U.S. Banks Defrauded of Record $1.1 Billion in 1986

The nation’s banks lost a record $1.11 billion through fraud and embezzlement last year, nearly a third more than they did in 1985, a weekly newsletter on white-collar crime said Sunday.

The Corporate Crime Reporter said FBI documents it obtained show agents closed 10,416 cases in 1986, 44.9% more than in 1985. There were 1,957 bank fraud and embezzlement convictions last year.

Of those cases closed in 1986, 72% involved fraud and embezzlements by someone who worked in the bank and 39% of all cases involved over $100,000, the FBI documents showed.

The $1.1 billion taken overall is 32% more than the $841.9 billion lost in 1985, the newsletter said. Cases in the FBI’s New York field office led the nation in losses at $369 million, followed by Houston, $196.6 million; Oklahoma City, $81.3 million; Jackson, Miss., $42.4 million; and Dallas, $37.9 million.

Going into 1987, the Los Angeles field office had the most pending cases with 290. Dallas was next at 189, followed by Houston with 140, Chicago with 118 and New York with 117.

The newsletter said Rep. Douglas Barnard, D-Ga., chairman of the House Subcommittee on Commerce, Consumer and Monetary Affairs, plans hearings in September on insider bank fraud and whether it relates to financial problems suffered by banks and thrift institutions. A subcommittee report in June said insider abuse “has been a significant factor” in failures involving California savings and loans since 1984.