The FBI is using behavioral profiling to target suspected white collar criminals. Agents assigned to the task are drawing from experience tracking serial killers:
For about two years now, agents with the Federal Bureau of Investigation's Behavioral Analysis Unit have been consulting with their colleagues in New York who specialize in securities fraud detective work. The BAU agents are going over the case files put together by the FBI for Madoff and other convicted scammers like Bayou Group's Samuel Israel, whose $400 million hedge fund turned out to be Ponzi scheme, and former Democratic fundraiser Hassan Nemazee, who stole nearly $300 million from Citigroup and two other big banks.
The hope is the BAU agents, whose work in profiling serial killers has been popularized in books, movies and on TV, can get into the minds' of fraudsters and see what makes them tick.
It is part of an effort by the agency to deter rampant fraud:
The expanded efforts to sniff out white collar crime arise from a deep-seeded belief shared by many in law enforcement - that fraud is rife in some corners of Wall Street and corporate America. Manhattan U.S. Attorney Preet Baharara says his office, which is prosecuting the big insider trading case against Galleon Group co-founder Raj Rajaratnam, has found that trading by hedge funds on confidential information is "pervasive and pernicious."
Indeed, some of the FBI agents in New York assigned to investigating securities fraud openly describe some of their targets as operating like "professional criminals" - the kind of language you might expect agents to use when discussing the Mob or other organized crime syndicates.
In 2009, billionaire Raj Rajaratnam was ensnared in the largest case of insider trading ever brought against a hedge fund.
It's the latest hit to the reputation of Wall Street, which has also been shaken over the past year by the Bernard Madoff scandal, other Ponzi schemes, and the whirlwinds of controversy surrounding the broader crisis in America's banking system...
Authorities said the arrests Friday show they are pursuing fraud at high levels of Wall Street with the same determination, and the same tools, that they use on drug lords or mobsters.
"This case should be a wake-up call for Wall Street," said Preet Bharara, US Attorney for the Southern District of New York, who announced the arrests along with the FBI. "It should be a wake-up call for every hedge fund manager and every Wall Street trader and every corporate executive who is even thinking about engaging in insider trading."
Last December, an entire network of insider dealing was exposed in a major bust:
Three technology company executives and a salesman for an "expert network" firm were arrested and charged with leaking confidential tips to hedge funds, including secret details about Apple Inc's iPad ahead of its launch.
The case is part of a widening probe of insider trading, which intensified with a string of raids on hedge funds last month and subpoenas for information about their activities.
The charges relate to money managers' ties with so-called expert networking firms, which help investors meet business experts to research a specific industry.
The approach is part of a shift in tactics from the prior administration, which pulled 2.400 agents from a division pursuing financial fraud:
Thousands of white-collar criminals are not being prosecuted in federal court -- and in many cases, not at all -- because of the Bush administration's restructuring of the FBI after the attacks of 9/11.
Five and a half years later, the White House and Justice Department have not replaced at least 2,400 agents shifted to counterterrorism work, leaving far fewer on the trail of identity thieves, con artists and other criminals.
The Bush cabal not only pulled the cops off of Wall Street, it gave one of its czars the authority to place financial firms above the law:
President George W. Bush has bestowed on his intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations...
William McLucas, the Securities & Exchange Commission's former enforcement chief, suggested that the ability to conceal financial information in the name of national security could lead some companies "to play fast and loose with their numbers." McLucas, a partner at the law firm Wilmer Cutler Pickering Hale & Dorr in Washington, added: "It could be that you have a bunch of books and records out there that no one knows about."