The investigations into TARP-related criminal and civil misconduct show no signs of abating. On April 20, 2010, the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), the watchdog agency investigating conduct related to TARP assets, disclosed 84 ongoing criminal and civil investigations in its Quarterly Report to Congress. SIGTARP is investigating not only TARP fraud but also TARP-related accounting, securities, bank, and mortgage fraud, insider trading, trade secrets theft, money laundering, false statements and obstruction of justice. In a recent interview with Bloomberg News, Neil Barofsky, head of SIGTARP, said specifically that he was looking into potential TARP-related insider trading and whether bankers purchased stock in their own companies before it was publicly known that they would receive TARP funding. In addition, as Barofsky stated in recent testimony before the Senate Finance Committee, SIGTARP plans to investigate mortgage-related securities similar to those at issue in the Goldman Sachs enforcement actions. Barofsky said that though he would work with the SEC, SIGTARP would “lead the charge.”
The Quarterly Report highlights other investigations that showcase the breadth of SIGTARP’s reach. As part of a mortgage fraud interagency task force, SIGTARP is investigating potential fraud at Omni National Bank (before its failure and Government takeover) and whether it had an impact on Omni’s application for TARP funds under the Capital Purchase Program. Notably, Omni never actually received those funds. SIGTARP investigations have also resulted in bank fraud charges against Mount Vernon Money Center executives which are connected to TARP because some of the allegedly misappropriated funds came from institutions in which taxpayers are invested through TARP. In another fraud and money laundering case, TARP is implicated because the indicted telemarketing firm operators “took advantage of the publicity surrounding the Administration’s mortgage modification efforts” under the TARP-funded Making Home Affordable initiative to induce customers to purchase modification services that were never provided.
These investigations – launched from multiple agencies and aimed at a range of activity emanating from TARP assets – make clear that the enforcement landscape stretches far beyond obvious misuses of TARP funds.