing we are doing is we are 
talking with the SIGTARP.
    The second thing is that within the last year or so, we 
have had--the Fraud Section of the Criminal Division has led a 
Mortgage Fraud Working Group which is a collection of 
representatives from various investigative agencies. They speak 
with U.S. Attorney's Offices. They find out what is going on in 
those offices. They talk about best practices. They look at 
mortgage fraud takedowns. They see what can we learn from that, 
what can we do better the next time.
    I know that there has been some discussion about whether to 
create a national mortgage fraud task force, and what I can say 
about that is that the Department is studying it. No decisions 
have been made with respect to that. And it is just something 
that is still under discussion in the Department as to what we 
want to do and the best way to coordinate.
    Senator Whitehouse. And the same with respect to corporate 
fraud?
    Ms. Glavin. Yes. In fact, we still have the standing 
Corporate Fraud Task Force, which met most recently with our 
newest member, Mr. Barofsky.
    Senator Whitehouse. Thank you.
    Chairman Leahy. Thank you.
    Senator Grassley is back, and before I turn to him, I just 
want to note we have written testimony of the Inspector General 
for the Department of Housing and Urban Development, Kenneth 
Donohue. Inspector General Donohue warns also that key Federal 
programs such as the Housing and Economic Recovery Act, passed 
last year to help homebuyers to avoid foreclosure, are also at 
risk of being exploited by fraud. Ten years ago, his office had 
more than 130 investigators dedicated to housing fraud. The 
last administration made cuts, and now there are none dedicated 
to housing fraud. Again, I think most people are honest, but we 
know some people are not. And with the amount of money we are 
pouring out, we have got to have people who can investigate 
fraud and then prosecute people for fraud and try to recover 
assets.
    I will put, without objection, Inspector General Donohue's 
whole statement in the record.
    [The prepared statement of Mr. Donohue appears as a 
submission for the record.]
    Chairman Leahy. Senator Grassley, again, is a cosponsor of 
this legislation. We are glad to have you back. Please go 
ahead.
    Senator Grassley. Thank you, and once again thank you for 
allowing me to work with you on that bill, and particularly the 
part that you put in about the False Claims Act.
    I am going to ask some questions to each of you, the first 
question at least for each of you. I have worked with 
whistleblowers a lot in my life in Congress. I consider them 
very courageous people. They bring forth a lot of valuable 
information. I think Enron in the private sector would be an 
example of it. This latest Madoff case of Wall Street would be 
another example.
    Usually, whistleblowers have a rough time, whether it is in 
the private sector or in the public sector. They are about as 
welcome in an organization as skunks are at a picnic. So I 
believe that as more Government money is pumped into the 
system, be it housing, financial institutions, any private 
business, we are going to have more whistleblowers come forth 
with information of fraud and abuse. So I want to ask both 
questions and have you answer each of them.
    How do you envision working with whistleblowers that come 
forward with good-faith allegations of fraud and abuse of 
taxpayers' money? And will you work cooperatively with 
whistleblowers and their counsel, if they have it, to ensure 
that they are protected from retaliation consistent with 
Federal law? Whoever wants to start out, I would like to have 
each of you give short answers, because I have two more 
questions I want to ask.
    Mr. Pistole. I will start off, Senator. Obviously, anybody 
who has credible information that can help either predicate or 
enhance an investigation, we look forward to working with, and 
their counsel, so no issues there from our perspective.
    Mr. Barofsky. Senator Grassley, first of all, I just want 
to thank you for your continued support of our office. Its 
creation and continued support have been invaluable. And 
whistleblowers are obviously one of the most important things 
we have for finding cases in the TARP. Our website is up and 
running. It has a link for whistleblowers to lodge complaints. 
We have a telephone number, toll-free, 877-SIG-2009. We are 
going to promote that with training and awareness programs to 
encourage whistleblowers to reach out to us with any 
information they have on any TARP program, whether they are 
within Government or without. And we are 100 percent committed 
to protecting whistleblowers. The IG Act makes it very clear 
that any whistleblower's information will remain confidential, 
