FBI Targets 14 Firms in Subprime Fraud Probe

Suspected cases of mortgage fraud up in two years
By Matt Cantor,  Newser Staff
Posted Jan 30, 2008 6:26 AM CST
FBI Targets 14 Firms in Subprime Fraud Probe
Traders work on Citigroup's equities trading floor on Thursday, Jan. 10, 2008 in New York. Citigroup Inc. and Merrill Lynch & Co., the No. 1 U.S. bank and largest brokerage house, are scrambling again to secure major cash infusions from foreign governments to offset billions of dollars in losses from...   (Associated Press)

The FBI is investigating 14 companies linked to the subprime mortgage crisis, the Wall Street Journal reports. The bureau is pursuing allegations including accounting fraud  and insider trading, said a bureau spokesman. An investigation into the complex secondary mortgage market could implicate major firms that have lost billions of investor dollars on mortgage securities, according to an agent. The companies were not named.

The FBI is currently handling 1,200 mortgage fraud cases. While “subprime loans are decreasing,” banks’ “suspicious activity reports have noted that suspected cases of mortgage fraud are increasing.” Such reports have ballooned from 35,000 in 2006 to a projected 60,000 in 2008. (More subprime crisis stories.)

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