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[House Report 111-95]
[From the U.S. Government Publishing Office]

111th Congress                                             Rept. 111-95
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================

 
                        FIGHT FRAUD ACT OF 2009

                                _______
                                

                  May 4, 2009.--Ordered to be printed

                                _______
                                

    Mr. Conyers, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 1748]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 1748) to amend title 18, United States Code, to enhance 
the investigation and prosecution of mortgage fraud and 
financial institution fraud, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     1
Purpose and Summary..............................................     5
Background and Need for the Legislation..........................     6
Hearings.........................................................     7
Committee Consideration..........................................     7
Committee Votes..................................................     7
Committee Oversight Findings.....................................     7
New Budget Authority and Tax Expenditures........................     7
Congressional Budget Office Cost Estimate........................     8
Performance Goals and Objectives.................................    10
Constitutional Authority Statement...............................    10
Advisory on Earmarks.............................................    10
Section-by-Section Analysis......................................    11
Changes in Existing Law Made by the Bill, as Reported............    13

                             The Amendment

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Fight Fraud Act of 2009''.

SEC. 2. AMENDMENTS TO IMPROVE MORTGAGE, SECURITIES, AND FINANCIAL FRAUD 
                    RECOVERY AND ENFORCEMENT.

  (a) Definition of Financial Institution Amended To Include Mortgage 
Lending Business.--Section 20 of title 18, United States Code, is 
amended--
          (1) in paragraph (8), by striking ``or'' after the semicolon;
          (2) in paragraph (9), by striking the period and inserting 
        ``; or''; and
          (3) by inserting at the end the following:
          ``(10) a mortgage lending business or any person or entity 
        that makes in whole or in part a federally related mortgage 
        loan as defined in section 3 of the Real Estate Settlement 
        Procedures Act of 1974.''.
  (b) Mortgage Lending Business Defined.--
          (1) In general.--Chapter 1 of title 18, United States Code, 
        is amended by inserting after section 26 the following:

``Sec. 27. Mortgage lending business defined

  ``In this title, the term `mortgage lending business' means an 
organization which finances or refinances any debt secured by an 
interest in real estate, including private mortgage companies and any 
subsidiaries of such organizations, and whose activities affect 
interstate or foreign commerce.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 1 of title 18, United States Code, is 
        amended by adding at the end the following:

``27. Mortgage lending business defined.''.

  (c) False Statements in Mortgage Applications Amended To Include 
False Statements by Mortgage Brokers and Agents of Mortgage Lending 
Businesses.--Section 1014 of title 18, United States Code, is amended--
          (1) by striking ``or'' after ``the International Banking Act 
        of 1978),''; and
          (2) by inserting after ``section 25(a) of the Federal Reserve 
        Act'' the following: ``, or a mortgage lending business, or any 
        person or entity that makes in whole or in part a federally 
        related mortgage loan as defined in section 3 of the Real 
        Estate Settlement Procedures Act of 1974''.
  (d) Major Fraud Against the Government Amended To Include Economic 
Relief and Troubled Asset Relief Program Funds.--Section 1031(a) of 
title 18, United States Code, is amended--
          (1) by striking ``in any procurement'' and inserting ``in any 
        Federal assistance in the form of financial relief or stimulus 
        provided by the Government, including through the Troubled 
        Assets Relief Program, whether through grant, contract, 
        subcontract, subsidy, loan, guarantee, insurance, purchase of 
        preferred stock, or otherwise, or any procurement''; and
          (2) by striking ``the contract, subcontract'' and inserting 
        ``such grant, contract, subcontract, subsidy, loan, guarantee, 
        insurance, purchase, or other form of financial relief or 
        stimulus''.
  (e) Securities Fraud Amended To Include Fraud Involving Options and 
Futures in Commodities.--
          (1) In general.--Section 1348 of title 18, United States 
        Code, is amended--
                  (A) in the caption, by inserting ``and commodities'' 
                after ``Securities'';
                  (B) in paragraph (1), by inserting ``any commodity 
                for future delivery, or any option on a commodity for 
                future delivery, or'' after ``any person in connection 
                with''; and
                  (C) in paragraph (2), by inserting ``any commodity 
                for future delivery, or any option on a commodity for 
                future delivery, or'' after ``in connection with the 
                purchase or sale of''.
          (2) Clerical amendment.--The item relating to section 1348 in 
        the table of sections at the beginning of chapter 63 of title 
        18, United States Code, is amended by inserting ``and 
        commodities'' after ``Securities''.

SEC. 3. AUTHORIZATION OF ADDITIONAL RESOURCES FOR INVESTIGATORS AND 
                    PROSECUTORS FOR MORTGAGE FRAUD, SECURITIES AND 
                    COMMODITIES FRAUD, AND OTHER CRIMES OF FRAUD.

