Office of Inspector General Audit reveals historical bankruptcy fraud referral data

The Office of Inspector General's (OIG) audit of the U.S. Trustee Programs Efforts to Prevent Fraud and Abuse (Audit Report 03-17) reveals some very interesting historical bankruptcy criminal referral data.  In particular, from January 1988 (when tracking criminal referrals began) through September, 2001, U.S. Trustees made 7,564 bankruptcy criminal referrals to law enforcement.  The referrals resulted in 1,038 indictments and 837 convictions.  Potential losses from the criminal conduct referred was estimated at approximately $11 billion.  Additional data on the referrals, convictions and potential losses by regional office, together with the limitations of the data, is available in this excerpt of the OIG Audit.

Effective in FY 2005, all 95 U.S. Trustee Program offices began reporting criminal referral data using a new Criminal Enforcement Tracking System.  This system provides criminal referral data that is more reliable and acccessible than in years past.   

Comments

[David O'Donnell]

Learning that the Office of Inspector General performed an audit of criminal referrals is an odd development. Having witnessed numerous instances of Bankruptcy Judges and Trustees failing to refer conduct that any sentient person would have to conclude was criminal, or at least suspected to be criminal, as required under Title 18 USC § 3057 - I sent a Freedom Of Information Act request to the DOJ requesting any documents reporting on criminal referals by U.S. Trustees. Their responce was they had no documents and performed no tracking. An odd claim given that one of their own U.S. Trustee manuals clearly stated that performance evaluations of staff includes review of criminal referrals. An X-files theorist might conclude that the best way for a U.S. Trustee to win a top evaluation is to ensure that NO criminal referrals are made which might implicate top law firms (a source of and destination for many DOJ lawyers), former DOJ lawyers currently in bankruptcy practise, or any of their respective well financed clients such as hedge funds and private equity firms. Sorry if I'm not at all impressed with the "bankruptcy crimes" involving mom and pop restaurants and similar small time players, with a rare small time lawyer thrown in for good measure. Why the dearth of action on the professionals involved in the big bankruptcy cases?

[Terri]

How can you find out if a certain person has been named for a criminal referral. Cleveland, Ohio seems to have the lowest referral and convictions, can the local US Trustee be contacted for this information or is it top secret? Thanks!