The Special Inspector General (SIG) for the Toxic Asset Relief Program (TARP) just released its January 2014 Quarterly Report to Congress on the status of TARP.  SIGTARP is the lead law enforcement agency investigating rescue fraud which includes bank, mortgage, and securities fraud and money laundering as well as crimes that prey upon people or institutions seeking help from TARP's recue program.  More than six years after TARP was implemented in the wake of the financial crisis SIGTARP says it is still investigating fraud and in fact has ratcheted up enforcement over the last two years.

The investigative agency says that in 2012-2013 it nearly doubled the number of defendants that were criminally charged from the numbers in 2009-2011 and also more than doubled the number who were convicted.  As of the end of 2013 its investigations have resulted in criminal charges against 174 defendants, 112 of which were senior officers of companies.  Already 122 of these have been convicted and others are awaiting trial.  Seventy-two have received prison sentences with 37 receiving those sentences in 2013 compared with 13 in 2012. 

Because the financial crisis was caused by toxic mortgage assets and TARP's original purpose was to remove those assets from bank balance sheets, SIGTARP said it is not surprising that most of the fraud it investigates is mortgage related.  The mortgage process is complicated with many participants and multiple moving parts the report says, and fraud can seep into the process at each stage. SIGTARPS investigations have detected fraud at origination, during the life of risky mortgages, and at the sale of defective mortgages on the secondary market.

SIGTARP mentions as one of its recent signal achievements the October 2013 conviction of Bank of America/Countrywide Financial for defrauding the U.S. Government through a process known as High-Speed Swim Lane or "Hustle."   Another was the multiple year prison sentences handed down on Jun 28, 2013 to the CEO and a vice president of American Mortgage Specialists for defrauding TARP recipient BNC National Bank. 

SIGTARP said it is focusing on several types of crime.  The two prosecutions listed above are examples of rescue fraud cases involving TARP banks.  It is also targeting rescue fraud involving mortgage modification schemes targeting homeowners including Internet-based scams and those that target victims either through the Internet, radio, or direct mail.   Other types of fraud attempt to take advantage of TARP by manipulating bankruptcy laws or charging homeowners for phony foreclosure prevention assistance.

SIGTARP says it currently has more than 150 open investigations and that "Treasury's current status in recovering TARP funds has no bearing on SIGTARP's enforcing the law for TARP related crime.  A company's repayment of TARP must not serve as a shield to criminal liability."  It will continue, the report says, to open new investigations of ongoing suspected rescue fraud and to detect other rescue fraud by or against TARP institutions that had been hidden.