[Infowarrior] - The FBI's terrorism trade-off

[Richard Forno]

<http://seattlepi.nwsource.com/national/311046_fbiterror11.html>

Wednesday, April 11, 2007 · Last updated 1:13 a.m. PT The FBI's terrorism
trade-off Focus on national security after 9/11 means that the agency has
turned its back on thousands of white-collar crimes

By PAUL SHUKOVSKY, TRACY JOHNSON AND DANIEL LATHROP P-I REPORTERS © 2007
Seattle Post-Intelligencer

Thousands of white-collar criminals across the country are no longer being
prosecuted in federal court -- and, in many cases, not at all -- leaving a
trail of frustrated victims and potentially billions of dollars in fraud and
theft losses.

It is the untold story of the Bush administration's massive restructuring of
the FBI after the terrorism attacks of 9/11.

Five-and-a-half years later, the White House and the Justice Department have
failed to replace at least 2,400 agents transferred to counterterrorism
squads, leaving far fewer agents on the trail of identity thieves, con
artists, hatemongers and other criminals.

Two successive attorneys general have rejected the FBI's pleas for
reinforcements behind closed doors.

While there hasn't been a terrorism strike on American soil since the
realignment, few are aware of the hidden cost: a dramatic plunge in FBI
investigations and case referrals in many of the crimes that the bureau has
traditionally fought, including sophisticated fraud, embezzlement schemes
and civil rights violations.

"Politically, this trade-off has been accepted," said Charles Mandigo, a
former FBI congressional liaison who retired four years ago as special agent
in charge in Seattle. "But do the American people know this trade-off has
been made?"

Among the findings of a six-month Seattle P-I investigation, analyzing more
than a quarter-million cases touched by FBI agents and federal prosecutors
before and after 9/11:

# Overall, the number of criminal cases investigated by the FBI nationally
has steadily declined. In 2005, the bureau brought slightly more than 20,000
cases to federal prosecutors, compared with about 31,000 in 2000 -- a 34
percent drop.

# White-collar crime investigations by the bureau have plummeted in recent
years. In 2005, the FBI sent prosecutors 3,500 cases -- a fraction of the
more than 10,000 cases assigned to agents in 2000.

In Western Washington, the drop has been even more dramatic. Records show
that the FBI sent 28 white-collar cases to prosecutors in 2005, down 90
percent from five years earlier.

# Civil rights investigations, which include hate crimes and police abuse,
have continued a steady decline since the late 1990s. FBI agents pursued 65
percent fewer cases in 2005 than they did in 2000.

# Already hit hard by the shift of agents to terrorism duties, Washington
state's FBI offices suffer from staffing levels that are significantly below
the national average.

While other federal agencies have stepped in to pick up more of the load in
drug enforcement, and the FBI has worked to keep agents on Indian
reservations, the gaps created by the Bush administration's war on terrorism
are troubling to criminal justice experts, police chiefs -- even many
current and former FBI officials and agents.

"There's a niche of fraudsters that are floating around unprosecuted," said
one recently retired top FBI official, who spoke on condition of anonymity.
"They are not going to jail. There is no law enforcement solution in sight."

In most cases, local law enforcement agencies haven't been able to take up
the slack.

Seattle police Chief Gil Kerlikowske said his department isn't as equipped
to handle complex white-collar investigations -- particularly when officers
must also join anti-terrorism efforts and when federal funding for local
police departments has shrunk.

Whether the solution is to hire more FBI agents or shift some away from the
counterterrorism effort, he said, more resources should be devoted to
solving white-collar crime.

"This is like the perfect storm," Kerlikowske said. "It's now five years
later. We should be rethinking our priorities."

A solution can't come soon enough for a growing number of discouraged fraud
victims: A 75-year-old Issaquah woman who was allegedly swindled out of more
than $1 million. A cancer patient whose identity was stolen from a Seattle
hospital. People who fell victim to a nationwide investment scam worth about
$70 million.

They all sought the FBI's help. They got little or none.

"As far as I'm concerned, the FBI has no interest in protecting people from
these kinds of crimes," said Lloyd Martindale Jr., a Bellingham man who put
$500,000 into an investment con and is still fighting to get some of it
back. "They were not responsive to this at all."

If the FBI had continued investigating financial crimes at the same rate as
it had before the World Trade Center came down, about 2,000 more
white-collar criminals would be behind bars, according to the P-I analysis,
which was based on Justice Department data from 1996 through June 2006.
Since 9/11, the number of white-collar convictions in federal courts has
dropped about 30 percent.

White-collar crimes often affect the people least able to afford it --
lower-income and elderly people, according to Peter Henning, a former
Justice prosecutor who teaches law at Wayne State University in Detroit. "If
you keep it small, and act quickly and get out of the jurisdiction, you can
avoid being prosecuted," he said. "Scam artists know that."

Large numbers of FBI agents also were transferred out of violent-crime
programs because bureau officials knew that local police -- who have
overlapping jurisdiction in violent crimes -- would have to help.

The retired FBI official said the Bush administration is forcing the bureau
to "cannibalize" its traditional crime-fighting units in the name of
fighting terrorism.

"The administration is starving the criminal program," the former official
said.

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