For Immediate Release
Office of the Press Secretary
July 22, 2003
President's Corporate Fraud Task Force Compiles Strong Record
Fact Sheet: One-Year Anniversary of the President's Corporate Fraud Task Force
The President's Leadership in Restoring Confidence to the Marketplace
[I]t is time to reaffirm the basic principles and rules that make
capitalism work truthful books and honest people, and well-enforced
laws against fraud and corruption.
President George W. Bush, July 9, 2002
[B]y our concentrated efforts, the Department and our colleagues on
the Corporate Fraud Task Force are moving decisively to combat
corporate fraud and restore investor confidence in the marketplace.
Deputy Attorney General Larry Thompson, March 26, 2003
The Task Force's One-Year Anniversary. During its first year, the
President's Corporate Fraud Task Force has compiled a strong record in
combating corporate fraud and punishing corporate wrongdoers.
Coordination by federal authorities has been significantly enhanced by
drawing on the expertise of the Task Force's membership. And by
aggressively investigating and prosecuting fraud, the Task Force has
helped to restore investor confidence.
The President created the Corporate Fraud Task Force by Executive
Order #13271 on July 9, 2002. It is chaired by Deputy Attorney General
Larry Thompson and includes senior Department of Justice officials, the
heads of the Departments of Treasury and Labor, and the heads of the
Securities and Exchange Commission, Commodity Futures Trading
Commission, Federal Energy Regulatory Commission, Federal
Communications Commission and United States Postal Inspection Service.
Last week, the Deputy Attorney General added the Department of Housing
and Urban Development's Office of Federal Housing Enterprise Oversight
(OFHEO) to the Task Force to strengthen the coordination of its
investigations.
Through fair, swift and decisive actions, the Task Force is helping
to remove suspicion, doubt and uncertainty that pervaded the
marketplace one year ago. Investor confidence is returning and the
public is recognizing that the vast majority of corporate leaders are
honest and ethical stewards of their shareholders and employees. The
Task Force's actions are successfully working to:
- restore confidence to the marketplace;
- provide fair and accurate information to the investing public;
- reward shareholder and employee trust;
- and protect jobs and savings of hard-working Americans.
Prosecuting Corporate Fraud. The Task Force has assisted the
investigation in virtually every corporate fraud case brought by
federal prosecutors over the last year. For example, the FBI, Postal
Inspection Service, and IRS have bolstered the effectiveness of the
Justice Department's 450 prosecutors and 130 investigators, auditors,
and paralegals who have worked on corporate fraud matters. With
unparalleled coordination by Executive branch agencies, federal
prosecutors, as of May 31, 2003:
- Obtained over 250 corporate fraud convictions or guilty pleas,
including at least 25 former chief executive officers;
- Charged 354 defendants with some type of corporate fraud crime in
connection with 169 filed cases;
- Investigated over 320 potential corporate fraud matters, involving in
excess of 500 individuals and companies; and
- Obtained restitution, fines, and forfeitures in excess of $85 million
since inception of the Task Force, in connection with cases involving
securities fraud, commodities fraud, investment fraud, and advanced fee
schemes, conduct which is often part of corporate wrongdoing.
Aggressively Pursuing Civil and Regulatory Enforcement. Civil and
regulatory departments and agencies on the Task Force are stepping-up
coordination to protect investors and consumers from corporate fraud.
- Securities and Exchange Commission: During fiscal year 2002---the
year in which the Task Force was created --- the SEC filed almost 50%
more financial fraud and reporting cases than in the previous fiscal
year. From October 1, 2002 through June 30, 2003, the SEC filed 443
enforcement actions, 137 of which involved financial fraud or
reporting. Eleven companies have been suspended from trading, and the
assets of 30 companies have been frozen. In addition, the SEC has
sought to bar 124 offending corporate executives and directors from
again serving in publicly traded companies. Under the Sarbanes-Oxley
Act, which the President signed into law on July 30, 2002, the SEC is
employing important new tools to improve corporate responsibility and
protect America's shareholders and workers. And, the SEC is sharing
its securities expertise and knowledge with other Task Force members in
a substantial number of cases.
- Federal Energy Regulatory Commission: FERC's numerous investigations
into the manipulation of energy markets and violations of standards of
conduct have resulted in settlements of more than $35 million on behalf
of energy customers. FERC has revoked the marketing authorizations for
Enron affiliates and is pursuing similar actions against other market
participants. FERC's actions were facilitated by coordinated actions
and oversight of the Corporate Fraud Task Force.
- Commodity Futures Trading Commission: CFTC's investigations in the
last year resulted in 58 enforcement actions against 157 defendants.
Among other things, the CFTC has investigated the actions of more than
30 energy companies. In its enforcement actions, the CFTC obtained 34
permanent injunctions and 17 restraining orders to freeze assets and
preserve books and records. It also obtained 58 cease and desist orders
in administrative proceedings. Proceedings initiated by the CFTC have
yielded more than $133 million in civil monetary penalties and $105
million in restitution and disgorgement, aided by the work of the
Corporate Fraud Task Force.
- Department of Labor (Employee Benefits Security Administration):
EBSA is aggressively protecting employee benefit
plans from the effects of corporate fraud. In a notable case, EBSA
recently filed a civil complaint against the Enron Corporation and its
executive officers for failing to prudently protect Enron workers'
retirement assets. Much of the underlying investigative work was
accomplished by members of the Task Force.
Restoring Investor Confidence. The Task Force's swift, fair and
decisive
actions are helping to restore confidence to the marketplace. CEOs
and
other executives who fudged the numbers and deceived their
investors and
workers are being held accountable. The actions of the Task Force
are
helping to demonstrate something equally important to the American
people:
the vast majority of corporate leaders are honest and ethical who
work
hard to earn the trust of their shareholders and employees.
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