  (a) Authorizations for the Department of Justice.--
          (1) In general.--There is authorized to be appropriated to 
        the Attorney General, $185,000,000 for fiscal year 2010 and 
        $175,000,000 for fiscal year 2011, for the purposes of 
        investigations, prosecutions, and civil enforcement actions 
        against possible fraud (including mortgage fraud and securities 
        and commodities fraud) relating to a financial institution, 
        including financial institutions receiving Federal assistance 
        under the Troubled Assets Relief Program or otherwise.
          (2) Allocations.--The amounts authorized to be appropriated 
        under paragraph (1) shall be allocated as follows:
                  (A) Federal Bureau of Investigation: $75,000,000 for 
                fiscal year 2010 and $65,000,000 for fiscal year 2011, 
                an appropriate percentage of which amounts shall be 
                used to investigate mortgage fraud.
                  (B) The offices of the United States Attorneys: 
                $50,000,000.
                  (C) The criminal division of the Department of 
                Justice: $20,000,000.
                  (D) The civil division of the Department of Justice: 
                $15,000,000.
                  (E) The tax division of the Department of Justice: 
                $5,000,000.
                  (F) The Director of the Administrative Office of the 
                United States Courts: $20,000,000.
  (b) Authorizations for the Postal Inspection Service.--There is 
authorized to be appropriated to the Postal Inspection Service of the 
United States Postal Service, $30,000,000 for each of the fiscal years 
2010 and 2011 for investigations into possible fraud described in 
subsection (a)(1).
  (c) Authorizations for the Inspector General for the Department of 
Housing and Urban Development.--There is authorized to be appropriated 
to the Inspector General of the Department of Housing and Urban 
Development, $30,000,000 for each of the fiscal years 2010 and 2011 for 
investigations into possible fraud described in subsection (a)(1).
  (d) Authorizations for the United States Secret Service.--There is 
authorized to be appropriated to the United States Secret Service of 
the Department of Homeland Security, $20,000,000 for each of the fiscal 
years 2010 and 2011 for investigations into possible fraud described in 
subsection (a)(1).
  (e) Additional Authorizations; Availability.--The amounts authorized 
under this section are in addition to amounts otherwise authorized in 
other Acts, and shall remain available until expended.
  (f) Defense Services.--Funds made available under this section by the 
recipient described in subsection (a)(2)(F) shall be used to cover 
costs associated with providing defense services to defendants 
investigated for or charged with an offense described in subsection 
(a)(1).
  (g) Report to Congress.--Following the final expenditure of all funds 
appropriated pursuant to authorization under this section, the Attorney 
General, in consultation with the United States Postal Inspection 
Service, the Inspector General for the Department of Housing and Urban 
Development, and the Secretary of Homeland Security, shall submit a 
report to Congress identifying--
          (1) the amounts expended under each of subsections (a), (b), 
        (c), and (d) and a certification of compliance with the 
        requirements listed in subsection (e); and
          (2) the amounts recovered as a result of criminal or civil 
        restitution, fines, penalties, and other monetary recoveries 
        resulting from criminal, civil, or administrative proceedings 
        and settlements undertaken with funds authorized by this Act.

SEC. 4. GRANTS FOR STATE AND LOCAL LAW ENFORCEMENT.

  (a) In General.--Subject to the availability of amounts provided in 
advance in appropriations Acts, the Attorney General is authorized to 
award grants to States to establish and develop programs to increase 
and enhance enforcement against mortgage fraud, securities and 
commodities fraud, and financial institution fraud, including 
enforcement against the use of computers in committing such fraud.
  (b) Application.--To be eligible to be considered for a grant under 
subsection (a), a State shall submit an application to the Attorney 
General at such time, in such manner, and containing such information, 
including as described in subsection (d), as the Attorney General may 
require.
  (c) Use of Grant Amounts.--A grant awarded to a State under 
subsection (a) shall be used by the State to establish and develop 
programs to--
          (1) assist State and local law enforcement agencies in 
        enforcing State and local criminal laws relating to criminal 
        activity described in subsection (a);
          (2) assist State and local law enforcement agencies in 
        educating the public to prevent and identify such criminal 
        activity;
          (3) educate and train State and local law enforcement 
        officers and prosecutors to conduct investigations, forensic 
        analyses of evidence, and prosecutions relating to such 
        criminal activity;
          (4) assist State and local law enforcement officers and 
        prosecutors in acquiring computer and other equipment to 
        conduct investigations and forensic analyses of evidence 
        relating to such criminal activity;
          (5) assist public defenders with providing defense services 
        to defendants in cases in which the defendant is charged with 
        any such criminal activity; and
          (6) facilitate and promote communication between Federal, 
        State, and local law enforcement to improve the sharing of 
        Federal law enforcement expertise and information about the 
        investigation, forensic analysis of evidence, and prosecution 
        relating to such criminal activity, with State and local law 
        enforcement officers and prosecutors, including through the use 
        of multi-jurisdictional task forces.
  (d) Assurances and Eligibility.--To be eligible to receive a grant 
under subsection (a), a State shall provide assurances to the Attorney 
General that the State--
          (1) will provide an assessment of the resource needs of the 
        State and units of local government within that State, 
        including criminal justice resources being devoted to the 
        investigation and enforcement of laws related to criminal 
        activity described in subsection (a);
          (2) will develop a plan for coordinating the programs funded 
        under this section with other federally funded technical 
        assistance and training programs; and
          (3) will submit to the Attorney General applicable reports in 
        accordance with subsection (f).
  (e) Matching Funds.--The Federal share of a grant received under this 
section may not exceed 75 percent of the total cost of a program or 
proposal funded under this section unless the Attorney General waives, 
wholly or in part, the requirements of this subsection.
  (f) Reports.--For each year that a State receives a grant under 
subsection (a) for a program, the State shall submit to the Attorney 
General a report on the results, including the effectiveness, of such 
program during such year.
  (g) Definition of State.--For the purposes of this section, the term 
``State'' means each of the several States, the District of Columbia, 
the Commonwealth of Puerto Rico, the United States Virgin Islands, 
American Samoa, Guam, and the Northern Mariana Islands.
  (h) Authorization of Appropriations.--
          (1) In general.--There is authorized to be appropriated to 
        carry out this section $100,000,000 for each of the fiscal 
        years 2010 through 2011.
          (2) Limitations.--Of the amount made available to carry out 
        this section in any fiscal year, not more than 3 percent may be 
        used for salaries and administrative expenses for the 
        Department of Justice.
          (3) Minimum amount.--Each State submitting an application 
        for, and eligible to receive, a grant under this section for a 
        fiscal year shall be allocated under this section, in each such 
        fiscal year, not less than 0.75 percent of the total amount 
        appropriated in such fiscal year for grants pursuant to this 
        section, except that not less than 0.25 percent of such total 
        amount shall be allocated to the United States Virgin Islands, 
        American Samoa, Guam, and the Northern Mariana Islands, 
        collectively.
          (4) Grants to indian tribes.--Subject to paragraph (3), the 
        Attorney General may use amounts made available pursuant to 
        authorizations under this section to make grants to Indian 
        tribes for use in accordance with this section.

SEC. 5. AUTHORIZATION AND EXPANSION OF NATIONAL WHITE COLLAR CRIME 
                    CENTER.

  (a) In General.--Title I of the Omnibus Crime Control and Safe 
Streets Act of 1968 (42 U.S.C. 3711 et seq.) is amended--
          (1) by redesignating part JJ, as added by section 952 of 
        Public Law 110-315 (relating to Loan Repayment for Prosecutors 
        and Public Defenders), as part LL, and moving such part so that 
        such part follows part KK;
          (2) in part LL, as so redesignated and moved by paragraph 
        (1), by redesignating section 3001 as section 3021; and
          (3) by adding at the end the following new part:

          ``PART MM--NATIONAL WHITE COLLAR CRIME CENTER GRANTS

``SEC. 3031. ESTABLISHMENT OF GRANTS PROGRAM.

  ``(a) Authorization.--The Attorney General is authorized to award 
grants and enter into contracts with State and local criminal justice 
agencies and nonprofit organizations for the purpose of improving the 
detection, investigation, and prosecution of covered criminal 
activities.
  ``(b) Covered Criminal Activities Defined.--For purposes of this 
part, the term `covered criminal activity' means a criminal conspiracy 
or activity or a terrorist conspiracy or activity that spans 
jurisdictional boundaries, including the following:
          ``(1) Terrorism.
          ``(2) Economic crime, including financial fraud and mortgage 
        fraud.
          ``(3) High-tech crime, also known as cybercrime or computer 
        crime, including internet-based crime against children and 
        child pornography.
  ``(c) Criminal Justice Agency Defined.--For purposes of this part, 
the term `criminal justice agency', with respect to a State or a unit 
of local government within such State, includes a law enforcement 
agency, a State regulatory body with criminal investigative authority, 
and a State or local prosecution office to the extent that such agency, 
body, or office, respectively, is involved in the prevention, 
investigation, and prosecution of covered criminal activities.

``SEC. 3032. AUTHORIZED PROGRAMS.

  ``Grants and contracts awarded under this part may be made only for 
the following programs, with respect to the prevention, investigation, 
and prosecution of covered criminal activities:
          ``(1) Programs to provide a nationwide support system for 
        State and local criminal justice agencies.
          ``(2) Programs to assist State and local criminal justice 
        agencies to develop, establish, and maintain intelligence-
        focused policing strategies and related information sharing.
          ``(3) Programs to provide training and investigative support 
        services to State and local criminal justice agencies to 
        provide such agencies with skills and resources needed to 
        investigate and prosecute such criminal activities and related 
        criminal activities.
          ``(4) Programs to provide research support, to establish 
        partnerships, and to provide other resources to aid State and 
        local criminal justice agencies to prevent, investigate, and 
        prosecute such criminal activities and related problems.
          ``(5) Programs to provide information and research to the 
        general public to facilitate the prevention of such criminal 
        activities.
          ``(6) Programs to establish National training and research 
        centers regionally, including within Virginia, Texas, and 
        Michigan, to provide training and research services for State 
        and local criminal justice agencies.
          ``(7) Any other programs specified by the Attorney General as 
        furthering the purposes of this part.

``SEC. 3033. APPLICATION.

  ``To be eligible to be considered for an award of a grant or contract 
under this part, an entity shall submit to the Attorney General an 
application in such form and manner, and containing such information, 
as required by the Attorney General.

``SEC. 3034. RULES AND REGULATIONS.

  ``The Attorney General shall promulgate such rules and regulations as 
are necessary to carry out this part, including rules and regulations 
for submitting and reviewing applications under section 3033.''.
  (b) Authorization of Appropriation.--Section 1001(a) of such Act (42 
U.S.C. 3793) is amended by adding at the end the following new 
paragraph:
  ``(27) There is authorized to be appropriated to carry out part MM--
          ``(A) $25,000,000 for fiscal year 2010;
          ``(B) $28,000,000 for fiscal year 2011;
          ``(C) $31,000,000 for fiscal year 2012;
          ``(D) $34,000,000 for fiscal year 2013;
          ``(E) $37,000,000 for fiscal year 2014; and
          ``(F) $40,000,000 for fiscal year 2015.''.

                          Purpose and Summary

    H.R. 1748, the ``Fight Fraud Act of 2009,'' introduced by 
Chairman Conyers and Ranking Member Lamar Smith, will amend 
relevant criminal statutes and authorize additional funding for 
Federal, state, and local agencies to combat corporate fraud, 
mortgage fraud, securities and commodities fraud, and other 
financial frauds that have significantly contributed to the 
recent economic crisis, and other specified crimes.

                Background and Need for the Legislation

                               BACKGROUND

    For more than a year, this Nation has been experiencing the 
worst economic crisis since the Great Depression.\1\ Millions 
of Americans have lost their homes, their savings, and their 
jobs.\2\ While there are many factors which contributed to this 
crisis, fraud has played a significant role--including fraud on 
the part of unscrupulous mortgage lenders and brokers, who 
lured consumers into buying homes that they could not afford, 
by aggressively marketing subprime loans with low teaser 
rates.\3\ Now, as the initial teaser rates have gone up and 
many homeowners have lost their jobs, many of those homes have 
fallen into foreclosure.\4\
---------------------------------------------------------------------------
    \1\See Jon Hilsenrath, Serena Ng, & Damian Paletta, Worst Crisis 
Since '30's, With No End Yet in Sight, Wall St. J., Sept. 18, 2008.
    \2\See Peter S. Goodman & Jack Healy, 663,000 Jobs Lost in March; 
Total Tops 5 Million, N.Y. Times, Apr. 4, 2009.
    \3\See Fraud Factor, N.Y. Times, Apr. 18, 2009.
    \4\See Phillip R. Robinson, The Worst Mortgages, Baltimore Sun, 
Apr. 13, 2009.
---------------------------------------------------------------------------
    This subprime mortgage fraud, in turn, contributed to the 
collapse of the wider financial industry. The financial 
services industry had skimmed billions of dollars from the 
rising tide of real estate values, by marketing mortgage-backed 
securities to investors around the world. When the real estate 
bubble burst, the securities became toxic. In the past year, 
banks and financial institutions in this country have suffered 
more than $500 billion in losses that can be traced to the 
collapse of the mortgage industry.\5\
---------------------------------------------------------------------------
    \5\See Hon. Patrick Leahy, Statement of Introduction of Fraud 
Enforcement and Recovery Act of 2009, Feb. 5, 2009, available at http:/
/leahy.senate.gov/press/200902/020509b.html.
---------------------------------------------------------------------------
    During this time, the number of fraud investigations and 
enforcement actions has dramatically increased. The number of 
open FBI mortgage fraud investigations, for example, has risen 
from 881 in fiscal year 2006 to more than 2000 currently.\6\ 
There has not, however, been a commensurate increase in 
available resources. For example, the FBI currently has more 
than 1,800 mortgage fraud investigations open, but only 240 
agents specifically assigned to these cases.\7\ Investigators 
and agents at the Inspector General's Office for Housing and 
Urban Development (HUD), the U.S. Secret Service, and the U.S. 
Postal Inspector Service have also seen an increase in their 
financial fraud investigations, but not a corresponding 
increase in their budgets.\8\ States and localities likewise 
struggle to handle the mounting tide of fraud and other 
financial crimes they are investigating.
---------------------------------------------------------------------------
    \6\Proposals to Fight Fraud and Protect Taxpayers, Hearing Before 
the H. Comm. on the Judiciary, 111th Cong. (2009) (written statement of 
John Pistole).
    \7\See Need for Increased Fraud Enforcement in the Wake of the 
Economic Downturn, Hearing Before the Subcomm. on Crime, Terrorism, and 
Homeland Security of the H. Comm. on the Judiciary, 111th Cong. (2009) 
(testimony of John Pistole).
    \8\See, e.g., The Role of FHA in Addressing the Housing Crisis, 
Hearing Before the S. Comm. on Appropriations Subcomm. on 
Transportation, Housing and Urban Development & Related Agencies, 111th 
Cong. (2009) (testimony of Kenneth Donohue, Inspector General, Dept. of 
Housing and Urban Development).
---------------------------------------------------------------------------

