March 12, 2009

Fraud cases could accelerate

The case against New York trader Bernard Madoff may be the kickoff for an open season of prosecuting executives for fraud, a top fraud attorney said.

It's going to be open season. You'll see a lot more indictments down the road, Daniel Petrocelli, whose clients include former Enron Chief Executive Officer Jeffrey Skilling, said to The New York Times.

U.S. President Barack Obama's federal budget includes increase spending for the FBI to tackle white-collar crime and a 13 percent budgetary increase for the Securities and Exchange Commission, the Times reported Thursday.

With a financial crisis ripping into global economies, Obama wants to send a message of zero tolerance for mortgage fraud, Connecticut Attorney General Richard Blumenthal told the Times.

As loses mount, bankers will argue they were following the herd mentality, making the same mistakes other bankers made, the newspaper said.

We'll all sing the stupidity song, said a lawyer, who did not want to be named. We'll all sing the 'These guys never told me' song.

On the other hand, the Times reported, expanded fraud statues could lead to a rising percentage of guilty pleas, as defendants try to avoid long prison sentences that are linked to the amounts of money lost or stolen.

Madoff's lawyers said their client would plead guilty to a series of federal charges, which carry a total of 150 years in prison as penalty.