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FINANCIAL CRIMES
FBI Releases Annual ‘Report to the Public’

03/07/07

United States Currency

The arm of the FBI that investigates financial crimes ranging from underground pyramid schemes to institutionalized fraud in the nation’s corporate suites has issued its annual report detailing the most prevalent types of schemes investigators tackled in 2006.

The Financial Crimes Report to the Public is prepared each year by the Financial Crimes Section of the FBI’s Criminal Investigative Division. The report, which covers a 12-month period ending September 30, 2006, explains in detail dozens of fraud schemes, tallies FBI accomplishments combating the crimes, and offers tips the public can use to protect itself.

The full report is available here and on our Reports & Publications page.

The FBI’s financial crimes investigations are primarily focused on corporate fraud, health care fraud, mortgage fraud, identity theft, insurance fraud, mass marketing fraud, and money laundering. Within each of those categories are dozens of schemes with a single focus: to illegally beat the system.

Here are some highlights of the report’s contents:

  • Corporate Fraud: The highest priority of the Financial Crimes Section, the FBI was pursuing 490 cases at the end of FY2006, which ended last September, including 19 cases that individually cost investors over $1 billion. Investigations resulted in 171 indictments and 124 convictions, as well as over $1 billion in restitutions, $41 million in recoveries, and $62 million in seizures.
  • Securities Fraud: More than 150 agents were probing 1,655 cases, including “pump and dump” and Ponzi schemes, hedge fund fraud, and late day trading, when mutual funds are illegally traded after the market closes. FBI probes recorded 302 indictments and 164 convictions last year.
  • Health Care Fraud: The FBI is the primary investigative agency in the fight against health care fraud, an issue that is expected to grow. Some of the most common schemes include upcoding services (billing for more services than provided), duplicate claims, kickbacks, and providing medically unnecessary services. This section of the report provides tips to protect yourself (review medical bills) and a tip line. More than 2,400 cases investigated last year resulted in 534 convictions, including a doctor whose unnecessary procedures resulted in the deaths of two patients.
  • Mortgage Fraud: The FBI investigates in two distinct areas: fraud for profit, which often involves insiders inflating a property’s value, and fraud for housing, which is typically when borrowers misrepresent their incomes to qualify for loans. The report shows a regional analysis of fraud hotspots and lists some indicators of fraud, like requests to sign blank documents or requirements to use an exclusive appraiser. The number of FBI cases has grown steadily in recent years, from 436 in 2003 to 818 last year.
  • Insurance Fraud: Of the 233 cases investigated last year, 54 resulted in convictions. The number of cases and convictions is expected to rise in the near future as more fraud is uncovered in the wake of Hurricane Katrina, which generated, according to some estimates, more than $34 billion in insurance claims.

The report also provides tips on how to recognize different types of scams and what to do if you are victimized. To that end, you can also read about different financial schemes on our Common Fraud Schemes page.

The bottom line of the report: Financial schemes, in the end, are designed to game the system and cheat innocent people of their fair share. Be informed to protect yourself.

Resources:
- Financial Crimes Report to the Public 2006
- White-Collar Crime
- Common Fraud Schemes