Patrick Leahy

Mr. LEAHY

Mr. LEAHY. Mr. President, as I indicated to my friend earlier, I would object to that, and I do object.

Mr. LEAHY. Mr. President, reserving the right to object, I hate to try to fix something that I don't think is broken. The False Claims Act has worked very well for the U.S. taxpayers. It has worked well. I know the Senator from Iowa worked so hard in putting this together in the first place. It has brought more than $22 billion back into the Treasury. The awards to whistleblowers have to be approved by a judge. I don't want to fix something that is not broken, so, therefore, I will object, and I do object.

Mr. LEAHY. Mr. President, I know the distinguished Senator from Iowa wishes to speak on this amendment, and we will soon have a rollcall vote. I ask the Senator from Arizona and the Senator from Iowa if we could withhold for 2 minutes in order for the Senator from Wisconsin to speak on an amendment of his, and then we will go back to the amendment of the Senator from Arizona.

Mr. LEAHY. Mr. President, I ask unanimous consent that the vote on the Kyl amendment, now pending, occur at 11:45 but that there be 2 minutes equally divided immediately preceding the vote. First, I make that request.

Mr. LEAHY. Will the Senator yield for a unanimous consent request?

Mr. LEAHY. Mr. President, I understand the senior Senator from New York has an amendment. While the senior Senator from Iowa is on the floor, I ask unanimous consent that it be in order for the Senator from New York to bring up his amendment--that the pending amendment be set aside for 5 minutes--speak on it, and if there are no objections to it, it then be accepted, and we go back to the Kyl amendment so as not to interfere with the unanimous consent agreement to have a vote on the Kyl amendment at 11:45 a.m. I make that request.

Mr. LEAHY. If I can get the attention of the senior Republican, my request is that the Senator from New York be allowed to bring up his amendment for 5 minutes, and at the conclusion of the 5 minutes, unless more time is requested by unanimous consent, that the matter, if it can be disposed of, be disposed of, but in any event, at the end of that time, we go back to the Kyl amendment on which there is a unanimous consent agreement for a rollcall vote at a quarter of 12.

Mr. LEAHY. I so modify it. That would still leave the amount of time Senator Kyl has requested prior to a vote on his amendment.

Mr. LEAHY. Wait a minute. Reserving the right to object, would the Senator repeat that? That is not my understanding of what he was to do. Would the Senator repeat the unanimous consent request?

Mr. LEAHY. Mr. President, are we now back on the Kyl amendment?

Mr. LEAHY. Before that happens, I thank the Senator from New York and the Senator from Iowa. They have been meeting with me and my staff for weeks on this amendment. I am glad they were able to reach agreement on the amendment. I yield the floor.

Mr. LEAHY. Mr. President, I suggest the absence of a quorum. Will the Senator give up the floor?

Mr. LEAHY. Mr. President, I assume the Banking Committee will talk about the amendment of the Senator from Nevada. If I could have the attention of the Senator from Nevada, if his staff would allow me to have the attention of the Senator from Nevada for a moment, I realize we are merely constitutional impediments to the staff. I hate to interfere. Again, this is one of a series of amendments that is not at all within the jurisdiction of the Judiciary Committee. I find it an interesting amendment, but it is within the jurisdiction of the Banking Committee. I was hoping, since there is going to be a banking bill next week, that some of these banking amendments would actually go on the Banking bill and have Judiciary amendments on the Judiciary bill. And I would assume that the discussion will be carried out by Senators Dodd and Shelby of the Banking Committee, in that there is no relationship at all to the Judiciary Committee bill. I would add to that, of course, that the Senator from Nevada has an absolute right to bring up anything. Someone can bring up something on agriculture and price supports, I suppose. But I wish we could keep it to Judiciary matters. Mr. President, am I correct we are now back on the Kyl amendment?

Mr. LEAHY. I thank the Chair, and I suggest the absence of a quorum. Mr. ENSIGN addressed the Chair.

Mr. LEAHY. I withhold that request for the Senator from Nevada. Amendment No. 1000

Mr. LEAHY. Mr. President, I thought the Kyl amendment was pending by unanimous consent.

Mr. LEAHY. Mr. President, I suggest the absence of a quorum.

