counter-terrorism became a top priority, and yet, at the same time, we were confronted with a rash of wrongdoing, from enron to world qualm -- worldcom. we had to prioritize, and we did. today, we continue to combat the risk of attacks by terrorists. we want to protect our communities from fraud and violent crime, as well. .

there are many lenses to view the financial crisis, from financial institutions that traded in risk itself, lenders and real estate professionals who sidestepped the practice, homeowners, whose purchases exceeded their pocketbooks. the rest is central in this crisis, much of what led to the financial meltdown was the result of a failure to properly invest -- assess the risks, risks to investors, risk to home

owners and the economy at large. there are those who intended to defraud others. in part, the sub prime lending crisis they have been more a matter of greed. the prevailing thought process seems to be that everyone is making money, why should we miss the boat? when it did, some tried to patch the holes with tape, and bail out the water with dixie cups. the fbi plays a role in addressing this crisis. we do so with two distinct ways. first, we are investigating those with criminal responsibility, four aspects of the current crisis. second, we are using intelligence to prevent new threats on the horizon.

in this way, we can better promote and help the growth of the economy. we start by talking about mortgage fraud. we are currently investigating more than 2400 mortgage fraud matters, more than doubled to years ago. we have doubled the number of agents for of the country. we are investigating industry insiders, those who knowingly participated in fraudulent transactions, and those who knew the risks and intentionally misrepresented those risks to homeowners and investors. we have developed new ways to detect and combat mortgage fraud. we are collecting and analyzing data to figure out trends. we are using the full array of investigative techniques to stop criminals before the fact, rather than after the damage has been done.

this past april in maryland, we charge five defendants in a $70 million mortgage fraud scheme. they allegedly tricked home owners to pouring money into the defendant's business with the false promise that revenue from the business would be used to pay off the homeowners mortgages. in san diego, we charge 24 individuals under the racketeering statute in connection with a scheme that included more than two hundred 20 properties, valued at more than $100 million. the alleged leader of this group is a documented member of a well established street gang. in a case with a unique twist, we work with our partners in the milwaukee police department to investigate of mortgage fraud scheme by a convicted drug dealer. michael -- and his conspirators ran a house flipping scheme with

phony appraisals and forged bank records. they would obtain loan money in divide the proceeds. the load -- the loans would go into default and the houses into foreclosure. the criminal activity did not end there. one of the whole pop -- the bodies of two suspected drug dealers were found under concrete slabs in the back yard. we have cases similar to these across the country. the mortgage fraud is not necessarily the bodies that were found in the back yard. unfortunately the picture is not any prettier when it comes to corporate fraud. like mortgage fraud, economic crimes are crimes of

opportunity. new schemes are reviewed every day. they are becoming commonplace. we are investigating more than 580 corporate fraud cases. we have more than 1300 security frauds cases under investigation, including the and many ponzi schemes prevalent in the news today, such as bernie madoff, a seemingly ordinary individuals. we are targeting accounting fraud, insider trading and deceptive sales practices. we identified the key players come investigate and bring the appropriate charges come agency and less on our corporate fraud response team. they are specially trained to conduct investigations in a very short timeframe.

they can be deployed at minimum notice across the country. we do not take these investigations lightly, nor do we open these without considerable --. these investigations further emphasize the need for independent board members, auditors, and outside accountants. shareholders rely on a board of directors as corporate watchdogs. it often we see conflicts of interest in the corporate suite. we all understand that it is better for a company to repeat its wrong doing before the fbi becomes involved. executives who let the situation escalate to the point of a sudden restatement, and the

resulting loss and shareholder confidence, often do greater harm to the companies they are trying to protect them if they had exercised earlier intervention. in my days of private practice, i represented a number of executives that rationalized every bad decision. none of them would have likened themselves to an organized crime. business was business as usual, that they were playing by the same rules as everybody else. saying they were doing what was best for the company. i would think to myself, you broke about 14 loss before breakfast, how could you fail to see that what you were doing was wrong? i have also seen executives who did not starting -- are up to break the law, they started to believe their own explanations. it is a very slippery slope from

behavior, to ethical or legal boundaries, behavior that crosses the line. we in the fbi are investing our jobs -- are best in our jobs when we have the trust of the american people. the same can be said for the business community. if this financial crisis has taught us anything, maybe that it is time for a cultural shift, of back to basics approach with a sound business judgment, risk assessment from the top down. let me spend a brief moment talking about an aspect of financial crime, economic crime, and that is public corruption. unfortunately, the private sector is -- has not corner the market on greed. corruption is the fbi's top priority since september 11th.

