File Bankruptcy

So far there have been 1.4 million bankruptcy filings this year but the numbers of prosecutions for criminal bankruptcy fraud have declined.

U.S. authorities prosecuted the fewest number of people and companies for criminal bankruptcy fraud this year since at least 1986, even as filings rose amid the worst economic crisis since the Great Depression.

The FBI, which is the primary agency that probes such cases, says it is putting more emphasis on other white-collar crimes, including securities and mortgage fraud. The bureau had reassigned agents handling white-collar crimes to national security after the Sept. 11 attacks.

Many advocates for the criminal prosecution of debtors accused of bankruptcy fraud have decried the change saying that if FBI agents refocus their energy on bigger fish it will create an open season environment for “debtors out to scam the system.”  That’s just simply ridiculous.  While there are real cases of bankruptcy fraud, usually committed by individuals and corporations who have a history littered with unethical dealings anyway, most debtors filing bankruptcy are doing so in a last ditch effort to save their financial lives. Most debtors filing bankruptcy are not out to defraud the system. It is about time that the FBI put more attention on one of  the real root causes of this financial crisis-trained professionals who knowingly railroaded unsuspecting homeowners into mortgages they could not afford or that were simply toxic.  In many cases debtors filing bankruptcy are the casualties of mortgage fraud perpetuated by unscrupulous “mortgage brokers” and the corporations who backed them. I say, hooray for the FBI for going after the real crooks.