Mr. LEAHY. I know Senator Kyl is on the way. I will say what I said before, when he was standing on the floor. I, along with Senator Grassley, strongly oppose his amendment because the False Claims Act is so well put together, has a balanced approach of providing incentives for whistleblowers, and has recovered more than $22 billion for the Treasury. That is why Senator Grassley and I oppose the amendment by the Senator from Arizona. Awards to whistleblowers have to be approved by judges, so there is a mechanism to handle excessive awards. When we have something like the False Claims Act that is working as well as it is--as I said, it is one of the few things that has made money for the Federal Government. So far it has made $22 billion for the U.S. taxpayers. I hate to interfere with something that is working. My time is up. The Senator from Arizona is on the Senate floor.

Mr. LEAHY. I move to reconsider the vote and to lay that motion on the table. The motion to lay on the table was agreed to. vote explanation

Mr. LEAHY. Madam President, if the Senator will yield for a moment, this bill would have been easily finished last night, but I understand, under the Senate schedule, we were unable to continue at that time. I hope we will finish soon so that we don't have to spend a great deal more time. We have had a large number of amendments that are basically Banking Committee amendments, and other committees, not the Judiciary Committee. We should come back to realizing that this is a Judiciary bill. Every one of us says we are against those who are stealing life savings and money set aside for kids' colleges and stealing people's homes. We all say we would love to put them in jail. We will not do it until we get the bill through. I yield the floor.

Mr. LEAHY. Madam President, I wish to thank the Senator from Missouri for her statement. I hope people listen to what she had to say because it is a warning to many. Again, I would reiterate that one of the reasons we are trying to move this fraud bill through, everybody will be against fraud and everybody is against crime, but as the Senator from Missouri knows so well, you have to have some laws on the book to go after fraud and go after crime. I wish to speak further on that, but I see my dear friend and distinguished colleague from Vermont on the floor. I will yield the floor so he can also speak on a matter.

Mr. LEAHY. I ask unanimous consent that the order for the quorum call be rescinded.

