FBI Agents Shifted From Terror Work to Madoff, Subprime Probes

[Joanne98]

By Patricia Hurtado

Dec. 21 (Bloomberg) -- The FBI has been forced to shift agents from terror and other crime work to Wall Street investigations including the Bernard Madoff Ponzi scandal, said David Cardona, head of the New York office’s criminal division.

The Federal Bureau of Investigation has had to engage in “triage” in responding to successive frauds involving subprime mortgages, auction-rate securities and Madoff, who prosecutors said confessed this month to bilking investors out of $50 billion, Cardona said in an interview yesterday.

“We have to work those cases which we think pose the greatest threat,” he said. “In this case, it’s a threat to the financial system and Wall Street. It’s the same with mortgage fraud. I’m ramping these squads up.”

Special Agent Rachel Rojas, who once worked on tracing terrorist financing and al-Qaeda, now oversees 15 agents investigating mortgage fraud, said Cardona, a career agent with 23 years at the bureau who once worked as a New York state accountant. He declined to say how many other agents he has reassigned from anti-terror work to financial crimes.

Rojas heads one of two such mortgage-fraud squads that work with federal prosecutors in Brooklyn and Manhattan and other federal agencies, Cardona said. The U.S. Justice Department has created more than 40 mortgage-fraud task forces around the country this year.

To address the rise in criminal investigations related to the subprime crisis and other financial crimes, his office has become more selective on the kinds of cases they’ll take on, Cardona said. They do handle multimillion dollar fraud cases, while referring smaller cases to state prosecutors or to New York Attorney General Andrew Cuomo, Cardona said.

Big Case Skipped

Even some big cases are left to others now. The FBI didn’t get involved in the investigation of Marc Dreier, a New York lawyer charged Dec. 8 with defrauding hedge funds out of more than $100 million. The Dreier case is being handled by investigators in the U.S. Attorney’s Office in Manhattan.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aLRvQBfKvPeM&refer=home

[Tansy_Gold]

1. Where did the money go? Oh, to be a forensic accountant!

Bernie Madoff doesn't have it. Or at least he doesn't have all of it. Some of the loot he took in was eventually "returned" to some of the investors, or at least that's the way a classic Ponzi scheme works. So I imagine the forensic accountants will be tracking down just who got "returns" on their investments and how much they got.

After all, depending on when they began investing with Madoff, some of these investors may have been getting "payments" for months or even years, and if the stories already told are accurate, those who received anything at all were getting proceeds higher than the market average.

Any individual or "institutional" investor, like a charitable foundation or a retirement fund or whatever, that puts all its eggs in one basket is KNOWINGLY going for the big payout and not for safe investing. I don't care if it's Elie Wiesel, Rigoberta Menchú, or Osama bin Laden -- if you put ALL yoru funds in one place, and that place is femous for its unusually high returns, then you're knowlingly sacrificing security for the fat bottom line.

I have no sympathy. None at all. But I'm also aware that the media is NOT revealing that some of these investors did in fact receive at least part of their investment back.



Tansy Gold, who really does have a difficult time feeling sorry for billionnaires