it is our top priority, because our public corruption breaks apart good government. while the vast number of public officials are honest in their work and are committed to serving their fellow citizens, there are other -- others that have abused the public trust. we currently have more than 2500 public corruption investigations. in the last two years alone, we have convicted nearly 1700 federal, state, and local officials for abuse of the public trust. for a nation that is built on the rule of law, we can and we should do better. whether the matter is local, national, or international, whether it concerns billions of dollars or million -- merely hundreds, there is no reason for

corruption. the damage to the taxpayer is devastating. public corruption needs to start, and we can start to make every effort to recognize corruption when it is made at home, overseas, refused to participate in corruption of any kind. finally, call us. we are always willing to receive your calls. one last question. what do we see in the future? we and our counterparts in other agencies are working to prevent what has the potential to be the next wave of cases. fraud and corruption related to the tarp fund and the stimulus package. these funds are vulnerable to bribery, collusion,.

there is an old adage that fraud is not behind, like bees to honey. we face a similar challenge in funding related to hurricane katrina. in the wake of that storm, we created a task force investigated fraud and corruption, and to identify serious abuse which was likely to take place. we have two hundred 46 convictions in mississippi and louisiana. today, we face a much different kind of war, with opportunities for criminal behavior and underlying agreed remain sustained. with trillions and trillions of dollars at stake, the purchase of troubled assets, improvements to infrastructure, health care, energy and education, even a small percentage of fraud

results in substantial taxpayer losses. we must select the intelligence is necessary to target waste and abuse at all levels, and we must do so before we get fully -- it gets fully develop. we must be able to follow the money all the way down the line. we are working with the fcc for the tarp, the task forces and inspector general's to identify where these funds are going and for what purpose. we want to ensure that these funds will be appropriately utilized, and we will investigate and prosecute where necessary. our goal is to protect financial services industry, and by extension, the economy. we will continue to target those with the opportunity and the intent to harm investor confidence in the public at

large. one certainly does not need to be a roosevelt scholar to know that common sense was as important in education, courage of one's convictions can always prevail and that integrity was the cornerstone of any endeavor, public or private. in the past century, we have seen great change. the players, the technology may be novel, corruption is as old as time. the best schools at our disposal are the same as those by roosevelt, hard work, credibility, courage, and character. it is my hope that by working together, we can minimize fraud and corruption. we all have a role to play. together we can bring to light

the wrongdoing, the security, and the welfare of our nation. together we can strengthen our united states culture of integrity. thank you for having me today, and god bless. >> thank you very much. " this is the point where we have club members ask questions. >> thank you, mr. director. thank you for the work to perform. i want to focus on two areas. the focus on financial fraud, raise some questions having to do with the fbi as a

preventative association, where the fbi as a crime-fighting association. my second question will deal with the counter terrorism issue, and the role the fbi should most effectively play in crime fighting vs intelligence. this is an issue i know you are very familiar with and have been involved in examining. the first question, from my own experience in the corporate sector, i find there are certain organizations by culture, orientation and training are better at prevention and detection. i would say that is true of the auditing profession. the fbi has a great and well- earned reputation as a crime- fighting organization. one of the issues i would pose to you is, who will own the responsibility? i know there are task forces, committees which are inherently difficult to manage.

just looking at the tarp funds, what will be taking place in the disposition of toxic assets, there will be a huge sum of money moving around and opportunities for fraud. why is the fbi focused on the preventive part, when we have many organizations private and public, who in my view, are better equipped? most people in the room probably don't know how few special agents are. you have a limited amount of manpower. my question specifically is, prevention versus detection versus both. and your policy-setting as the head of the bureau. >> i tend to look at prevention and detection and conviction along a continuum. you are more successful and detection and conviction then on the preventive stage.

an example is, we are working with inspector general's now. and they have the initial responsibility of placing those mechanisms that will prevent fraud, waste, and abuse. looking down the road, we want to make certain that the mechanisms, record keeping, that is put into place right now is capable of providing us the information you will need when we detect fraud. there are various goals we made in preventing fraud in the first instance, but also going after the fraud once it occurs, to the extent that we can incorporate the task forces and work with the inspector general's, we will be successful in preventing fraud, and also much more successful in identifying that fraud and investigating and prosecuting it down the road. >> any examples where the fbi in

the context of financial fraud has played any meaningful role prior to the last 12 months from a preventative standpoint? >> i think you are and making it an artificial distinction. whether it be ourselves, i cannot name off the top of my head, where together we have identified a fraudulent scheme and terminated it through prosecution. we have worked very closely as you know, with the inspectors general on the government fraud. with the other inspectors general elsewhere to address both from the preventive side, but also the investigation. >> let me switch topics now. ok, glenn.

