Obama Administration To Form Financial Fraud Task Force

The Obama administration has recently announced the formation of an interagency task force to combat financial fraud.

"This task force's mission is not just to hold accountable those who helped bring about the financial meltdown, but to prevent another meltdown from occurring," said U.S. Attorney General Eric Holder.

The order will direct the task force to investigate and prosecute financial crimes connected to last year’s financial meltdown, while also seeking to prevent future crises by uncovering fraudulent actors and serving as a deterrent to future offenders. The Obama administration is pledging a more aggressive effort to prosecute and discourage financial fraud. U.S. Attorney General Eric Holder says fraud has caused hardship for thousands of Americans and contributed to the worst financial crisis in decades.

"This task force's mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from occurring," Holder said. "By punishing criminals for their actions, we will send a strong message to anyone looking to profit from the misfortunes of others."

Formation of the high level panel comes as the administration wrestles with a weak economy and public outrage over Wall Street bonuses. It also comes amid criticism that regulators ignored irregularities that allowed imprisoned financier Bernard Madoff to perpetrate one of the biggest frauds in U.S. history.

On a global level, there’s little sign that global economic crime and accounting fraud are slowing down, according to the latest survey data from PricewaterhouseCoopers.

The firm’s biannual Global Economic Crime Survey surveyed over 3,000 corporate executives across the globe and found that 30 percent reported having experienced at least one incident of fraud in the past 12 months. Of those respondents who reported economic crime in the past year, 38 percent reported experiencing accounting fraud. That’s a significant increase from the 27 percent who reported accounting fraud in the 2007 survey.

Sixty-eight percent of those surveyed attributed the greater risk of fraud to increased incentives or pressures, 18 percent reported that more opportunities to commit fraud were the most likely reason for greater risk of fraud, and 14 percent believe that people’s ability to rationalize was the main factor contributing to a greater risk of fraud. “Fraudsters have to have the ability to rationalize,” said PwC partner Steven Skalak at a press conference in New York on Thursday.

Skalak sees value in the interagency Financial Fraud Enforcement Task Force that the Obama administration is setting up to coordinate efforts among various departments, including the SEC, the Justice Department, HUD, and other agencies. The task force could help keep the information flow going across agencies and avoid letting cases fall through the cracks in the system.

While fraud is increasingly global, so too are anti-fraud efforts, with the Organization for Economic Cooperation and Development pushing more countries to crack down on bribery, corruption, fraud and other forms of economic crime. The economy may go up or down, but fraud and crime never go away.