In testimony before the House Subcommittee on Oversight and Investigations Tuesday, Neil Barofsky, the special investigator general for the Troubled Asset Relief Program, said that TARP fraud could cost taxpayers billions.
"If, by percentage terms, some of the estimates of fraud in those programs apply to TARP programs, we are looking at the potential exposure of tens if not hundreds of billions of dollars in taxpayer money lost to fraud," Barofsky said.
"History teaches us that an outlay of so much money in such a short period of time will inevitably draw those seeking to profit criminally."
"As we build," Barofsky continued, "we have focused on developing relationships with other law enforcement and prosecutorial agencies to leverage those resources and to provide proactive leadership."
"For example, I have joined the President's Corporate Fraud Task Force and have initiated coordinated planning efforts with the FBI, the Criminal and Civil Divisions of the Department of Justice, the Internal Revenue Service, and U.S. Attorney's offices from coast to coast."
He further added, "We have already opened several criminal investigations involving multiple jurisdictions. We have also teamed up with the SEC, and have provided assistance to them in shutting down a securities fraud scam in Tennessee that had reaped millions by illegally trading on the TARP name."
"Based on a meeting we had last week with the Chairman, Mary Schapiro," Barofsky said, "I am confident that our partnership with a reinvigorated SEC will generate important investigations and serve as a powerful deterrent to those contemplating fraud in connections with TARP programs."
Finally, Barofsky said, "we have been coordinating closely with the New York State Attorney General's investigation into executive compensation issues, including issues surrounding the year-end bonuses paid by Merrill Lynch."
"Through these relationships, we are exploring task force and similar regional relationships throughout the country to deter criminal activity before it occurs, and to investigate and prosecute any and all who attempt to profit criminally from this national crisis."
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