TARP Fraud Probes Have Tripled Since April, Says Watchdog

TARP Fraud Probes Have Tripled Since April, Says Watchdog

The watchdog charged with policing the massive government bailout says that he's conducting 65 investigations of possible fraud in the program, more than triple the number of probes he opened six months ago.

Neil Barofsky, speaking at the Bloomberg Washington Summit on Thursday, added that the probes range from complicated securities transactions to mortgage-fraud cases.
He explained that half of the investigations were prompted by tips from insiders, victims or members of the public who called his office's fraud hotline.

"When I first took office, I can't tell you how many times I'd be having a sit-down and warning about potential fraud in the program and I would hear a response basically saying, 'Oh, they're bankers, and they wouldn't put their reputations at risk by committing fraud,'" he said.

"I think we've done a good job of instilling a greater degree of skepticism that what comes from Wall Street isn't necessarily the Holy Grail," he said.

Barosky, a former federal prosecutor who pursued white-collar criminals, said last April that he had opened 20 criminal probes and six audits into whether bailout funds were being ripped off or wasted.

At that time, he described those probes as including securities fraud, tax fraud, insider trading and public corruption.

"It's not trillions of dollars going out the door without anyone keeping tabs on it," Barofsky told CNN.

Other government agencies, including the FBI, are also pursuing crimes related to the bailout. In June, FBI director Robert Mueller told the Economic Club of New York that the bureau is working with other agencies, such as the Securities and Exchange Commission, to pursue any fraud or crime related to government bailout money and the economic stimulus package, in what could be the "next wave" of financial fraud cases.

"With billions of dollars at stake -- from the purchase of troubled assets to improvements in infrastructure, healthcare, energy and education -- even a small percentage of fraud would result in substantial taxpayer losses," Mueller said, adding that the bureau had shifted resources in New York to pursue white-collar crime.

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