From the beginning of his tenure, the Attorney General established twin commitments to the American people: that the Department of Justice will devote significant resources to combating financial fraud, and that we will be as aggressive and creative as we can be in holding accountable those who, in violating the law, contributed to the financial crisis.
This case demonstrates the full force of those commitments.
First, today’s action culminates a massive, multi-year investigation by a team of nearly two dozen lawyers from the United States Attorney’s Office in Los Angeles, and the Federal Programs and Consumer Protection branches of the Civil Division. Our lawyers and staff served hundreds of civil subpoenas, spent thousands of hours reviewing and analyzing millions of pages of documents, and contacted and interviewed over 150 witnesses, including dozens of former S&P analysts and executives. This enormous task would not have been possible without the combined expertise and tireless efforts of this team. I thank them for their commitment to this historic investigation and congratulate them on reaching this important milestone.
Second, the lawsuit being announced today demonstrates the Department’s commitment to using every available legal tool to bring to justice those who bear responsibility for the financial crisis. Our complaint asserts claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, or FIRREA. This statute was enacted in the wake of the Savings and Loan crisis in the late 1980s but has not been used very often in recent years. One of Congress’s stated purposes for FIRREA was to provide “enhanced enforcement powers and increase criminal and civil money penalties for crimes of fraud against financial institutions.” Under this law, the Department of Justice can seek civil penalties for the violation of certain underlying criminal statutes, including mail fraud, wire fraud and bank fraud, which the Department alleges as part of this lawsuit. But, unlike a criminal case that requires proof beyond a reasonable doubt, the FIRREA provisions underlying today’s lawsuit require only proof by a preponderance of the evidence. In addition, FIRREA authorizes the Department to seek civil penalties up to the amount of the loss suffered by a financial institution as a result of the violation.
As a result of these provisions, FIRREA is a powerful weapon for combatting financial fraud, and it will continue to play a key role in the Department’s efforts to hold accountable those who violated the law.