Campbell said the "jury is still out" on just how much criminal activity the office might find, particularly on Wall Street, which saw a sudden decline in the value of securities backed by pools of mortgages last year. "There are market forces in play in that area, and that doesn't necessarily mean there is fraud," said Mr. Campbell, 41 years old.That said, the very formation of the task force likely signals recognition by prosecutors and investigators that fraud is out there. At least some of the ongoing investigations within the Eastern District are focused on now-defunct American Home Mortgage Investment Corp., the Journal reported, including allegations that company officials "made misrepresentations in securities filings about a company's financial position and the quality of its mortgage loans, including failing to disclose a rising number of loan defaults, or engaged in questionable accounting to hide losses." The investigation overlaps with a separate investigation by the FBI into subprime lending that now encompasses 20 firms. That investigation was initially disclosed to the press in January.
Prosecutors Step up Mortgage Investigations
Federal prosecutors have intensified their investigation into Wall Street and the mortgage trade, forming a new task force led by assistant U.S. attorney Jonathan Green. Inquiries will range from fraud by brokers, to securities fraud and insider trading allegations, according to a report Monday in the Wall Street Journal. The group includes officials and agents from the FBI, Secret Service, the FDIC, and the New York State Banking Department. Benton Campbell, the U.S. attorney for Eastern District of New York in Brooklyn involved in the task force, stressed in an interview with the Journal that the group is not out on a mortgage-style witch hunt: