[Congressional Record (Bound Edition), Volume 155 (2009), Part 9]
[Senate]
[Pages 12487-12489]
[From the U.S. Government Publishing Office, www.gpo.gov]




               FRAUD ENFORCEMENT AND RECOVERY ACT OF 2009

  Mr. REID. Mr. President, I ask that the Chair lay before the Senate a 
message from the House with respect to S. 386, the Fraud Enforcement 
and Recovery Act.
  The Presiding Officer laid before the Senate the following message 
from the House of Representatives:

       Resolved, That the bill from the Senate (S. 386) entitled 
     ``An Act 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'', do 
     pass with amendments.

  Mr. LEAHY. Mr. President, today, the Senate has passed the bipartisan 
Fraud Enforcement and Recovery Act of 2009, S.386. The House passed 
this bill overwhelming just last week. This bill is a major step toward 
holding accountable those who have caused so much damage to our 
economy. It will also help protect our economic recovery efforts from 
the scourge of fraud.
  Our bill will strengthen the Federal Government's capacity to 
investigate and prosecute the kinds of financial frauds that have so 
severely undermined our economy and hurt so many hard-working people in 
this country. These frauds have robbed people of their savings, their 
retirement accounts, their college funds for their children, and their 
equity and have cost too many people their homes. The bill will help 
provide the resources and legal tools needed to police and deter fraud 
and to protect taxpayer-funded economic recovery efforts now being 
implemented.
  I want to once again commend Senator Grassley, our lead cosponsor, 
for his leadership at every stage in this process. He helped to write 
this legislation and to manage it on the Senate floor, where it 
ultimately passed 92 to 4. He also worked tirelessly to make important 
and difficult compromises with Senate and House leaders, which was 
crucial to crafting a consensus a bill that could pass both Houses. He 
has once again proven his dedication to protecting taxpayer funds by 
deterring, investigating, and prosecuting fraud.
  I thank Majority Leader Hoyer and the House leadership, as well as 
Chairman Conyers, Ranking Member Smith and Congressmen Berman and Scott 
on the House Judiciary Committee, for working with us to promptly pass 
this bill in the House with minimal changes and a number of helpful 
additions. The new ranking member of the Senate Judiciary Committee, 
Senator Sessions, was also very important and supportive in those 
negotiations.
  I thank our many cosponsors for their steadfast support for this 
effort. Senators Kaufman and Klobuchar have worked particularly hard to 
ensure that this important fraud enforcement bill becomes law, and I 
thank them for their efforts. Senator Kaufman has spoken and written 
about the need for fraud enforcement all year. We have been joined by a 
growing bipartisan group of cosponsors that now stands at 28. And I 
thank our majority leader and our underappreciated cloakroom and floor 
staff for all that they have done on this bill.
  Mortgage fraud has reached near epidemic levels in this country. 
Reports of

[[Page 12488]]

mortgage fraud are up 682 percent over the past 5 years, and more than 
2800 percent in the past decade. And massive, new corporate frauds, 
like the $65 billion Ponzi scheme perpetrated by Bernard Madoff, are 
being uncovered as the economy has turned worse, exposing many 
investors to massive losses. We can now finally take action to better 
protect the victims of these frauds. These victims include homeowners 
who have been fleeced by unscrupulous mortgage brokers who promise to 
help them, only to leave them unable to keep their homes and in even 
further debt than before. They include retirees who have lost their 
life savings in stock scams and Ponzi schemes, which have come to light 
as the markets have fallen and corporations have collapsed. They also 
include American taxpayers who have invested billions of dollars to 
restore our economy, and who expect us to protect that investment and 
make sure those funds are not exploited by fraud.
  This legislation will immediately give Federal law enforcement 
agencies the tools and resources they need to combat fraud effectively. 
In the last 3 years, the number of criminal mortgage fraud 
investigations opened by the Federal Bureau of Investigation, FBI, has 
more than doubled, and the FBI anticipates that number may double yet 
again. Despite this increase, the FBI currently has fewer than 250 
special agents nationwide assigned to financial fraud cases, which is 
only a quarter of the number the Bureau had more than a decade ago at 
the time of the savings and loan crisis. At the current levels, the FBI 
cannot even begin to investigate the more than 5000 mortgage fraud 
allegations referred by the Treasury Department each month.
  In the late 1980s and early 1990s, Congress responded to the collapse 
of the federally insured savings and loan industry by passing 
legislation similar to the bill we consider today, to hire prosecutors 
and agents. While the current financial crisis dwarfs in scale to the 
savings and loan collapse, we are poised to once again take decisive 
action.
  At its core, the Fraud Enforcement and Recovery Act authorizes the 
resources necessary for the Justice Department, the FBI, and other 
investigative agencies to respond to this crisis. In total, the bill 
authorizes $245 million a year over the next 2 years to hire more than 
300 Federal agents, more than 200 prosecutors, and another 200 forensic 
analysts and support staff to rebuild our Nation's ``white collar'' 
fraud enforcement efforts. While the number of fraud cases is now 
skyrocketing, we need to remember that resources were shifted away from 
fraud investigations after 9/11. Today, the ranks of fraud 
investigators and prosecutors are drastically understocked, and 
thousands of fraud allegations are going unexamined each month. We need 
to restore our capacity to fight fraud in these hard economic times, 
and this bill will do that.
  Fraud enforcement is an excellent investment for the American 
taxpayer. According to recent data provided by the Justice Department, 
the government recovers more than $20 for every dollar spent on 
criminal fraud litigation. Strengthening criminal and civil fraud 
enforcement is a sound investment, and this legislation will not only 
pay for itself, but will bring in money for the Federal Government.
  In addition, the Fraud Enforcement and Recovery Act makes a number of 
straightforward, important improvements to fraud and money laundering 
statutes to strengthen prosecutors' ability to combat this growing wave 
of fraud. It also strengthens one of the most potent civil tools we 
have for rooting out fraud in government--the False Claims Act. The 
Federal Government has recovered more than $22 billion using the False 
Claims Act since it was modernized through the work of Senator Grassley 
in 1986, but this bill will make the statute still more effective. In 
fact, the amendments the House made to the bill, after extensive input 
from Senator Grassley and Congressman Berman, strengthen the False 
Claims Act further still.
  The Fraud Enforcement and Recovery Act has broad bipartisan support, 
as well as the strong backing of the Justice Department and the Obama 
administration. As explained in the Statement of Administration policy:

       The Administration strongly supports enactment of S. 386. 
     Its provisions would provide Federal investigators and 
     prosecutors with significant new criminal and civil tools and 
     resources that would assist in holding accountable those who 
     have committed financial fraud.

  Strengthening fraud enforcement is a key priority for President 
Obama. During the campaign, President Obama promised to ``crack down on 
mortgage fraud professionals found guilty of fraud by increasing 
enforcement and creating new criminal penalties.'' And the President 
made good on this promise in his budget to Congress by calling for 
additional FBI agents ``to investigate mortgage fraud and white collar 
crime,'' as well as hiring more Federal prosecutors and civil attorneys 
``to protect investors, the market, and the Federal Government's 
investment of resources in the financial crisis, and the American 
public.'' The initial Senate-passed recovery package included 
additional money for the FBI for this purpose, but it was cut during 
the negotiations that led to its passage. This bill, the bipartisan 
Fraud Enforcement and Recovery Act, is our chance to authorize the 
necessary additional resources to detect, fight and deter fraud that 
robs the American people and American taxpayers of their funds. Strong 
support from the President and the Justice Department has been integral 
to making progress on this important bill.
  This is and has been bipartisan legislation. Our cosponsors and our 
supporters in both Houses of Congress come from across the political 
spectrum--Democrats, Republicans, and Independents. What we share is a 
commitment to fight fraud and the horrible costs it is imposing on 
hard-working Americans. I believe that our efforts are supported by 
most Americans. No one should want to see taxpayer money intended to 
fund economic recovery efforts diverted by fraud. No one should want to 
see those who engaged in mortgage fraud escape accountability. Law 
enforcement agencies desperately need the resources and tools in this 
legislation.
  During these first months of the year, the Judiciary Committee has 
concentrated on what we can do legislatively to assist in the economic 
recovery. Already we have considered and reported this fraud 
enforcement bill, the patent reform bill, and worked to ensure that law 
enforcement assistance was included in the economic recovery 
legislation.
  The recovery efforts are generating signs of economic progress. That 
is good. That is necessary. But that is not enough. We need to make 
sure that we are spending our public resources wisely and that they are 
not being dissipated by fraud. We need to ensure that those responsible 
for the downturn through fraudulent acts in financial markets and the 
housing market are held to account. That is why the Fraud Enforcement 
and Recovery Act is so needed.
  The bill has also received the support of the Fraternal Order of 
Police, the Federal Law Enforcement Officers Association, the National 
Association of Assistant United States Attorneys, the Association of 
Certified Tax Examiners, and Taxpayers Against Fraud. It was strongly 
endorsed by an editorial in The New York Times on April 18, 2009.
  I thank Senators for joining with us to take decisive action to 
protect American families and our economy from fraud.
  Mr. REID. Mr. President, I ask unanimous consent that the Senate 
concur in the House amendment with the amendment which is at the desk; 
and that the motion to reconsider be laid upon the table; further, that 
the Senate then concur in the title amendment.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The amendment (No. 1128) was agreed to, as follows:

     (Purpose: To modify the provision relating to the issuance of 
                               subpoenas)

       On 31, line 13, after ``the Commission'' insert ``, 
     including an affirmative vote of at

[[Page 12489]]

     least one member appointed under subparagraph (C) or (D) of 
     subsection (b)(1)''.

  The title was amended so as to read:

       ``An Act to improve enforcement of mortgage fraud, 
     securities and commodities 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.''.

                          ____________________