Despite the FBI's renewed emphasis on battling terrorism since 9/11, it still ranks fighting public corruption and white-collar crime as top priorities. And the agency says it now uses a more efficient force in a triage system to tackle fraud of all stripes. 

On Sept. 11, 2001, FBI agent Christine Monaco was working in New York City, dealing with organized crime. On that fateful morning she was on her way to a Brooklyn courthouse where she was due to give testimony to a grand jury in a mob-related case - only to be called back to Manhattan.

She has been working the anti-terrorism beat ever since.

"We still have a very robust white-collar crime and organized crime force," Monaco said in an interview. "But after what happened down the block [from the FBI's New York office in lower Manhattan], our efforts against terrorism had to be stepped up."

Although Monaco's experience on 9/11 is just the story of one agent with the Federal Bureau of Investigation, her personal experience has broader implications. In the nearly five years since 19 radical Islamic terrorists hijacked four airplanes and crashed three of them into the World Trade Center and the Pentagon, causing the deaths of some 3,000 persons, the FBI has shifted its focus. Instead of concentrating on just battling white-collar criminals, organized crime and drug-trafficking, its

No. 1 priority understandably is combating terrorism.
So much so that, according to a lengthy, 200-plus-page audit by the U.S. Justice Department's Office of Inspector General (OIG), there has been a 38 percent reduction in the overall number of white-collar crimes that the FBI has referred for prosecution between 2000 and 2004, the most recent year for which figures have been compiled, as well as a 37 percent rollback in organized crime referrals. At the same time, terrorism-related cases referred by the agency rose by a whopping 846 percent in the established areas of international and domestic terrorism while new areas of FBI probes - involving such areas as terrorist financing and terrorism-related identity theft - have gone from essentially zero to scores of cases being referred for prosecution.

"For more than three years, the FBI has been undergoing a broad transformation aimed at focusing the agency on terrorism and intelligence-related matters," the OIG's audit report, issued last fall, declares, adding: "In May 2002, in the aftermath of the September 11, 2001 terrorist attacks, the FBI established counter-terrorism and counterintelligence as its top two investigative priorities.

"At the same time," the audit report continues, "the FBI Director formally transferred more than 500 agents from traditional criminal areas to terrorism-related programs. These changes were designed to transform the FBI into a more proactive, intelligence-driven agency dedicated to preventing acts of terrorism against the United State and its citizens."

On closer inspection, the FBI's shift in priorities has had an effect on a broad swath of investigative areas. According to the OIG report, almost all of the 16 areas of white-collar crime that the bureau investigates recorded a reduction in the number of FBI referrals for prosecution. Commodities fraud and tax fraud were the only two exceptions. Cases of commodities fraud referred by the FBI for prosecution increased to 16 in 2004 compared with 12 in 2000, an increase of 33 percent. Referrals to prosecutors for tax fraud remained steady at 29 cases in 2004, the same figure as in 2000.

But given the changing emphasis by the FBI, a drop-off in white-collar crime referrals by the agency to U.S. attorneys for prosecution was inevitable. The OIG report found that frauds against insurance companies topped the list of white-collar crimes that were receiving less attention from the agency: in 2004, the FBI referred just 55 insurance-fraud cases to prosecutors for insurance fraud - 90 fewer than the 145 cases referred in 2000, a 68 percent decrease in referrals. Rounding out the top five investigative areas that showed declines in referrals to prosecuting attorneys were: corporate fraud (down 58 percent), bankruptcy fraud (down 53 percent), financial institution fraud (down 52 percent), and securities fraud (down 38 percent).

Similarly, such areas as organized crime, narcotics enforcement, civil rights offenses, labor union racketeering and corruption, and anti-trust violations have seen reductions in prosecutorial referrals from the agency. All told, criminal-related matters referred to the U.S. Attorney's Office fell by 6,151 cases to 16,725 in 2004 - a 27 percent reduction compared with the 22,876 cases referred in 2000.

Not surprisingly, the drop in criminal cases paralleled the displacement of FBI agents. The OIG determined that the FBI had "formally reallocated" 1,143 field agents who had been investigating drug trafficking, violent crime, white-collar crime, and other "traditional crimes" and reassigned them to terrorism-related programs. In addition, the inspector general's office ascertained from interviews with senior FBI officials that another 1,279 agents who had been investigating traditional crimes had their workload reduced so they could be detailed to handle terrorism-related matters "as needs arose."

Experts say that the trend follows a time-honored pattern and is largely the result of the law-enforcement agency's responding to the populace's perceptions about which crimes constitute the greatest danger. "This is not new," says Nikos Passas, a criminologist at Northeastern University in Boston who is an expert on white-collar crime. "Whatever crime problem seems to occupy the country's leadership and the public is where resources are shifted. Since 9/11 we've seen terrorism and terrorism-finance get a lot of attention. And given the limited resources, inevitably some areas will suffer."

A top official at the FBI says the country isn't imperiled by the bureau's rejiggered priorities, especially in the areas of white-collar crime, which remains on the list of the FBI's top ten priorities. (See "FBI's top ten priorities" at the end of this article.)