but there are other certain circumstances where--there may be 
some circumstances where it has to be disclosed. But we will 
work vigilantly to protect the identity of whistleblowers to 
the extent they seek that protection. And we will make sure 
that they are not retaliated against.
    Ms. Glavin. Senator, as you know, the Department has 
enjoyed tremendous success in working with whistleblowers under 
the False Claims Act. We have obtained approximately $10 
billion in the past 8 years under the qui tam statute, and we 
have paid whistleblowers, who are also called relaters, a 
substantial amount of those recoveries--$1.6 billion in rewards 
under the statute for their laudable efforts.
    The Department believes that whistleblowers, often 
insiders, can serve a vital function in our law enforcement 
efforts in exposing potential fraud in connection with 
Government programs, and we expect that we are going to see 
some of that with the TARP, and whistleblowers will be treated 
the same way for their laudable efforts that the Department has 
historically treated them and have had a successful 
relationship.
    Senator Grassley. OK. Thank you.
    Now, Mr. Barofsky, as you know, the bailouts of Bear 
Stearns and AIG took place outside of the TARP. In fact, they 
were orchestrated through special purpose vehicles, which in 
these cases were limited to liability companies Maiden Lane, 
Maiden Lane II, and Maiden Lane III. Secretary Geithner 
announced yesterday that the revised approach for dissemination 
of TARP funds includes the use of Financial Stability Trusts as 
well as Public-Private Investment Funds. That may sound like 
Bear Stearns. I have this concern about the use of such 
vehicles because they seem to result in less transparency. 
Enron used an SPV to hide many of its assets. While my Finance 
Committee staff still has some documents to review from the AIG 
and Bear Stearns bailouts, much of the information is not 
public. I think it makes sense to fold oversight of the Bear 
Stearns and AIG bailouts into your office.
    Do you have any thoughts or concerns about taking on that 
responsibility? Do you believe that all special purpose 
vehicles, including those that the Treasury Secretary may 
implement, should be subject to the same filing and disclosure 
requirements of SEC companies? And, last, what other ways do 
you propose to bring transparency to Maiden Lane SPVs and 
similar things that taxpayers' money simply is not part?
    Mr. Barofsky. We will, of course, follow the lead of 
Congress in our jurisdiction of the coverage of areas. 
Obviously, right now under the existing statute, we are limited 
to TARP-related--tracing basically TARP-related funds. If this 
Congress wants us to look into and have jurisdiction over other 
areas, we will follow this Congress' lead, of course.
    With regard to the special purpose vehicles and 
transparency, I think that is a very serious concern. We 
addressed it just yesterday. We have initiated discussions with 
both the Federal Reserve and with Treasury to get a handle on 
what their plans are for transparency on the SPV with the TALF 
program, which are announced now may be as large as a $1 
trillion program. And we look forward to having those 
discussions, and we are going to make recommendations based on 
once we have a better sense of exactly what their plans are.
    A lot of these programs are still works under construction, 
and we plan on having a role in giving recommendations in their 
formation, as we have to date.
    Senator Grassley. Could I put the rest of my questions----
    Chairman Leahy. You can continue if you want. If the 
Senator from Iowa needs additional time, feel free.
    Senator Grassley. Then I might ask one more question. But 
by unanimous consent may I have exhibits put in?
    Chairman Leahy. Without objection.
    [The exhibits appears as a submission for the record.]
    Senator Grassley. Okay. Then this will be my last question.
    To Mr. Pistole, resources at the FBI have been reallocated 
as a core mission of FBI shifting its focus to 
counterterrorism. At the same time, we have had a dramatic 
increase in the amount of Federal Government resources into the 
private sector to shore up financial institutions, private 
businesses, and other Government-sponsored enterprises. Given 
these significant outlays of Federal taxpayer dollars, it would 
seem wise to make sure that adequate resources are available to 
investigate fraud. However, the FBI cannot simply let up on 
counterterrorism.
    Now, I am not known around here to be one to simply, you 
know, hand out money, but it seems to me that if we do not 
address this head on, we will have a hard time chasing 
taxpayers' money.
    Two questions, and then answer both of them at the same 
