How the FTC can help local prosecutors with cases of criminal fraud.

• Author: Gorman, Frank

IMAGINE THAT A CRIMINAL GANG in your hometown has defrauded people around the country out of hundreds of thousands, perhaps millions, of dollars. You know exactly who these criminals are and where they live. They have spent most of the money to support lavish lifestyles, or hidden it in offshore accounts, so returning money to the victims is impossible. Imagine further that there is overwhelming evidence tying the criminals to the theft, and that witnesses--including victims and co-conspirators--have been located and interviewed and are willing to testify. Finally, imagine that a federal judge has granted a preliminary injunction shutting down the operation and freezing its assets and those of the participants but has left the criminals free and uncharged. Is this a case you would consider prosecuting? If so, you should contact the Federal Trade Commission's Criminal Liaison Unit, which has details about dozens of consumer fraud cases that fit this description.

American consumers lose tens of billions of dollars to fraud every year. According to a recent consumer survey, more than 30 million U.S. consumers were victims of fraud in 2005, with a median loss of approximately $60. Much of this fraudulent activity is criminal, but it often does not result in criminal prosecution after detection. Instead, these fraudulent enterprises and the criminals that run them, when discovered, are typically subject to civil law enforcement actions brought by the Federal Trade Commission or consumer protection units within the offices of state attorneys general. Seldom do the criminals face criminal sanctions. As a result, they become better at hiding their involvement in new and improved seams and much better at laundering and hiding their assets.

The Federal Trade Commission, the only federal agency with general jurisdiction over consumer fraud, is a civil law enforcement agency. The FTC brings civil actions in federal district court alleging unfair and deceptive acts. In cases involving hard-core fraud, the FTC files lawsuits in federal district court seeking a temporary restraining order, often without notice to the defendants, an asset freeze, appointment of a receiver, temporary injunctive relief, and immediate access to the business premises. Once the FTC has shut down the fraudulent operation, secured the business premises, and frozen all known and discoverable assets, it seeks permanent injunctive relief and the return of money to injured consumers...