                        NEED FOR THE LEGISLATION

    This legislation will amend and clarify current criminal 
fraud statutes and provide resources to more effectively 
address the magnitude of financial crimes associated with the 
current economic crisis. While general fraud statutes may reach 
some of the fraud that has occurred in recent years, clarifying 
the Federal criminal fraud statutes will better ensure that 
they are able to reach the variety of these fraudulent schemes 
and deter future fraud against the newly created economic 
recovery programs. Additional resources are also needed for the 
agencies in the front lines of combating this wave of fraud and 
other financial crimes.
    During Committee mark-up, the bill was amended to address 
other priorities such as additional resources for Federal 
public defenders, authorizing grants to States and localities 
to investigate and prosecute fraud, and authorizing new grants 
through the National White Collar Crime Center for States and 
localities to combat economic crimes, as well as terrorism, and 
cyber-crime involving child exploitation.

                                Hearings

    On April 1, 2009, the full Committee on the Judiciary held 
1 day of hearings on H.R. 1748, along with other legislative 
proposals to fight fraud. Testimony was received from 
Representative Elijah Cummings (D-MD); Representative Neil 
Abercrombie (D-HI); Representative Judy Biggert (R-IL); Mr. 
Jonathan Mintz, Commissioner, New York City Department of 
Consumer Affairs; Mr. Ira Rheingold, Executive Director, 
National Association of Consumer Advocates (NACA); Jeb White, 
President, Taxpayers Against Fraud; Barry Pollack, Chair, White 
Collar Crime Committee, National Association of Criminal 
Defense Lawyers (NACDL) and Partner, Miller & Chevalier; Ms. 
Rita Glavin, Acting Assistant Attorney General, Criminal 
Division, U.S. Department of Justice, Mr. John Pistole, Deputy 
Director, Federal Bureau of Investigation; and Ms. Marcia 
Madsen, Institute for Legal Reform, Chamber of Commerce, and 
partner, Mayer, Brown, and Platt.

                        Committee Consideration

    On April 28, 2009, the Committee met in open session and 
ordered the bill, H.R. 1748, favorably reported with amendment, 
by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 1748.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    With respect to the requirement in clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives, and 308(a) 
of the Congressional Budget Act of 1974, the Committee 
references the report of the Congressional Budget Office 
included in the report.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 1748, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 29, 2009.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 1748, the ``Fight 
Fraud Act of 2009.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz, who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                          Director.
Enclosure
cc: Honorable Lamar S. Smith.
    Ranking Member
H.R. 1748--the ``Fight Fraud Act of 2009.''

                                SUMMARY

    H.R. 1748 would broaden the coverage of current laws 
against financial crimes, including fraud affecting mortgages, 
securities, and Federal assistance and relief programs. The 
bill would authorize the appropriation of $520 million over the 
2010-2011 period for the Department of Justice (DOJ), the 
Postal Inspection Service, and other Federal agencies to 
investigate and prosecute violators of the bill's provisions. 
The bill also would authorize the appropriation of $395 million 
over the 2010-2015 period for DOJ to make grants to states and 
other entities to combat financial and other crimes.
    CBO estimates that implementing H.R. 1748 would cost $805 
million over the 2010-2014 period, assuming appropriation of 
the authorized amounts. Enacting H.R 1748 could affect direct 
spending and revenues; CBO has no basis for estimating the 
timing or magnitude of any such effects, but we estimate that 
there would be no net change in costs over time.
    H.R. 1748 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 1748 is shown in the 
following table. The costs of this legislation fall within 
budget functions 370 (commerce and housing credit), 450 
(community and regional development), and 750 (administration 
of justice).