how often do you get a chance to cross-examine the head of the fbi? >> you were talking about the shortage of agents. that is because you hired them all away. i want to go back to your point about mortgage fraud. you talked about a doubling of fraud cases, doubling resources to combat fraud. one of the things that happened in the last decade was an extraordinary abandonment of prudent lending standards. mortgage loans were made with no down payment, they were made with negative amortization, people were not -- people were qualified to be the first year, but not the third year when a balloons. and the no document loans, were you did not have to prove you had an income.

i've wondered how you feel about putting the burden now on the fbi to clean that up, if the fundamental problem was lax lending standards? >> i think i would say that there are many factors that contributed to the financial plight we are in now. a piece of that was intentional fraud. that should be investigated and prosecuted, and individuals responsible go to jail. it is a much larger problem than just those individuals who committed fraud. an agent that i talk to a few months ago was doing these cases back in 2001, 2002.

we had some success in addressing this. he said then the housing market was going up so fast, you would find no lost to the investors. so the housing market -- the continued upturn in the housing market eliminated the loss to investors, because you could turn around and sell it at a higher price. fraud was a part of this, but it was not the sole reason for it, or do i think it is a principal reason for it. >> director, let me sit shift to my second area, the fighting against counterterrorism. we have present commissioner kelly as well as others and i know it has been a terrific partnership. my question is a focus question.

i am back to prevention and detection, but in a different vein. this time the venue is in counter-terrorism. given the limitations resources that you have, as a crime- fighting organization, my own experience is people who are crime-fighter's tend not to be particularly good at intelligence activities. my question is this. there are other countries around the world who have divided the responsibility for intelligence gathering verses crime fighting. if you could, could you make the case for why we need to keep both of these inside of the bureau, when the need for crime- fighting will always be substantial, substantial fraud, whether it is violence, what ever is, please make the case for why intelligence functions should remain as head of one

organization, from your perspective. >> you are diluting to domestic intelligence capabilities and around the world, i think what you will find if you go back and look at a number of these agencies, there has to be a closer connection with the law enforcement agencies. we need to have it within our organization is because whenever you -- develop a case, and it is an intelligence case, inevitably, there is a drop in the knowledge of the agencies or the agents to pass on. the other thing that is overlooked is the incentive to gather intelligence through the criminal justice process. one of the things that you have happening in almost all of our cases is that one or more of the persons will ultimately cooperate and give us

intelligence. in some circumstances, we go to the person who wants to cooperate, now we go back and say, what can you tell me about terrorism in the u.s. or overseas? having that continuing, the development of the in doubt -- intelligence, developing the case and utilize that case and convicting the person. also it feeds back into the cycle. if you look at what we are good at, as a law-enforcement agency, we are good and it interrogation, developing sources. we are good at wiretaps. the same type of thing that is done by nsa.

last is surveillance. what we do in all of those irina's is collect information. in the past, there is the mentality of collecting evidence, the fact is you are gathering information. you have a much broader view of the gaps that you are missing in terms of identifying things down the road. what we would need to do if you use the intelligence community jargon, we have not done well in the past to understand that our domain, understand what we know, identify gaps in what we know and then having it wrapped up in one organization, gives you a am much broader capability to identify the threat, build a gap to that threat, and where

appropriate, investigate. we as an organization believe strongly as a principal that we are there to protect civil liberties, and the privacy rights of individuals. this is inculcated to every agent coming out of quantitate -- quantico. we are utilizing intelligence, and our organization keeps that foremost in mind. i am not certain that an intelligence agency would have the same appreciation of the intelligence. ray kelly is here, and does a terrific job we learned this from ray. we asked him about the noises -- necessity of finding intelligence in his operation.

he is one of the foremost advocates of that. [applause] >> speaking of counterterrorism, can you talk about how counterterrorism strategy and or tactics have changed under the new administration? and comment on your recent comments before congress, saying guantanamo should not be closed after the president said it should be? >> let me address the latter first, that was not my testimony at all. i stayed away from opining on what should happen with regard to guantanamo. to the extent that there are

areas in which we will play a role, we will end up playing a role on what is done as a result. i have seen in terms of the new administration coming in the interest of the president or national security council when it comes to addressing terrorism. under each administration, i firmly believe that person in charge has a deep understanding of responsibility to protect the american people. whether it be the previous president or this president, it is exactly the same. understanding that commitment, protecting the american people. >> if we are going to keep the