time. If Congress decides that the FBI needs more resources and 
agrees to fund them, what sort of controls can we expect to 
prevent the FBI from simply retasking those agents to different 
areas once they get the money? Would you adhere to any 
restrictions on the use of funding by Congress? I guess that is 
two questions, so then one more. If Congress does provide 
additional funding, will you pledge to comply with any 
reporting requirements that we include with those resources?
    Mr. Pistole. Senator, we currently have in place similar 
situations, for example, on our health care fraud investigators 
and in our Organized Crime and Drug Enforcement Task Force, 
OCDETF investigators, reimbursable positions that have much 
greater accountability and oversight than the other positions. 
But in response to your two-part first question, absolutely if 
we are given additional resources to apply to the mortgage 
fraud problem, that is what we would put them on. We need the 
bodies there. It is a huge problem that we look forward to 
addressing as robustly and as aggressively as we can. The 240 
agents working now are working very hard, and we have actually 
looked at our national security resources to see can we 
incrementally move some of those over without jeopardizing 
national security.
    So we are doing a complete scrub of all available resources 
to make sure that we are putting those resources where they are 
needed.
    Senator Grassley. Thank you, Mr. Chairman, for your 
kindness.
    Chairman Leahy. Thank you very much, and, of course----
    Senator Grassley. And also a letter, we have something that 
Senator Specter asked us to put in, too.
    Chairman Leahy. And I will keep the record open for 
anything that any member wishes to add to the record.
    [The letter appears as a submission for the record.]
    Chairman Leahy. Senator Kaufman.
    Senator Kaufman. Ms. Glavin, in those areas of finance that 
have gone unregulated, like derivatives and hedge funds, can 
you talk about how that makes trying to prosecute fraud cases 
more difficult?
    Ms. Glavin. Well, one of the--it does and it does not. In 
the areas that have gone unregulated, we still have at our 
disposal the same tools we have always had in fraud cases--mail 
fraud, wire fraud. You tell a lie to get money and you use the 
mails or the wires to do it, we can prosecute you.
    So, to the extent that some areas of the financial industry 
have gone unregulated, it does not mean that we cannot 
prosecute them, and it does not mean that we do not, you know, 
have the same tools at our disposal. We are still going to use, 
you know, the basics--you know, we can use wiretaps. We can use 
grand jury subpoenas. We still have all of our investigative 
tools at our disposal.
    And so I do not think that we are particularly hindered 
just because it is unregulated. I think the unregulated aspect 
to it could make it more ripe for fraud and heavier use of our 
statutes. But I think we can still go after those sectors.
    Senator Kaufman. All right. Mr. Barofsky, what are some of 
the telltale signs on Wall Street--now we are talking about 
financial fraud here--that fraud has been committed? In your 
old days a prosecutor now, what kind of things do you look at 
that just scream out that something has gone wrong here?
    Mr. Barofsky. Restatements are always good to see, any type 
of audit qualified opinions, you know, relying on auditors. 
Jumps and shifts that are unexplained or do not make sense. You 
know, for insider trading, there is a whole bunch of tell tales 
that we look for.
    The list is a long one, and we are going to be looking at 
those very closely, especially with respect to potential frauds 
in procuring TARP funds from financial institutions.
    Senator Kaufman. Mr. Pistole, can you kind of go through--
clearly, there is going to have to be some training done here 
for FBI agents. Can you talk a little bit about how that is 
going to happen--you are talking about a rather massive scale 
up--how that would happen and what kind of funds are going to 
be required for that?
    Mr. Pistole. Yes, Senator. There are two aspects to that: 
the training of our current employees who are both the agents 
and financial and intelligence analysts who are investigating 
those. Again, many of those have the experience from the Enron 
type, or other investigations, in terms of the complex 
corporate fraud. And it is as much a practical issue that my 
colleagues Neil and Rita know about in terms of trying to take 
a very complex financial fraud and then making it presentable 
to a jury in a way that it makes sense. So that is just one of 
the practical challenges.
    The other aspect is the training of new agents and analysts 
