Each year banks are the targets of insider and outsider fraudulent activity. Borrowers overstate their assets and holdings in order to obtain loans for which they would never otherwise qualify. Employees embezzle, steal, or conspire with crooked clients for a kickback, and billions are lost. Law enforcement agencies around the world are reporting increased instances of corporate, mortgage, and bank fraud. For example, the United States Federal Bureau of Investigations ("FBI") in its FY2007 Financial Crimes Report states that its corporate fraud cases doubled from five years earlier. Through FY2007, U.S. Grand Juries returned 183 indictments resulting in 173 convictions. Securities and commodities fraud cases increased from 937 cases in 2002 to 1,217 in 2007.5 With the increased attention, mortgage fraud is getting in the wake of the mortgage default crisis, the FBI in FY2008 had 1,204 cases under investigation, got 321 indictments, and 260 convictions. The number of mortgage fraud investigations has tripled over the last five-year period.7 In FY2007, the FBI's health care fraud cases alone produced $1.12 billion in restitution orders. Corporate fraud alone in the United States amounts to over $1 billion per year.
Denying the criminal the fruits of his unlawful enterprise is one of law enforcement's main deterrents. To accomplish this, financial institutions, regulators, and law enforcement must be able to follow and find the ill-gotten assets and get them back, which is not an easy task. Even when assets are found, stumbling blocks often keep private parties from seizing them.
Albert F. Tellechea & Michael J. Cortes,
Bank Frauds and Tracking the Hidden Assets,
Fla. A&M U. L. Rev.
Available at: https://commons.law.famu.edu/famulawreview/vol12/iss1/4