Inside the FBI: Financial Crimes
With Keith Slotter
Section Chief, White Collar Crime Program
Thursday, May 8, 2003; 1 p.m. ET

White collar crime is responsible for the loss of billions of dollars annually to the government, businesses, and citizens nationwide. The FBI's White Collar Crime Program investigates financial crimes of various national corporations and technology firms.

Join Keith Slotter, section chief in the White Collar Crime Program, on Thursday, May 8 at 1 p.m. ET, as he discusses the FBI's efforts in addressing major corporate and investment frauds.

The transcript follows.

NOTE: Per the FBI's request, please DO NOT use this forum to post crime leads or solicitations to investigate matters. If you have an emergency, please contact the nearest FBI office or, if outside the United States, contact the nearest Legal Attaché office.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

Maryland: Hello Mr. Slotter,

I am currently taking a course on White Collar Crime. I am curious as to your opinion on the following question:

Do you think that people such as judges, political leaders and law enforcement agents should be sentenced more severely than the average White Collar Criminal mainly in part due to their position and power?

Thank you!

Keith Slotter: First, let me say that white-collar crime is very serious for all offenders and tough penalties should apply for all types. To answer your question, yes, I believe as civic leaders, the types of individuals you name should be held to a higher standard and held accountable with tough sentences depending on the totality of the circumstances.

Washington, D.C.: I would like to know what kind of punishment these white-collar criminals are subject to. To me these people are worse than the majority of violent offenders in maximum security. The ruin not just a few lives -- but thousands. I also think that given the EXTENT of the damage they have caused (Enron, Worldcom) I think they should have every asset they 'own' (read "stole") confiscated in partial repayment to those who had their pension or life savings disappear as a result of their actions.

Keith Slotter: Punishment for white-collar criminals varies greatly and often sentences are not as severe as violent criminals, drug dealers, etc. receive. Often times, fraud schemes are much more profitable than certain violent crimes, such as bank robberies, but the sentences aren't as severe.

With the recent spate of corporate frauds and the passing of the Sarbanes-Oxley Act last year, the landscape is changing and we're seeing some very lengthy sentences in this arena. As you indicate, asset forfeiture is an extremely important aspect of these investigations and we make seizing illicit gains a top priority within the criminal case.

Fort Lauderdale, Fla.: Does the FBI go after telemarketers who promise prizes, or vacations, but never deliver what they promise?

Keith Slotter: Telemarketing fraud is a top priority and a subject near and dear, as I was involved in Operations "Disconnect" and "Senior Sentinel" targeting boiler rooms in your area. We've made great strides in this area, but the problem persists, particularly in Canada where illegal telemarketers try to avoid detection but still prey on U.S. victims.

Philadelphia, Pa.: What is the lowest dollar loss case the FBI would investigate relating to corporate fraud?

Keith Slotter: Generally, we're investigating companies with losses exceeding $100,000, but these cases usually go well beyond that. For instance of our approximately 100 pending corporate fraud cases, over 20 have losses over $100 million and at least 8 have losses in excess of $1 billion - these are the really big cases like Enron, Worldcom, and HealthSouth.

Washington, D.C.: There have been a few Hollywood movies, most recently "Catch Me If You Can," that have used financial crimes and credit fraud as story lines. Do you believe that Hollywood is helping to increase public awareness of this growing area of crime? Also, are there specific types of financial crimes that should receive more public attention?

Thanks!

Keith Slotter: The story of Frank Abagnale in "Catch Me If You Can" is intriguing and true to life. His is quite a story and I believe is beneficial in increasing public awareness. Unfortunately, most white-collar crimes don't have Hollywood appeal and many of these stories aren't told.

Crimes that probably need more attention include Identity Theft and Health Care Fraud. Incredibly, these crimes cost this country nearly $100 billion per year.

Willingboro, N.J.: Considering the sometimes exorbitant audit fees paid to CPA firms, it's easy to see how they can forego their independence and their willingness to make the tough calls to expose financial wrongdoings by their clients.

What role could the government play in assuring the validity of company financial statements, and what is your opinion about the worth of the audit function of CPA firms?

