Justice Dept. to Double Number of Investigators of Thrift Fraud

Using funds already approved by Congress, the Justice Department will double the number of federal investigators assigned to root out fraud in the nation’s banks and savings and loan institutions, Atty. Gen. Dick Thornburgh announced Thursday.

Thornburgh, labeling the S&L; scandal as perhaps the largest white-collar swindle in U.S. history, said Los Angeles and 26 other cities will receive more than 400 additional prosecutors, FBI agents and federal accountants to complete 8,000 pending cases and to open new investigations of financial fraud.

Twenty-seven of the FBI agents will be assigned to Los Angeles, along with 14 FBI accounting technicians and 15 prosecutors. Ten additional enforcement officers will go to San Francisco and three to Sacramento.

The emphasis is on “target cities where alleged criminal violations in the banking and savings and loan industries are most acute,” said FBI Director William S. Sessions.

Thornburgh said he is concerned that, without the additional investigative effort, the kind of widespread abuses detected so far could recur.

The S&L; bailout and reform legislation approved by Congress this year included $45.8 million requested by President Bush for law enforcement, which Thornburgh said was being used to beef up investigations around the country.

“Prosecutions of those who are accused of violating the law will come--perhaps not as quickly as we would like--but they will come,” Thornburgh said.

Sessions added that “complex bank and thrift fraud investigations are often tedious and long. Investigations involve owners, board members and high-ranking bank officials and often take place against a backdrop of seemingly legitimate business transactions.”

The officials warned that not all stolen or misappropriated assets would be recovered.

“We will make every effort we can to recover lost assets but some have been dissipated or spirited overseas” by the culprits, Thornburgh said.

Marvin Collins, the U.S. attorney in Dallas who attended the news conference, said his experience also has shown that “a lot of assets are in worthless real estate” currently valued at a fraction of its original cost.

Thornburgh, asked why the government had not moved a year or two earlier to put additional FBI agents on the S&L; scandal, replied that “President Bush was the first to address the need for additional resources.”

Asked if he was not closing “the barn door” after most of the horses had escaped, he responded: “No. This barn door still shelters a number of persons who have been engaged in criminal activities.”

He declined comment on specific cases such as Lincoln Savings & Loan of Irvine, whose collapse is expected to cost taxpayers as much as $2.3 billion.