Task Forces Formed to Fight White-Collar ‘Crime in the Suites’

Atty. Gen. Dick Thornburgh, flanked by U.S. attorneys from New York, Chicago and Kansas City, today announced formation of special task forces to target “crime in the suites,” primarily securities and commodities fraud.

The Securities and Commodities Fraud Task Forces, including 15 additional assistant U.S. attorneys, will be located in six cities: New York, Chicago, Los Angeles, San Francisco, Kansas City and Denver.

U.S. Atty. Rudolph Giuliani in New York and U.S. Atty. Anton Valukas in Chicago already have undertaken substantial investigations of the markets in those two cities.

On Investors’ Behalf

“We are undertaking to bring this additional firepower to bear on behalf of investors who might otherwise run the risk of being defrauded or lose confidence in the market,” Thornburgh said.

He said the task forces are being formed to “combat what can aptly be called crime in the suites.” Fraud is being committed “under the guise of respectability in the financial and securities markets,” he said.

In addition, Thornburgh said, the Treasury loses more than $90 billion a year as a result of tax fraud, and white-collar crime has been a factor in many recent business failures, including many of the bank and savings and loan closings.

There was no talk of how much the new effort will cost. Those involved in the task forces will be senior, experienced prosecutors who will be replaced in their current jobs by new attorneys, Edward S. G. Dennis, assistant attorney general in charge of the Justice Department’s criminal division, said at a news conference.

Complex Crimes

The task forces will concentrate on the most complex and difficult frauds, including stock loan frauds, precious metals fraud, “parking” of securities with buyers concealing how much of a stake they have in a company’s stock, and major bank and brokerage frauds, plus tax evasion, obstruction of justice and perjury, Thornburgh said.

“These investigations are difficult and require the sophisticated efforts of experienced prosecutors,” Thornburgh said. “They are not made by breaking down the door and seizing the evidence.”

Agents from the Securities and Exchange Commission, the Internal Revenue Service, the Postal Inspection Service, the FBI and the Commodity Futures Trading Commission also will be involved in the investigations.

Attack on Insider Trading

Giuliani, who is leaving his post today after five years, made a name for himself in part by attacking insider trading on Wall Street and has long called for additional money to uncover fraud in the securities markets.