In The News

FBI Fraud Investigations on the Ris

The BLT: Blog of Legal Times

WASHINGTON, D.C., March 20, 2009 | Kate Thompson ((202)225-3035)
Special Agent Frederick Bragg, president of the FBI Agents Association, issued this statement regarding the new transfer policy for field supervisors, which requires them to move up or move over after seven years, instead of five: "Changes to the up and out policy have not addressed the fundamental problems that led the Bureau to agree to protect the retirement benefits of agents who took their positions before the policy was implemented and establish a housing assistance program to help address the burdens associated with families having to relocate to expensive areas of the country. Until those problems are addressed, we fear that the Bureau will continue to lose experienced Agents."

The FBI is pulling rapidly shifting resources to handle a surge in mortgage-fraud investigations. Since October, the bureau has peeled 75 agents away from other tasks to work on more than 2,000 cases, according to FBI officials.

The force is now 254 strong and is expected to grow. Attorney General Eric Holder Jr. has asked President Barack Obama and OMB to budget for additional agents and prosecutors for the “traditional side” of the Justice Department -- as apart from its national security side.

The need for more resources is evident. In the past five weeks, the FBI has opened about 200 mortgage-fraud investigations and 36 corporate-fraud investigations, based on figures provided to Congress by FBI Deputy Director John Pistole.

In February, Pistole told the Senate Judiciary Committee that the FBI had more than 1,800 open mortgage-fraud investigations and 530 open corporate-fraud investigations, including 38 matters “directly related to the current financial crisis.”

On Friday, he told the House Financial Services Committees that the FBI now has 2,000 open mortgage-fraud investigations and 566 open corporate-fraud investigations, including 43 matters related to the financial crisis.

Pistole said he expected "an exponential rise" in the number of fraud investigations, and he said the 43 investigations connected to the financial crisis involved companies “that everybody knows about.”

In another bit of news, Pistole revealed that the FBI has "modified" its policy of requiring field supervisors to shift positions after five years on the job.

Pistole said the FBI had amended its "five-and-out" policy to allow field supervisors to remain in their positions up to seven years, and in some cases eight years. (FBI spokesman Richard Kolko said agents can stay put past seven years if they are within 15 months of mandatory retirement.)

FBI Director Robert Mueller III began enforcing the policy in 2004. It was meant to encourage agents to fill leadership posts in Washington and create room for other agents to advance. The new policy was implemented in December, Kolko said. (The BLT is waiting for comment on why the policy was changed.)

The policy has drawn criticism from members of Congress and the FBI Agents Association. They have said it undermines the field offices' relationship with the community and local law enforcement.

Rep. Louie Gohmert (R-Texas), who raised the issue with Pistole, said the complexities of white-collar investigations required more training and benefited from experienced supervisors.