who we are hiring. We actually have a fairly targeted 
recruiting effort trying to identify those people with the 
financial skills backgrounds that could be beneficial. 
Obviously, that is a longer-term proposal, but we look forward, 
believing this is going to be a long-term process for us, to 
having those people on board, whether 6 months, 9 months, a 
year from now, to complement those with the current experience. 
So it is really that twofold process.
    Senator Kaufman. Ms. Glavin, you start--at least I am 
starting to hear the old story, look, there are a few bad 
apples on Wall Street that did this, and, you know, they are 
just bad people, and, you know, why go to criminal 
investigations because it really is not a deterrent for these 
kind of folks. Could you just talk about that a little bit, how 
you see criminal investigations and criminal prosecutions as 
deterrent to the kind of folks that behaved in the bad behavior 
in the recent financial crisis?
    Ms. Glavin. I think that you can see historically through 
some of the prosecutions that have happened in corporate fraud 
over the last 10 years. Adelphia, you saw the people running 
the company were convicted after embezzling money from the 
company. It makes your corporate heads aware that they are 
responsible and that they cannot use money for their personal 
use. I think you saw with the Bernie Ebbers/WorldCom 
prosecution, that had an incredible deterrent effect on what 
CEOs do with money, what they are supposed to know about what 
they do with their money. And so criminal law enforcement, it 
is--a few bad apples, I cannot really speak to that. What I can 
say is historically when corporate leaders have been 
prosecuted, such as you saw with Skilling and Lay in Enron, it 
makes a difference and you see the way corporations operate, 
how they structure themselves, and how the boards want to pay 
more attention to what is going on in the company. It is 
effective because when you have a corporate head who is 
stealing or lying to the stockholders or participating in 
falsification of accounting records or reports to the SEC, the 
stockholders get victimized. And when it is prosecuted 
criminally, that is what makes a real difference, and that is 
what can make changes. And I think changes were already made 
because of some of those prosecutions.
    Senator Kaufman. Thank you. You three have a real challenge 
in front of you. I am glad you are doing this. Thanks.
    Chairman Leahy. Thank you.
    Senator Klobuchar.
    Senator Klobuchar. Thank you, Mr. Chairman.
    Do you say your name ``Gla-vin'' or ``Glay-vin''? Sheldon 
and I were having a senatorial debate over this fact.
    Ms. Glavin. It is ``Glay-vin.''
    Senator Klobuchar. Okay, good. I completely agree with what 
you have been saying. I saw it in our own cases. We once 
prosecuted nine pilots for not paying their taxes, and the 
Minnesota Revenue Department got millions of extra dollars in 
because people saw it in the news and they got very worried. 
And I think it has a positive effect going forward, but a 
deterrent effect. And one of the things that I am concerned 
about is that there has not been enough of this, some 
legitimately because of the transfer of resources over, and 
some because some of the regulatory agencies having basically 
been asleep at the wheel. And what comes to, I think, 
everyone's mind when they think about this is the Madoff case 
and how this could have happened when a whistleblower came 
forward. And while I do not expect you to go into the details 
of that, if you could just give some of your impressions of how 
that could have gone wrong, why that happened, and how we could 
not have that happen again?
    Ms. Glavin. I cannot really speak to all the particulars of 
the Madoff case because I am not in the weeds on that. What I 
can say is that I think what we may be starting to see is that 
as the economy went south, you see these sort of Ponzi schemes 
that were able to go along for a little while, and then all of 
a sudden, you know, there is a rush by the victims of the 
schemes who do not know they are victims yet. And then the 
money is not there when they go to get the money out.
    Just last week, our Fraud Section in the District of 
Minnesota----
    Senator Klobuchar. That was so nice how you brought that 
up. Very, very smooth.
    [Laughter.]
    Senator Klobuchar. Go on.
    Ms. Glavin. It took down a Ponzi scheme involving 
commodities that were supposed to be pooled into a trading 
account, and the charges in that case alleged that they were 
not really pooled at all, they just ran off with the money.
    So I think that for some of the frauds that we are going to 
see is that people are going to be exposed because they are 
going to need their money more now than when they invested, and 