                                    By fiscal year, in millions of dollars--
----------------------------------------------------------------------------------------------------------------
                                                                     2010   2011   2012   2013   2014  2010-2014
----------------------------------------------------------------------------------------------------------------
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Funding for DOJ and Other Federal Agencies
to Combat Financial Crimes
  Authorization Level                                                 265    255      0      0      0       520
  Estimated Outlays                                                   228    252     34      5      1       520

DOJ Grants
  Authorization Level                                                 125    128     31     34     37       355
  Estimated Outlays                                                    28     66     70     61     60       285

  Total
    Authorization Level                                               390    383     31     34     37       875
    Estimated Outlays                                                 256    318    104     66     61       805
----------------------------------------------------------------------------------------------------------------

                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that the bill will be 
enacted during fiscal year 2009, that the authorized amounts 
will be appropriated each year, and that spending will follow 
historical patterns for the authorized activities.
Spending Subject to Appropriation
    H.R. 1748 would authorize the appropriation of $265 million 
for fiscal year 2010 and $255 million for fiscal year 2011 for 
DOJ and other Federal agencies to investigate and prosecute 
financial crimes. Of those totals, the bill would authorize $75 
million for 2010 and $65 million for 2011 for the Federal 
Bureau of Investigation. In addition, for each of fiscal years 
2010 and 2011, the bill would authorize:

         L$90 million for offices of the United States 
        Attorneys and DOJ's criminal, civil, and tax divisions;

         L$30 million for the Postal Inspection 
        Service;

         L$30 million for the Inspector General for the 
        Department of Housing and Urban Development;

         L$20 million for the Administrative Office of 
        the United States Courts; and

         L$20 million for the United States Secret 
        Service.

    In addition, H.R. 1748 would authorize the appropriation of 
$100 million for each of fiscal years 2010 and 2011 for DOJ to 
make grants to states to combat financial crimes, including 
fraud affecting mortgages, securities, and financial 
institutions. The bill also would authorize an appropriation 
totaling $155 million over the 2010-2014 period (and $40 
million for 2015) for DOJ to make grants to state and local 
governments and nonprofit organizations to combat terrorist 
acts, economic crimes (including financial and mortgage fraud), 
and cybercrimes.
Revenues and Direct Spending
    H.R. 1748 could increase collections of civil and criminal 
fines for violations of the bill's provisions. Civil fines are 
recorded as revenues and deposited in the U.S. Treasury. 
Criminal fines are recorded as revenues, deposited in the Crime 
Victims Fund, and subsequently spent without further 
appropriation.
    CBO has no basis for estimating the magnitude of any 
additional collections of civil and criminal fines. However, we 
estimate that any such effects would have no net costs over 
time.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 1748 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments. Assuming the appropriation of 
authorized amounts, those governments would receive $285 
million over the 2010-2014 period to investigate and prosecute 
fraud and computer crimes. Any costs would be incurred 
voluntarily as a condition of receiving Federal assistance.

                         PREVIOUS CBO ESTIMATE

    On March 18, 2009, CBO transmitted a cost estimate for S. 
386, the Fraud Enforcement on Recovery Act of 2009, as reported 
by the Senate Committee on the Judiciary on March 5, 2009. That 
bill would broaden the coverage of current laws against 
financial crimes and would authorize the appropriation of $245 
million for each of fiscal years 2010 and 2011 for DOJ and 
other Federal agencies to investigate and prosecute violators 
of the bill's provisions. The CBO cost estimates reflect the 
differences between those bills.

                         ESTIMATE PREPARED BY:

Federal Costs: Mark Grabowicz
Impact on State, Local, and Tribal Governments: Melissa Merrell
Impact on the Private Sector: Marin Randall

                         ESTIMATE APPROVED BY:

