Financial Institution Fraud

Pursuant to a legislative requirement and a congressional request, GAO determined whether the Department of Justice (DOJ): (1) complied with a legislative requirement that it create a regional office of its fraud section in northern Texas; and (2) should establish other such offices.

GAO found that: (1) DOJ established a fraud section regional office in Dallas; (2) DOJ designated the senior fraud section attorney heading the Dallas Bank Fraud Task Force as director of the new office and designated other fraud section attorneys on that task force as staff, taking the minimum steps necessary to comply with the legislative requirement; and (3) the fraud section was unable to transfer or hire enough new attorneys to staff the office, resulting in 11 task force attorneys commuting between the District of Columbia headquarters and the Dallas office. GAO also found that DOJ opposed establishing regional offices because: (1) fraud section attorneys lacked trial experience; (2) of difficulty in recruiting qualified personnel; (3) of unnecessary competition between fraud section attorneys and the U.S. Attorney's Office over investigative resources and the cases each office would handle; and (4) fraud section attorneys lacked familiarity with the local situation. In addition, GAO found that: (1) it could not determine whether DOJ should establish additional regional offices, since the Dallas regional office had no observable impact on the prosecution of financial institution fraud; (2) DOJ established the Special Counsel for Financial Institution Fraud to coordinate its efforts and ensure that resources were allocated to the most significant cases; (3) in December 1989, the Attorney General announced the establishment of task forces in 27 cities to investigate and prosecute financial institution fraud and allocated over 400 additional staff; and (4) Federal Bureau of Investigation officials stated that they had already established good working relationships with the U.S. Attorneys Office and could not see the advantage in creating another office to perform the same mission.