then all of a sudden, that is going to expose that maybe some 
lies were told to them to get the money in the first place or 
that the money just is not there and was misused.
    Senator Klobuchar. That is why I used that quote at the 
beginning. They discover it when the times are bad.
    Mr. Barofsky, any thoughts on the Madoff case, and just 
your impressions of it and, I am sure, your frustrations when 
you found out what happened.
    Mr. Barofsky. Well, I am certainly proud of my former 
district for prosecuting the case. But I think the lesson is 
that--you know, we just started our hotline, and we are dealing 
with whistleblowers. But I think everyone is going to pay very, 
very careful attention to whistleblowers and tips, and I think 
that will be the one positive result of everything that 
happened with Madoff, is I think everyone will necessarily take 
a very careful--pay careful attention. And we are considering--
as we are designing our hotline program, one of the things that 
I have done is I have hired a lawyer to be in charge of all 
things related to the hotline and review every single case, and 
we are going to have senior executive review, because we do not 
want to miss the next----
    Senator Klobuchar. Sometimes don't people get overwhelmed 
with these tips? I mean, we saw that after 9/11. There were, 
you know, many sightings of Osama bin Laden at the Mall of 
America in Minnesota and things like that. Sometimes you get 
overwhelmed with these tips, and how are you going to handle 
that?
    Mr. Barofsky. We are dedicating a significant portion of 
our modest resources to dealing with the hotline because we do 
think it is so important and it is such a potential area for 
significant investigations. But I think that really is the 
answer, that we are going to have to take some of our precious 
resources, which we have already done, and address this, 
because even if there is--you know, if there are 99 that are 
not necessarily valid tips, we do not want to miss that one.
    Senator Klobuchar. And one last thing. I think both of you 
referenced the experience after the hurricanes and some of the 
prosecutions, that you were ready to go and did that. Are there 
things you learned from that that will be helpful with this big 
influx for the TARP funds and the stimulus funds?
    Mr. Barofsky. I think what we are trying to do is get out 
in front as much as we can. One of the areas of our focus as an 
office in our oversight function is trying to make the right 
recommendations for funds before they go out the door, because 
I think that is going to make fraud prevention easier. It is 
going to raise deterrent levels. Obviously, we did not come 
into existence until most of the first tranche was committed or 
out the door, but we have had an impact on how the money since 
we have been there has gone out and some of the more 
significant programs, the Citigroup and Bank of America and the 
auto industry, and I look forward to working with Treasury to 
put the right conditions and fraud prevention into these 
programs before the money goes out the door.
    Senator Klobuchar. Thank you.
    Ms. Glavin, do you want to add anything?
    Ms. Glavin. The best response is what we want to do is 
coordination, coordination, coordination. You have got to have 
the law enforcement bodies working together and sharing 
information, and that is going to make the biggest impact. We 
have been doing that, and we are going to continue to do that.
    Senator Klobuchar. OK. Well, I just want to thank you as 
well, and I think these resources are going to be well spent. 
The public is crying out for accountability. This is a lot of 
money, and as Senator Kaufman said, you have a big job. But I 
know you are up to it, and we just have to be there to help 
you.
    Thank you.
    Chairman Leahy. Thank you. Whatever other questions I have, 
I am going to place in the record, and we will leave the record 
open, as I mentioned, to all of you. We are trying to learn as 
much as possible, especially with this new legislation. If 
after you see the transcript of your testimony you think, ``I 
should have added. . .,'' please feel free to do so. Or if you 
find any numbers in there that, as you look at it, on 
reflection you feel they are wrong, just note that so that it 
can be corrected. This is not a ``gotcha'' hearing. This is a 
hearing where we are trying to move a significant piece of 
legislation backed by Democrats and Republicans--a trend the 
Congress should return to. You do not have to respond to that. 
That is my own feeling.
    So I thank you all very much, and we stand in recess.
    [Whereupon, at 11:27 a.m., the Committee was adjourned.]
    [Questions and answers and submissions follow.]