Theresa Gullo
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
1748 is intended to (1) amend title 18 U.S.C. to clarify laws 
designed to combat fraud, (2) authorize funding for additional 
resources to Federal agencies to investigate, prosecute, and 
otherwise enforce against fraud, and (3) authorize funding for 
grants to states and localities to fight fraud and other 
specified crimes.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8, of the Constitution.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 1748 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee:
    Sec. 1. Short Title. Section 1 sets forth the short title 
of this Act as the ``Fight Fraud Act of 2009.''
    Sec. 2. Amendments to Improve Mortgage, Securities, and 
Financial Fraud Recovery and Enforcement. This section augments 
and clarifies the reach of federal criminal fraud statutes to 
ensure that they cover the various types of financial fraud 
that have recently occurred with respect to financial 
institutions and that could potentially occur in connection 
with the Troubled Asset Relief Program or other federal 
assistance being provided to financial institutions.
    Section 2(a) amends the definition in 18 U.S.C. 20 for a 
``financial institution'' to include a ``mortgage lending 
business,'' which section 2(b) adds a new definition of, in 18 
U.S.C. 27, as ``an organization . . . which finances or 
refinances any debt secured by an interest in real estate, 
including private mortgage companies and any subsidiaries'' 
whose activities affect interstate or foreign commerce. The new 
definition also includes ``any person or entity that makes in 
whole or in part a federally-regulated mortgage loan as defined 
in 12 U.S.C. Sec. 2602(1).''
    These new definitions for ``financial institution'' and 
``mortgage lending business'' will better ensure that private 
mortgage brokers and companies can be held fully accountable 
under Federal fraud laws for fraudulent actions against 
financial institutions, including mortgage lending businesses, 
particularly where they are dealing in federally-regulated or 
federally-insured mortgages. For example, the bank fraud 
statute, 18 U.S.C. Sec. 1344, prohibits defrauding ``a 
financial institution,'' which will now include mortgage 
lending businesses in addition to traditional banks and 
financial institutions.
    In addition, the expanded definition of ``financial 
institution'' would also apply to the following criminal 
provisions: 18 U.S.C. Sec. 215 (financial institution bribery); 
18 U.S.C. Sec. 225 (continuing financial crimes enterprise); 18 
U.S.C. Sec. 1005 (false statement/entry/record for financial 
institution); and 18 U.S.C. Sec. 1344 (bank/ financial 
institution fraud). The new definition would also provide for 
enhanced penalties for mail and wire fraud affecting a 
financial institution, including a mortgage lending business, 
pursuant to 18 U.S.C. Sec. Sec. 1341, 1343. Expanding the term 
``financial institution'' to include mortgage lending 
businesses will also strengthen penalties for mortgage frauds. 
It would also extend the statute of limitations in 
investigations of mortgage fraud to be consistent with bank 
fraud investigations.
    This definition of ``financial institution'' would not 
apply to the Suspicious Activity Reports (SARs) that banks and 
other financial institutions are required to file, as 
``financial institution'' is defined separately under the Bank 
Secrecy Act, 31 U.S.C. Sec. 5312(a)(2).
    Section 2(c) would amend the false statement in mortgage 
application statute (18 U.S.C. Sec. 1014) to include making a 
materially false statement or willfully overvaluing a property 
in order to influence any action by a mortgage lending 
business. The current offense applies only to Federal agencies, 
banks, and credit associations, and does not extend to private 
mortgage lending businesses, even if they are handling 
federally-regulated or federally-insured mortgages.
    Similar to expanding the definition of ``financial 
institution'' in sections 2(a) and 2(b), this provision will 
better ensure that private mortgage brokers and companies are 
held fully accountable for fraud--including false appraisal 
fraud, an especially problematic type of mortgage fraud during 
the recent financial crisis.
    Section 2(d) amends the Federal major-fraud-against-the-
United-States statute (18 U.S.C. Sec. 1031) to include and 
cover economic relief and TARP funds, ``whether through grant, 
contract, subcontract, subsidy, loan, guarantee, insurance, 
purchase of preferred stock, or otherwise.'' This will ensure 
that Federal prosecutors have jurisdiction to use one of their 
most potent fraud statutes to protect the Government assistance 
provided during the recent economic crisis, including money 
from the TARP. These amendments, however, apply only to major 
frauds against the Government, where the value exceeds 
$1,000,000.
    Section 2(e) amends the Federal securities fraud statute 
(18 U.S.C. Sec. 1348) to clarify that it includes fraud in 
commodities futures or options, in addition to securities 
fraud--this will more clearly include some of the derivatives 
and other financial products that were part of the financial 
collapse.
    Sec. 3. Authorization of Additional Resources for 
Investigators and Prosecutors for Mortgage Fraud, Securities 
and Commodities Fraud, and Other Crimes of Fraud. This section 
authorizes $185 million for fiscal year 2010 and $175 million 
for the fiscal year 2011 to be allocated to the FBI ($75 
million in 2010; $65 million in 2011), U.S. Attorney's offices 
($50 million each year), and the Criminal, Civil, and Tax 
Divisions of the Justice Department ($40 million each year). 
The section also authorizes additional appropriations for the 
Postal Inspection Service ($30 million each year), the 
Inspector General for HUD ($30 million each year), the U.S. 
Secret Service ($20 million each year), and the Director of the 
Administrative Office of the United States Courts ($20 million 
each year). The bill directs that these authorized funds may 
only be used for fighting mortgage, securities and commodities, 
and other crimes of fraud, and the Department must certify that 
funds were used for those purposes, after expended.
    Sec. 4. Grants for State and Local Law Enforcement. This 
section authorizes the Attorney General to award grants to 
States and Indian Tribes to establish and develop programs to 
increase enforcement against mortgage fraud, securities and 
commodities fraud, and financial institution fraud, including 
enforcement against the use of computers in committing such 
fraud. Such programs include initiatives to assist State and 
local law enforcement in providing public education, officer 
training, and equipment to combat these crimes. The term 
``mortgage fraud'' as used in this section is intended to 
include schemes to defraud homeowners through fraudulent 
promises to modify the terms of existing loans. This section 
also sets forth requirements for grant applications. Finally, 
the section authorizes appropriations for fiscal years 2010 and 
2011 in the amount of $100,000,000 for each year.
    Sec. 5. Authorization and Expansion of National White 
Collar Crime Center. This section amends the Omnibus Crime 
Control and Safe Streets Act of 1968 to authorize the Attorney 
General to award grants and enter into contracts with State and 
local criminal justice agencies and nonprofit organizations for 
the purpose of improving the detection, investigation, and 
prosecution of covered criminal activities, including 
terrorism, economic crime (including financial and mortgage 
fraud), and high-tech crimes, also known as cyber-crime. The 
funds are authorized to be appropriated in the following 
manner: $25,000,000 for fiscal year 2010, $28,000,000 for 
fiscal year 2011, $31,000,000 for fiscal year 2012, $34,000,000 
for fiscal year 2013, $37,000,000 for fiscal year 2014, and 
$40,000,000 for fiscal year 2015.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *
PART I--CRIMES