Mr. LEAHY. Madam President, with the vote and disposition of the Kyl amendment today and the Kyl amendment and the Leahy-Grassley amendment yesterday, we have basically completed work on the underlying bill. Those were the only amendments that affected the underlying bipartisan fraud enforcement bill. A number of other amendments have come in, but they, of course, have nothing to do with this bill. They are not within the jurisdiction of the Judiciary Committee. They are, in large part, extraneous to the fraud enforcement bill. Many if not all are within the jurisdiction of the Banking Committee. I haven't seen one yet that should be in Agriculture, but hope springs eternal. Today, a Senator offered an amendment drawn from the HELP Committee jurisdiction. In a way, it is a compliment that so few people have suggested changes that they wanted to make to the Judiciary Committee bill. I guess Senators are anxious in case they are not around here next week when we have a Banking bill. I would like to conclude consideration of the bill that actually is before the Senate. We will soon have a list of amendments on which both sides will agree to have votes. I don't think any of them really have anything to do with the Judiciary bill, but every Senator has a right to offer whatever amendments he or she wants, whether germane to the bill or not, and to get a vote on them. If they are all going to require rollcall votes, we should be done certainly sometime before midnight. Then we can pick up the next piece of legislation, which I understand we should have done by Saturday. Of course, the only amendments really involving this bill could have been done yesterday. We could have finished this bill yesterday. I would like to speak briefly about the bipartisan Fraud Enforcement and Recovery Act. This bill has received overwhelming support. Almost everyone recognizes the importance of strengthening the Federal Government's capacity to investigate and prosecute the kinds of financial frauds that have undermined our economy. The legislation has strong bipartisan support. I applaud Senator Grassley, who is the lead cosponsor. He worked with me to write this bill. He has been a leader on this issue. Senators Specter and Snowe have joined as cosponsors. Many different law enforcement and good government organizations are supporting this bill as well, including the Fraternal Order of Police, the Federal Law Enforcement Officers Association, the National Association of Assistant United States Attorneys, the Association of Certified Tax Examiners, and Taxpayers Against Fraud. Now let me address the authorizations in the bill. I have rarely seen such detailed justification with regard to an authorization. I mention this because this is not an appropriations bill. It is authorizing legislation. It still has to go through the appropriations process. Every agency authorized to receive money in the bill has set out in detail exactly what it would do with that money if it is authorized and appropriated. The detail includes the number of agents, prosecutors, and other key personnel who would be hired, and each agency has explained why the added resources are needed. Those detailed justifications have been shared with anyone interested in reviewing them. In total, the bill authorizes $245 million a year over the next 2 years to hire more than 300 Federal agents, more than 200 prosecutors, and another 200 forensic analysts and support staff to rebuild our Nation's fraud enforcement efforts. We have broken those numbers down agency by agency. These resources for additional agents, analysts, and prosecutors are desperately needed. The number of fraud cases is now skyrocketing, but resources were shifted away from fraud investigations after 9/11. Today, the ranks of fraud investigators and prosecutors are drastically understocked, and thousands of fraud allegations go unexamined each month. Reports of mortgage fraud are up nearly 50 percent from a year ago and have increased tenfold over the past 7 years. In the last 3 years, the number of criminal mortgage fraud investigations opened by the Federal Bureau of Investigation, FBI, has more than doubled, and the FBI anticipates that number may double yet again. Despite this increase, the FBI currently has fewer than 250 special agents nationwide assigned to financial fraud cases, which is only a quarter of the number the Bureau had more than a decade ago at the time of the savings and loan crisis. At current levels, the FBI cannot even begin to investigate the more than 5000 mortgage fraud allegations the Treasury Department refers each month. Other agencies have documented similar crises in their ability to keep up with the rising pace of new cases. We all know that fraud enforcement simply can't be adequately covered with funds allocated in the recently passed recovery legislation for State and local law enforcement. As someone who pushed strongly for recovery legislation that included State and local law enforcement, I know the purpose behind those funds and what they are dedicated to. It is intended to ensure that State and local law enforcement agencies and crime prevention programs could avoid layoffs, make new hires, and reinforce their work to prevent the increased crime so often associated with economic downturns. In so doing, these funds would reinforce and revitalize those neighborhoods that have experienced economic development and that could so easily backslide. State and local law enforcement fund are urgently needed for those vital purposes. They should not be diverted from State and local law enforcement needs to fund Federal fraud investigations. Moreover, while states have done admirable work cracking down on mortgage fraud, the Federal Government must play a substantial role in this area. Mortgage fraud schemes and other financial fraud schemes often cover many States and jurisdictions, which hampers the ability of any State or local investigators and prosecutors to reach them. These schemes also are often extremely complex and labor-intensive to unravel, requiring the expertise and resources of the Federal Government and the mortgage fraud task forces in which Federal and State law enforcement officers work closely together. We simply cannot ask States to solve this enormous and complex problem on their own. I believe that we need to be good law enforcement partners and that the Federal Government needs to do its share. To fulfill those responsibilities these additional funds need to be authorized. I agree that the $10 million in additional funding to the FBI for mortgage fraud enforcement in the omnibus appropriations bill is a good start, but it is just a small start to what is needed. I wish the economic recovery had been able to include an additional $50 million for the FBI that the Senate initially was willing to include, but that additional funding was stripped away. Unfortunately, to achieve bipartisan support and passage of the economic recovery package, those funds were eliminated. The funds currently being provided are insufficient to tackle the magnitude of this problem. I refer all Senators to the testimony before the Judiciary Committee by the Director of the FBI and the Deputy Director of the FBI and to the detailed justifications the FBI and other law enforcement agencies have provided. I believe authorizing and funding fraud enforcement will save the government money. That is what the Justice Department has found. That is what Taxpayers Against Fraud has found. That is what the administration indicates in its Statement of Administration Policy in strong support of this bill. As the administration says: ``These additional resources will provide a return on investment through additional