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California’s Task Force

May 25, 2011

California’s attorney general, Kamala Harris, wants to reduce the amount of mortgage fraud so much so that she’s “creating a 25-person task force to target mortgage fraud of any size.” Her goal may seem challenging and ambitious, but William K. Black from the University of Missouri-Kansas City believes prosecutors can be successful if “they carefully choose their targets.”

Fraud usually starts at the top with the CEO of the company, so prosecuting those executives who encourage engaging in fradulent behavior is important, even if the burdern proof “is very high.” Otherwise, it’s like a slap on the wrist. Just ask former executive of Countrywide Angelo Mozilo who settled on a hefty $67.5 million civil settlement (probably a drop in the bucket compared to how much he made while with Countrywide), but never served any jail time.

Update: The SEC has approved new rules that will reward whistleblowers for reporting any type of financial fraud.

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