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 Home > News & Policies > July 2003

For Immediate Release
Office of the Press Secretary
July 22, 2003

President's Corporate Fraud Task Force Compiles Strong Record
Fact Sheet: One-Year Anniversary of the President's Corporate Fraud Task Force
The President's Leadership in Restoring Confidence to the Marketplace

[I]t is time to reaffirm the basic principles and rules that make capitalism work truthful books and honest people, and well-enforced laws against fraud and corruption.
          President George W. Bush, July 9, 2002

[B]y our concentrated efforts, the Department and our colleagues on the Corporate Fraud Task Force are moving decisively to combat corporate fraud and restore investor confidence in the marketplace.
          Deputy Attorney General Larry Thompson, March 26, 2003

The Task Force's One-Year Anniversary. During its first year, the President's Corporate Fraud Task Force has compiled a strong record in combating corporate fraud and punishing corporate wrongdoers. Coordination by federal authorities has been significantly enhanced by drawing on the expertise of the Task Force's membership. And by aggressively investigating and prosecuting fraud, the Task Force has helped to restore investor confidence.

The President created the Corporate Fraud Task Force by Executive Order #13271 on July 9, 2002. It is chaired by Deputy Attorney General Larry Thompson and includes senior Department of Justice officials, the heads of the Departments of Treasury and Labor, and the heads of the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Energy Regulatory Commission, Federal Communications Commission and United States Postal Inspection Service. Last week, the Deputy Attorney General added the Department of Housing and Urban Development's Office of Federal Housing Enterprise Oversight (OFHEO) to the Task Force to strengthen the coordination of its investigations.

Through fair, swift and decisive actions, the Task Force is helping to remove suspicion, doubt and uncertainty that pervaded the marketplace one year ago. Investor confidence is returning and the public is recognizing that the vast majority of corporate leaders are honest and ethical stewards of their shareholders and employees. The Task Force's actions are successfully working to:

  • restore confidence to the marketplace;
  • provide fair and accurate information to the investing public;
  • reward shareholder and employee trust;
  • and protect jobs and savings of hard-working Americans.

Prosecuting Corporate Fraud. The Task Force has assisted the investigation in virtually every corporate fraud case brought by federal prosecutors over the last year. For example, the FBI, Postal Inspection Service, and IRS have bolstered the effectiveness of the Justice Department's 450 prosecutors and 130 investigators, auditors, and paralegals who have worked on corporate fraud matters. With unparalleled coordination by Executive branch agencies, federal prosecutors, as of May 31, 2003:

  • Obtained over 250 corporate fraud convictions or guilty pleas, including at least 25 former chief executive officers;

  • Charged 354 defendants with some type of corporate fraud crime in connection with 169 filed cases;

  • Investigated over 320 potential corporate fraud matters, involving in excess of 500 individuals and companies; and

  • Obtained restitution, fines, and forfeitures in excess of $85 million since inception of the Task Force, in connection with cases involving securities fraud, commodities fraud, investment fraud, and advanced fee schemes, conduct which is often part of corporate wrongdoing.

Aggressively Pursuing Civil and Regulatory Enforcement. Civil and regulatory departments and agencies on the Task Force are stepping-up coordination to protect investors and consumers from corporate fraud.

  • Securities and Exchange Commission: During fiscal year 2002---the year in which the Task Force was created --- the SEC filed almost 50% more financial fraud and reporting cases than in the previous fiscal year. From October 1, 2002 through June 30, 2003, the SEC filed 443 enforcement actions, 137 of which involved financial fraud or reporting. Eleven companies have been suspended from trading, and the assets of 30 companies have been frozen. In addition, the SEC has sought to bar 124 offending corporate executives and directors from again serving in publicly traded companies. Under the Sarbanes-Oxley Act, which the President signed into law on July 30, 2002, the SEC is employing important new tools to improve corporate responsibility and protect America's shareholders and workers. And, the SEC is sharing its securities expertise and knowledge with other Task Force members in a substantial number of cases.

  • Federal Energy Regulatory Commission: FERC's numerous investigations into the manipulation of energy markets and violations of standards of conduct have resulted in settlements of more than $35 million on behalf of energy customers. FERC has revoked the marketing authorizations for Enron affiliates and is pursuing similar actions against other market participants. FERC's actions were facilitated by coordinated actions and oversight of the Corporate Fraud Task Force.

  • Commodity Futures Trading Commission: CFTC's investigations in the last year resulted in 58 enforcement actions against 157 defendants. Among other things, the CFTC has investigated the actions of more than 30 energy companies. In its enforcement actions, the CFTC obtained 34 permanent injunctions and 17 restraining orders to freeze assets and preserve books and records. It also obtained 58 cease and desist orders in administrative proceedings. Proceedings initiated by the CFTC have yielded more than $133 million in civil monetary penalties and $105 million in restitution and disgorgement, aided by the work of the Corporate Fraud Task Force.

  • Department of Labor (Employee Benefits Security Administration): EBSA is aggressively protecting employee benefit plans from the effects of corporate fraud. In a notable case, EBSA recently filed a civil complaint against the Enron Corporation and its executive officers for failing to prudently protect Enron workers' retirement assets. Much of the underlying investigative work was accomplished by members of the Task Force.

Restoring Investor Confidence. The Task Force's swift, fair and decisive actions are helping to restore confidence to the marketplace. CEOs and other executives who fudged the numbers and deceived their investors and workers are being held accountable. The actions of the Task Force are helping to demonstrate something equally important to the American people: the vast majority of corporate leaders are honest and ethical who work hard to earn the trust of their shareholders and employees.