fines, penalties, restitution, damages, and forfeitures.'' I would add that strong fraud enforcement will also save money by deterring fraudulent conduct. According to recent data provided by the Justice Department, the government recovers on average $32 for every dollar spent on criminal fraud litigation. Similarly, the nonpartisan group Taxpayers Against Fraud has found that the Government recovers $15 for every dollar spent in civil fraud cases. Just last year, the Justice Department recovered nearly $2 billion in civil false claims settlements, and, in criminal cases, courts ordered nearly $3 billion in restitution and forfeiture. Strengthening criminal and civil fraud enforcement is a sound investment, and this legislation will not only pay for itself, but should bring in money for the Federal Government. If fraud goes unprosecuted and unpunished, then victims across America lose money. In many cases, American taxpayers take the loss directly. For example, in the case of many mortgage frauds, the Federal Government has guaranteed the loans, and when the fraud is uncovered, American taxpayers, as well as the victim, lose out. More directly, with the billions of dollars of Federal funds now going out through the recovery legislation, the Troubled Assets Relief Program, and other bailout programs, we should all recognize that enforcement will be essential to protect those recovery funds from fraud and to recover any money that is fraudulently taken. If we do not take action to investigate and prosecute this kind of fraud, Americans will lose far more money than this bill costs. The only organizations that have opposed this legislation are the Heritage Foundation and the National Association of Criminal Defense Lawyers. They have argued that the legal fixes in this bill constitute overreaching by the Federal Government. In fact, this bill does not overfederalize or overcriminalize. Senator Grassley and I took great care in crafting it to avoid those kinds of excesses. The bill creates no new statutes and no new sentences. Instead, it focuses on modernizing existing statutes to reach unregulated conduct and on addressing flawed court decisions interpreting those laws. This is exactly the kind of Federal criminal legislation that these critics should appreciate. Rather than gratuitously adding new laws or expanding Federal jurisdiction, it acts in a targeted way to fill in gaps identified by investigators and prosecutors to make it easier for them to reach the conduct most relevant to the current financial crisis. The bill amends the definition of ``financial institution'' in the criminal code in order to extend Federal fraud laws to mortgage lending businesses that are not directly regulated or insured by the Federal Government. These companies were responsible for nearly half the residential mortgage market before the economic collapse, yet they remain largely unregulated and outside the scope of traditional Federal fraud statutes. This change will finally apply the Federal fraud laws to private mortgage businesses like Countrywide Home Loans and GMAC Mortgage. The bill would also amend the major fraud statute to protect funds expended under the Troubled Assets Relief Program and the economic stimulus package, including any government purchases of preferred stock in financial institutions. The U.S. Government has provided extraordinary economic support to our banking system, and we need to make sure that none of those funds are subject to fraud or abuse. This change will give Federal prosecutors and investigators the explicit authority they need to protect taxpayer funds. This bill will also strengthen one of the core offenses in so many fraud cases--money laundering--which was significantly weakened by a recent Supreme Court case. In United States v. Santos, the Supreme Court misinterpreted the money laundering statutes, limiting their scope to only the ``profits'' of crimes, rather than the ``proceeds'' of the offenses. The Court's mistaken decision was contrary to congressional intent and will lead to financial criminals escaping culpability simply by claiming their illegal scams did not make a profit. Indeed, Ponzi schemes like the $65 billion fraud perpetrated by Bernard Madoff, which by definition turn no profit, are exempt from money laundering charges under this formulation. This erroneous decision must be corrected immediately, as dozens of money laundering cases have already been dismissed. None of these changes constitute overcriminalization. Rather, they reach fraudulent conduct at the center of our ongoing economic crisis. Americans are rightly demanding accountability for this fraud, and we cannot have full accountability without the participation of Federal investigators and prosecutors armed with the tools and resources they need. We can delay no further in taking decisive action to strengthen fraud enforcement and doing everything we can to fight the scourge of fraud that has contributed to our economic crisis. There is simply no good reason for us not to act. The administration ``strongly supports enactment'' of this bill. The Justice Department supports it, the FBI supports it, the Secret Service supports it, the TARP inspector general supports it, the HUD inspector general supports it, Federal and State law enforcement officers support it. The bottom line, Madam President--before I lose my voice entirely-- is, this legislation is to stop people who have been robbing the retirement savings of Americans, who have been robbing their homes from under them, who have been robbing the money they have set aside for their kids' college education and getting away with it under some of the elaborate mortgage fraud schemes. They get away with it because there is no real ability to go after them. There is neither the money nor the personnel. This legislation gives both money and personnel but also gives teeth to the law. I have said on this floor several times, if you have somebody who sets up a $100 million fraud scheme, they do not care what happens to the people in their way. They do not care if they ruin the lives of the people they are going after. They do not care if the people lose their homes because they figure if they get caught, they might have to give a little bit of the money back in a fine or otherwise. They are not deterred. They, obviously, do not have a sense of conscience or morality. They do not care if people lose their life savings. They do not care if people lose their retirement. They do not care if people lose their hope for the future. All they want is the money. Madam President, I tell you right now, if these same people think they are going to go to prison for what they are doing, if they think they will spend time behind bars for years and years, then maybe-- maybe--some Americans may be able to keep their homes, some Americans may be able to keep their dreams, some Americans may be able to keep their retirement, some Americans may be able to keep sending their children to college. People are now losing that dream. That is why there is strong bipartisan support for this bill. That is why I must admit I am somewhat frustrated that many have come here to try to bring amendments that have absolutely no place in this bill, and, if anything, would slow up the ability to protect Americans. But they have the right to do this. We will soon have a list of amendments, we will set the list in, and we will set a time for final passage. And maybe--maybe--within a few weeks the President will be able to sign this legislation and people will be a lot more protected than they are now. Madam President, I suggest the absence of a quorum.

Patrick Leahy

Speeches

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