"While we do have fewer agents working white-collar crime than in 2001 - and there is no question that the No. 1 priority has changed to combat terrorism - it is not fair to say that white-collar crime investigations at the FBI have been de-emphasized," says James H. "Chip" Burrus, deputy assistant director of the FBI's criminal investigation division.

"We're far more efficient in addressing cases," he adds. "9/11 made us look at ourselves and it told us where we could be more efficient."

Burrus also asserts that merely tallying up the numbers of cases referred to U.S. attorneys for prosecution - Burrus labels that a "case count" - is not a fair report card by which to measure the FBI's efforts. "Case counts don't reflect the quality of the cases we have pursued," Burrus says.

As Exhibit A, the FBI official cites high-profile convictions such as home-decorating celebrity Martha Stewart, who spent five months in federal prison for obstruction of justice charges that grew out of an investigation into her alleged insider trading in the stock market. Burrus also cited the FBI's investigative work that convicted Bernie Ebbers in March, 2005; the former CEO of WorldCom executive was sentenced to 25 years in prison after being found guilty of overseeing the $11 billion accounting fraud at the telecommunications corporation. And the agency takes credit for the July, 2004 convictions of top executives at Adelphia executives who were accused of looting the cable company: founder John Rigas and his son, former chief financial officer Timothy Rigas, were found guilty of 18 counts of securities fraud, bank fraud, and conspiracy.

The FBI can also take a bow for laying the groundwork that led to the convictions in late May of Enron executives of the deceased Kenneth Lay and Jeffrey Skilling on charges of fraud and insider trading. "These are blockbuster cases that certainly send the right message," Burrus adds.

In addition to its scrutiny of corporate crime, the FBI now ranks fighting public corruption as a top priority, trailing only terrorism, espionage, and cyber-crimes. In speaking out against public corruption, FBI director Robert S. Mueller III, has argued that rooting out venality among government officials has broad implications, affecting everything from the quality of roads and schools to public safety to court verdicts.

"Public corruption is different from other crimes," Mueller said in a speech in San Diego in May. "It does not just strike at the heart of good government - it can strike at the security of our communities and our nation."

The FBI's intentions on public corruption were bolstered by greater resources. According to Burrus, who is widely credited as a key architect of the agency's campaign against public corruption, the FBI has dedicated 160 more agents to ferreting out official corruption than were assigned in 2001. Citing FBI statistics, moreover, The New York Times reported that the number of convictions in 2004 and 2005 arising from the public corruption campaign totaled 1,060 government employees - including 177 federal officials, 158 state officials, 360 local officials and 360 police officers. "We have had incredible successes," Burrus said.
Several cases have attained marquee status. Burrus cites the downfall of Washington's notorious super-lobbyist, Jake Abramoff, who pled guilty in January to charges of mail fraud, conspiracy, and tax-evasion and whose web of bribery and influence-peddling is already reaching into the Bush Administration; before investigations are over, the Abramoff scandal is expected to extend into the halls of both congressional chambers. And the FBI's trophy room includes the scalp of Randy "Duke" Cunningham, the San Diego congressman who was sentenced in March to eight years and four months in federal prison and pay $1.8 million in restitution for taking gifts, bribes and kickbacks in return for arranging Pentagon contracts for defense contractors.

The FBI's campaign against public corruption has also involved widespread dragnets. In San Diego, as FBI Director Mueller noted in his May 11 speech, the bureau played an active role in the conviction of a city council member for conspiring with owners of an adult entertainment club to ease restrictions; FBI sleuthing there also led to the indictment of five members of the San Diego Retirement Board for engaging in a scheme to defraud city citizens.

But the FBI undercover sting operation known as the "Tennessee Waltz" is perhaps the most dramatic case in point. So far the operation - which incorporated the FBI's creation of a bogus computer-recycling company and making payoffs to politicians in return for their legislative help - has resulted in the indictments of 11 persons. The most recent person to be charged was Memphis school board member Michael Hooks Jr., who was indicted on charges of embezzlement and lying to federal agents on June 20. (Hooks is a nephew of former NAACP head Benjamin Hooks.) So far, according to the Associated Press, five current or former lawmakers have been arrested in the sting, two of whom have been convicted. One, a former state representative who resigned his seat, is in prison.

Other highly visible cases developed by the agency include the April conviction of former Illinois Governor George Ryan, a Republican, of 18 counts of helping to award state business to political cronies. The FBI's investigations have crossed party lines: in May, a Louisville businessman pleaded guilty to making payments of more than $400,000 as well as stock and a share of profits to Louisiana Congressman William Jefferson, a Democrat, in return for promoting his high-tech company in Africa.

"Stay tuned," Burrus said of the FBI's ongoing effort to expose public corruption. "This will continue to be an area of progress."

Burrus also reports that health-care fraud is getting more attention from the agency (an assertion that appears to conflict with the inspector general's findings). He said that more than 110 more agents were detailed to investigate health-care fraud than were on duty in 2001. In large part this is because "of the aging of America, with baby boomers getting into their sixties. And with reduced government spending, we want the system to be efficient. Most companies are law-abiding," he adds, "but there are an awful lot who fleece government and the system. We're working with the Health and Human Services' inspector general to make sure that we stem the tide."