    [GRAPHIC] [TIFF OMITTED] T3928.001
    
    [GRAPHIC] [TIFF OMITTED] T3928.002
    
    [GRAPHIC] [TIFF OMITTED] T3928.003
    
    [GRAPHIC] [TIFF OMITTED] T3928.004
    
    [GRAPHIC] [TIFF OMITTED] T3928.005
    
    [GRAPHIC] [TIFF OMITTED] T3928.006
    
    [GRAPHIC] [TIFF OMITTED] T3928.007
    
    [GRAPHIC] [TIFF OMITTED] T3928.008
    
    [GRAPHIC] [TIFF OMITTED] T3928.009
    
    [GRAPHIC] [TIFF OMITTED] T3928.010
    
    [GRAPHIC] [TIFF OMITTED] T3928.011
    
    [GRAPHIC] [TIFF OMITTED] T3928.012
    
    [GRAPHIC] [TIFF OMITTED] T3928.013
    
    [GRAPHIC] [TIFF OMITTED] T3928.014
    
    [GRAPHIC] [TIFF OMITTED] T3928.015
    
    [GRAPHIC] [TIFF OMITTED] T3928.016
    
    [GRAPHIC] [TIFF OMITTED] T3928.017
    
    [GRAPHIC] [TIFF OMITTED] T3928.018
    
    [GRAPHIC] [TIFF OMITTED] T3928.019
    
    [GRAPHIC] [TIFF OMITTED] T3928.020
    
    [GRAPHIC] [TIFF OMITTED] T3928.021
    
    [GRAPHIC] [TIFF OMITTED] T3928.022
    
    [GRAPHIC] [TIFF OMITTED] T3928.023
    
    [GRAPHIC] [TIFF OMITTED] T3928.024
    
    [GRAPHIC] [TIFF OMITTED] T3928.025
    
    [GRAPHIC] [TIFF OMITTED] T3928.026
    
    [GRAPHIC] [TIFF OMITTED] T3928.027
    
    [GRAPHIC] [TIFF OMITTED] T3928.028
    
    [GRAPHIC] [TIFF OMITTED] T3928.029
    
    [GRAPHIC] [TIFF OMITTED] T3928.030
    
    [GRAPHIC] [TIFF OMITTED] T3928.031
    
    [GRAPHIC] [TIFF OMITTED] T3928.032
    
    [GRAPHIC] [TIFF OMITTED] T3928.033
    
    [GRAPHIC] [TIFF OMITTED] T3928.034
    
    [GRAPHIC] [TIFF OMITTED] T3928.035
    
    [GRAPHIC] [TIFF OMITTED] T3928.036
    
    [GRAPHIC] [TIFF OMITTED] T3928.037
    
    [GRAPHIC] [TIFF OMITTED] T3928.038
    
    [GRAPHIC] [TIFF OMITTED] T3928.039
    
    [GRAPHIC] [TIFF OMITTED] T3928.040
    
    [GRAPHIC] [TIFF OMITTED] T3928.041
    
    [GRAPHIC] [TIFF OMITTED] T3928.042
    
    [GRAPHIC] [TIFF OMITTED] T3928.043
    
    [GRAPHIC] [TIFF OMITTED] T3928.044
    
    [GRAPHIC] [TIFF OMITTED] T3928.045
    
    [GRAPHIC] [TIFF OMITTED] T3928.046
    
    [GRAPHIC] [TIFF OMITTED] T3928.047
    
    [GRAPHIC] [TIFF OMITTED] T3928.048
    
    [GRAPHIC] [TIFF OMITTED] T3928.049
    
    [GRAPHIC] [TIFF OMITTED] T3928.050
    
    [GRAPHIC] [TIFF OMITTED] T3928.051
    
    [GRAPHIC] [TIFF OMITTED] T3928.052
    
    [GRAPHIC] [TIFF OMITTED] T3928.053
    
    [GRAPHIC] [TIFF OMITTED] T3928.054
    
    [GRAPHIC] [TIFF OMITTED] T3928.055
    
    [GRAPHIC] [TIFF OMITTED] T3928.056
    
    [GRAPHIC] [TIFF OMITTED] T3928.057
    
    [GRAPHIC] [TIFF OMITTED] T3928.058
    
    [GRAPHIC] [TIFF OMITTED] T3928.059
    
    [GRAPHIC] [TIFF OMITTED] T3928.060
    
    [GRAPHIC] [TIFF OMITTED] T3928.061
    
    [GRAPHIC] [TIFF OMITTED] T3928.062
    
    [GRAPHIC] [TIFF OMITTED] T3928.063
    
    [GRAPHIC] [TIFF OMITTED] T3928.064
    
    [GRAPHIC] [TIFF OMITTED] T3928.065
    
    [GRAPHIC] [TIFF OMITTED] T3928.066
    
    [GRAPHIC] [TIFF OMITTED] T3928.067
    
    [GRAPHIC] [TIFF OMITTED] T3928.068
    
    [GRAPHIC] [TIFF OMITTED] T3928.069
    
    [GRAPHIC] [TIFF OMITTED] T3928.070
    
    [GRAPHIC] [TIFF OMITTED] T3928.071
    
    [GRAPHIC] [TIFF OMITTED] T3928.072
    
    [GRAPHIC] [TIFF OMITTED] T3928.073
    
    [GRAPHIC] [TIFF OMITTED] T3928.074
    
    [GRAPHIC] [TIFF OMITTED] T3928.075
    
    [GRAPHIC] [TIFF OMITTED] T3928.076
    
    [GRAPHIC] [TIFF OMITTED] T3928.077
    
    [GRAPHIC] [TIFF OMITTED] T3928.078
    
    [GRAPHIC] [TIFF OMITTED] T3928.079
    
    [GRAPHIC] [TIFF OMITTED] T3928.080
    
    [GRAPHIC] [TIFF OMITTED] T3928.081
    
    [GRAPHIC] [TIFF OMITTED] T3928.082
    
                                 
