TARP Inspector General Investigations January 2010
Well, first of all, even if you like the Colts and Peyton Manning (I do), you still have to be happy for the Saints and the City of New Orleans. What a great American story.
Back to business though, the Troubled Asset Relief Program Inspector General (TARP IG), Neil Barofsky, announced in his January 20, 2010 report that TARP has continued to develop into a sophisticated white-collar investigative agency. Through December 31, 2009, TARP has opened 86 and has 77 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected TARP fraud, accounting fraud, securities fraud, insider trading, bank fraud, mortgage fraud, mortgage servicer misconduct, fraudulent advance-fee schemes, public corruption, false statements, obstruction of justice, money laundering, and tax-related investigations.
The Inspector General (IG) highlighted three current investigations. First, the IG remarked that Omni National Bank (“Omni”) a national bank headquartered in Atlanta with branch offices in Birmingham, Tampa, Chicago, Fayetteville, N.C., Houston, Dallas, and Philadelphia continued to be under scrutiny. Omni failed and was taken over by the Federal Deposit Insurance Corporation (“FDIC”) on March 27, 2009. Prior to its failure, Omni had applied for but had not been approved for TARP funds. TARP has participated in several investigations concerning Omni that have led to criminal charges as part of a mortgage fraud task force that includes TARP, the U.S. Attorney’s Office for the Northern District of Georgia, the Office of the Inspector General of the Federal Deposit Insurance Corporation (“FDIC OIG”), the Office of the Inspector General of the Department of Housing and Urban Development (“HUD OIG”), the Federal Bureau of Investigation (“FBI”), and the U.S. Postal Inspection Service.
TARP, the IG noted continues to play a significant role in the investigations by the Office of the New York Attorney General, the U.S. Attorney’s Offices for the Southern District of New York and Western District of North Carolina, the Securities and Exchange Commission (“SEC”), and the FBI into the circumstances of Bank of America’s merger with Merrill Lynch and its receipt of additional TARP funds.
And, finally, as previously reported, in August 2009, TARP, along with the FBI, FDIC OIG, and HUD OIG, conducted search warrants at the offices of Colonial Bancorp and Taylor, Bean & Whitaker (“TBW”). On December 16, 2009, TBW consented to its debarment from participating as an originator of Federal Housing Administration (“FHA”)-insured mortgages. HUD also terminated TBW as a Government National Mortgage Association (“Ginnie Mae”) issuer of mortgage-backed securities and took control of TBW’s $25 billion Ginnie Mae portfolio. In conjunction with the suspensions, HUD also proposed debarments of two officers of TBW. On August 7, 2009, Colonial reported that it is the target of a criminal probe. The investigation, the IG noted is ongoing.
The federal government’s enormous investment of monies into the TARP program and the establishment of the TARP IG, means a continued focus on financial crimes in the future.