But if there is dramatic progress being made in the area of political corruption and gains in health care fraud, FBI officials admit that some white-collar crimes - particularly financial institution fraud (FIF) - aren't receiving the attention that they were before 9/11. "We do have fewer agents working in FIF and I'll tell you why," Burrus says. "In many of our cases, our agents were working low-dollar cases."

As he describes it, the FBI has set up a system of triage. A North Dakota bank that was bilked out of $100,000, for example, might get the FBI's attention, "but there's no reason to investigate a $2,000 teller theft in New York City when people are walking out with millions of dollars in other cases. So there are fewer agents but we would argue that the cases (that the FBI elects to investigate) are much larger and high-profile."

Burrus also says that a more adroit use of technology is leveraging the FBI's ability to crack down on white-collar crimes by providing more bang for the back. In other words, while there are fewer FBI agents in the field, they are much more productive. "There is no substitute for an actual agent working a case," he says, "but we can make people more efficient. Say you had a group of fraudulent check-kiters. Instead of a surveillance team following people, we might put a tracking device on a car. Now we know where the car is and what the car is doing, so we can deploy fewer number of our people to track the bad guys. Technology is a big multiplier."

Even so, the OIG found in its audit that there was concern within the agency. "Some FBI officials we interviewed stated that the FBI's more limited presence in violent crime and white-collar crime had impaired the law enforcement community's efforts to address these crime areas, particularly financial institution fraud and bank robberies. They added that state and local law enforcement agencies generally do not have the necessary resources or jurisdictional authority to effectively address many of these violations, and they commented that no other law enforcement agency has been able to compensate entirely for the FBI's reduced efforts in these areas."

Meanwhile, there is no shortage of white-collar crimes involving financial institutions. An interview with Lieutenant Cynthia D. Machanic, supervisor of the major fraud section of the Miami-Dade Police Department, finds her struggling to keep up with "embezzlement, identify theft, and real-estate and mortgage fraud" as well as credit-card theft and assorted hot check schemes.

"Mortgage frauds are really big frauds here in Dade County because the real-estate market is in a boom," she says. "We're dealing now with several multi-million-dollar cases. It varies, but we've got everything from fraudulent quit-claim deeds to loan brokers engaging in predatory lending to hot-check cases. Some of the hot-check cases are simple but others involve lots of documents stretching from our doorstep to other countries. We could use a lot more people to work on these cases." More opportunities for Certified Fraud Examiners are opening up.

She describes the level of sophistication in many of the frauds seen today as far superior than what existed only five years ago. Such cases require "a different style of policing because of the way people are stealing. With the Internet, so much more information is available and cyber-crimes are at a level that it's hard to keep up with. We see both rings and individuals selling credit card and employing information for identity theft out of doctors' offices, real estate offices and restaurants."

Larry Brown, vice chairman of ASIS International, a Washington, D.C.-based trade association comprising industrial security experts, echoes Machanic's assertion that they need all the federal help that they can get. In his day job as senior vice president for risk management for First Citizens Bank in Raleigh, N.C., Brown, who was a former SWAT team member of the local police force, says that the diminished presence of the feds in fighting financial institution fraud can't really be offset by state and local authorities.

One reason, he says, is that "we lose the benefit of federal sentencing and bank robberies. .... A bank robber might get a 10-year sentence in state court but he won't serve more than a couple of years. Under the federal sentencing guidelines, however, he's more likely to pull the bulk of that time."

But he says that he does not want to be overly critical of the FBI for their reduced emphasis on crimes involving banks and other financial institutions. He notes that the FBI takes its cue from the U.S. Attorney's Office and some jurisdictions have shown an unwillingness to prosecute only the most prodigious thefts or most violent robberies. And one problem with that strategy, he says, "is that professional criminals know the threshold is and they want to stay just below it."

One solution he proposes is that, along with working more in concert with state and local authorities, federal law enforcement authorities like the FBI develop working partnerships with private security forces. That could include some Certified Fraud Examiners in the private sector. Citing one report by the U.S. Department of Justice, he notes: "Private security forces have more resources than public enforcement. They protect 80 percent of the country's businesses. And with a terrorist attack we need all the people we can get."

The FBI is now obviously challenged to cover all bases. But it says that 9/11 has compelled it to become more efficient as it tackles public corruption, white-collar crime, and terrorism.

Paul Sweeney is a business freelance writer. 

FBI's TOP TEN PRIORITIES 

1. Protect the United States from terrorist attack.
2. Protect the United States against foreign intelligence operations and espionage.
3. Protect the United States against cyber-based attacks and high-technology crimes.
4. Combat public corruption at all levels.
5. Protect civil rights.
6. Combat transnational and national criminal organizations and enterprises.
7. Combat major white-collar crime.
8. Combat significant violent crime.
9. Support federal, state, county, municipal, and international partners.
10. Upgrade technology to successfully perform the FBI's mission.

Source: www.fbi.gov