SEATTLE – The Bush administration’s refocusing of the FBI in the wake of the Sept. 11 terror attacks has left far fewer agents to target the sophisticated fraud and other white-collar crime cases the bureau has traditionally pursued, a Seattle newspaper reports.
It adds up to thousands of white-collar criminals nationwide who are no longer prosecuted in federal court, frustrated victims and potentially billions of dollars in fraud and theft losses, the paper reported in Wednesday editions.
More than five years after the 2001 attacks, the Justice Department has failed to replace at least 2,400 agents detailed to focus on counterterrorism, the newspaper reported.
“Politically, this trade-off has been accepted,” said Charles Mandigo, a former FBI congressional liaison who retired four years ago as special agent in charge in Seattle. “But do the American people know this trade-off has been made?”
The newspaper said its six-month investigation analyzed more than a quarter-million cases touched by FBI agents and federal prosecutors before and after Sept. 11, 2001.
Among the key findings:
* Overall, the number of criminal cases investigated by the FBI nationally has steadily declined. In 2005, the bureau brought slightly more than 20,000 cases to federal prosecutors, compared with about 31,000 in 2000 – a 34 percent drop.
* FBI investigations of white-collar crime have also plummeted. In 2005, the FBI sent prosecutors 3,500 cases – a fraction of the more than 10,000 cases assigned to agents in 2000.
* Had the FBI continued investigating financial crimes at the same rate as it had before the terror attacks, about 2,000 more white-collar criminals would be behind bars, according to the newspaper analysis, which was based on Justice Department data from 1996 through June 2006.
Seattle police Chief Gil Kerlikowske said his department isn’t as equipped to handle complex white-collar investigations. Whether more FBI agents are hired or some are shifted back from counterterrorism, he said more resources should be aimed at white-collar crime.
“This is like the perfect storm,” Kerlikowske said. “It’s now five years later. We should be rethinking our priorities.”
Among the discouraged fraud victims is a 75-year-old widow who says she was swindled out of more than $1 million.
Margarita MacDonald, who has Parkinson’s disease, was nearly deaf, all alone and living in Canada when a man befriended her, helping with chores and errands in exchange for room and board.
He persuaded her to move with him to the Seattle suburb of Issaquah. Then he began manipulating her, persuading her to sign documents and threatening that he wouldn’t bring her food or medicine if she didn’t do what he wanted, MacDonald stated in court documents. He gradually stole about $1 million from her, buying furniture, electronics, jewelry – even vacations to Hawaii, she wrote.
Larry Gold, a lawyer in Vancouver, B.C., who represented her, called the Seattle FBI office in January 2005. The duty officer asked for the information in writing. Gold put it together but said the FBI never responded.
“It was a fairly awful situation, and I thought they might be interested in it,” Gold said. “What can I say? They weren’t.”
A judge ordered the man to pay MacDonald more than $1.4 million last year; the man filed for bankruptcy. He hasn’t been charged with a crime.
A report in September 2005 by the Justice Department’s inspector general asserted that in addition to the 1,143 agents transferred away from traditional crime programs, the FBI used 1,279 agents on counterterrorism work, even though they were on the books as criminal-program agents. The inspector general concluded that the FBI “reduced its investigative efforts related to traditional crimes by more than 2,400 agents.”
Over the past eight years, the ranks of FBI agents have increased, from about 11,000 to 12,575, and virtually all have been assigned to anti-terrorism duties, the newspaper said records show.
The Justice Department and the Office of Management and Budget assert that traditional criminal enforcement by the FBI hasn’t suffered.
“The administration strongly disagrees that the FBI has been anything less than effective in the years since 9/11 in combating domestic crime issues,” said OMB spokesman Sean Kevelighan.
“We work a lot smarter than we have in the past,” said FBI Assistant Director Chip Burrus.
Still, Burrus acknowledged that the bureau has reduced its efforts to fight fraud. He likened the FBI’s current fraud-enforcement policies – in which losses below $150,000 have little chance of being addressed – to “triage.”
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