Prosecutions for Bank Fraud Fall Sharply

CATHERINE RAMPELL

Dollars to doughnuts.

Federal prosecutions for financial institution fraud have tumbled over the last decade, despite the recent troubles in the banking sector, according to a new analysis of Justice Department data by the Transactional Records Access Clearinghouse (TRAC) at Syracuse University.

Dollars to doughnuts.

This category can refer to crimes committed both within and against banks. Defendants include bank executives who mislead regulators, mortgage brokers who falsify loan documents, and consumers who write bad checks. (Here are some recent cases of bank fraud prosecutions.)

During the first 11 months of the 2011 fiscal year, the federal government filed 1,251 new prosecutions for financial institution fraud. If that pace continues, TRAC projects a total of 1,365 prosecutions for the fiscal year. That’s less than half the total a decade ago.

The decline in these new cases stands in contrast to the government’s broader approach to federal criminal prosecutions. Federal prosecutions for other crimes have grown tremendously, with the number of total new prosecutions filed for all federal crimes nearly doubling over the last decade:

Investment advisor sentenced to prison for defrauding retirees

 
A financial advisor from Topanga has been sentenced to nine years in federal prison for running an "audacious" Ponzi scheme that defrauded investors, many of them retired bus drivers, out of more than $7 million.

Thomas L. Mitchell, 64, was sentenced Monday at the federal courthouse in Los Angeles. U.S. District Judge Gary A. Feess also ordered him to pay more than $7 million in restitution to about 60 victims.

Mitchell, who pleaded guilty in April to mail fraud, established several companies to target retirees, many of them former transit operators for the Los Angeles County Metropolitan Transportation Authority, prosecutors said. He operated the scheme from 1995 to 2010 and cost many victims most or all of their retirement savings, said Thom Mrozek, a spokesman for the U.S. attorney’s office in L.A.

Mitchell told investors that he would put their money in stocks, bonds and real estate but in fact used most of the funds he raised to finance a lavish lifestyle including a luxury apartment, high-end cars and expensive travel and entertainment, prosecutors said.

“Mr. Mitchell committed an audacious fraud that spanned many years and devastated many victims,” said U.S. Atty. André Birotte Jr. “He was able to lead a luxurious lifestyle by stealing the life savings of hard-working men and women who only sought a dignified retirement. For his criminal conduct, Mitchell richly deserves his nearly decade-long prison sentence.”

RELATED:

Barry Minkow gets 5 years in prison in Lennar fraud case

Bank emails, bogus lotteries: Your weekly ScamWatch

Ponzi, Ponzi, Ponzi: Your weekly ScamWatch

-- Stuart Pfeifer

Photo: Thomas L. Mitchell was ordered to pay more than $7 million in restitution. Credit: Bloomberg