Keith Slotter: Good questions, though not a lot of easy answers. I am a CPA and have always questioned the true independence of audits for a variety of reasons. Several new laws, including Sarbanes-Oxley have strengthened the system, including financial statement certification by CEOs, government oversight in ensuring new review standards are implemented in the profession, and tougher penalties for offenders.

However, the fate of Arthur Andersen probably provides a stronger deterrent than any government regulator could implement.

Washington, D.C.: Has the FBI brought any cases to prosecution involving fraudulent telemarketing firms that collect money at the request of and with the assistance of the local or state police in any jurisdiction?

Keith Slotter: Yes, we have had some successful cases in this area, but it is often difficult to prove intent. It is common for police departments and others to hire professional telemarketers to raise funds for legitimate causes. The problem is the percentage that actually goes to the charity. It is not uncommon for the charity or benevolent organization to receive only a small fraction of the donation (less than 10%!).

Rule of thumb: Before making a donation over the phone, ask the telemarketer how much will actually go toward the charity. If you get an ambiguous answer, I'd make the donation directly to the PD or similar organization in person.

Addis Ababa, Ethiopia: Does the FBI monitor American companies around the world?

Keith Slotter: The FBI does not "monitor" companies, but many of our fraud investigations are international in scope.

Los Angeles, Calif.: How does the FBI generate a first lead in a case in white collar crime? In other words, how do you generally find out that crime is going on in the first place?

Keith Slotter: Leads are generated in a variety of ways, including tips from the general public, informant information, newspaper reporting, victim complaints, and statutory reporting requirements such as frauds committed against financial institutions, among others.

Mobile, Ala.: What steps are the FBI taking to counter the increasing use of the Internet as a tool to commit crime?

Keith Slotter: Several. Last year, the FBI created the Cyber Crimes Division dedicated to illegal intrusions, Internet Crimes Against Children, pornography, and Internet Frauds.

Additionally, the FBI established the Internet Fraud Complaint Center (IFCC) in Clarksburg, WV, to compile information in this area and initiate new cases based upon victim complaints.

Maryland: Thank you for your response!

As I have learned in this course, White Collar Crime is more serious and common then most citizens are aware of. Some people weren't even aware of White Collar Crime until the Enron case.

What do you suggest is the best way to educate the public on the seriousness of White Collar Crime?

Keith Slotter: Forums such as this are great educational tools. We do our best to promote investigations and alert the public as to particularly troublesome scams. We also work closely with private and civic organizations, such as the AARP, National White Collar Crime Center, and Citizen Alert organizations.

New Orleans, La.: What is your biggest concern with regard to white collar crime in the future?

Keith Slotter: Several areas:

- Continued rise in corporate fraud;
- Identity Theft;
- Continually evolving health care fraud schemes;
- Investment frauds, such as Prime Bank Investment Schemes;
- Sophisticated money laundering activities.

New Orleans, La.: What do you think needs to be done to help in the fight against white collar crime (e.g. legislation, public awareness, etc.)?

Also, what difficulties do you face when investigating white collar crimes?

Thanks

Keith Slotter: All of what you cited. Public awareness is crucial. New legislation is being passed all the time. Recent provisions include the USA Patriot Act (money laundering and terrorist financing) and Sarbanes-Oxley (corporate fraud). Currently, there are at least 10 separate identity theft legislative proposals before Congress.

WCC is always challenging because the crimes are often complex, document and/or computer intensive, and require a great attention to detail. They are also very rewarding. I think it's the best work in the FBI, but I confess to being biased.

Washington, D.C.: So any CPA can apply to work for the FBI? I thought FBI is for catching criminals while the SEC is responsible for catching corporations and companies.

Keith Slotter: CPAs are always in great demand at the FBI.

Both the FBI and SEC investigate corporate criminals and we generally do so in tandem. The difference is that the SEC seeks civil remedies, generally resulting in fines and prohibitions, while the FBI conducts criminal investigations, seeking prosecution of responsible individuals or the corporation itself.

Keith Slotter: Thank you for submitting your questions and taking the time to "chat". My time is up for today, but I hope to do it again another time. Thanks for your interest and support.

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