           *       *       *       *       *       *       *

                     CHAPTER 1--GENERAL PROVISIONS

Sec.
1. Repealed.
     * * * * * * *
27. Mortgage lending business defined.

           *       *       *       *       *       *       *

Sec. 20. Financial institution defined

  As used in this title, the term ``financial institution'' 
means--
          (1) * * *

           *       *       *       *       *       *       *

          (8) an organization operating under section 25 or 
        section 25(a) of the Federal Reserve Act; [or]
          (9) a branch or agency of a foreign bank (as such 
        terms are defined in paragraphs (1) and (3) of section 
        1(b) of the International Banking Act of 1978)[.]; or
          (10) a mortgage lending business or any person or 
        entity that makes in whole or in part a federally 
        related mortgage loan as defined in section 3 of the 
        Real Estate Settlement Procedures Act of 1974.

           *       *       *       *       *       *       *

Sec. 27. Mortgage lending business defined

  In this title, the term ``mortgage lending business'' means 
an organization which finances or refinances any debt secured 
by an interest in real estate, including private mortgage 
companies and any subsidiaries of such organizations, and whose 
activities affect interstate or foreign commerce.

           *       *       *       *       *       *       *

CHAPTER 47--FRAUD AND FALSE STATEMENTS

           *       *       *       *       *       *       *

Sec. 1014. Loan and credit applications generally; renewals and 
                    discounts; crop insurance

  Whoever knowingly makes any false statement or report, or 
willfully overvalues any land, property or security, for the 
purpose of influencing in any way the action of the Federal 
Housing Administration, the Farm Credit Administration, Federal 
Crop Insurance Corporation or a company the Corporation 
reinsures, the Secretary of Agriculture acting through the 
Farmers Home Administration or successor agency, the Rural 
Development Administration or successor agency, any Farm Credit 
Bank, production credit association, agricultural credit 
association, bank for cooperatives, or any division, officer, 
or employee thereof, or of any regional agricultural credit 
corporation established pursuant to law, or a Federal land 
bank, a Federal land bank association, a Federal Reserve bank, 
a small business investment company, as defined in section 103 
of the Small Business Investment Act of 1958 (15 U.S.C. 662), 
or the Small Business Administration in connection with any 
provision of that Act, a Federal credit union, an insured 
State- chartered credit union, any institution the accounts of 
which are insured by the Federal Deposit Insurance Corporation, 
the Office of Thrift Supervision, any Federal home loan bank, 
the Federal Housing Finance Agency, the Federal Deposit 
Insurance Corporation, the Resolution Trust Corporation, the 
Farm Credit System Insurance Corporation, or the National 
Credit Union Administration Board, a branch or agency of a 
foreign bank (as such terms are defined in paragraphs (1) and 
(3) of section 1(b) of the International Banking Act of 1978), 
[or] an organization operating under section 25 or section 
25(a) of the Federal Reserve Act, or a mortgage lending 
business, or any person or entity that makes in whole or in 
part a federally related mortgage loan as defined in section 3 
of the Real Estate Settlement Procedures Act of 1974, upon any 
application, advance, discount, purchase, purchase agreement, 
repurchase agreement, commitment, loan, or insurance agreement 
or application for insurance or a guarantee, or any change or 
extension of any of the same, by renewal, deferment of action 
or otherwise, or the acceptance, release, or substitution of 
security therefor, shall be fined not more than $1,000,000 or 
imprisoned not more than 30 years, or both. The term ``State-
chartered credit union'' includes a credit union chartered 
under the laws of a State of the United States, the District of 
Columbia, or any commonwealth, territory, or possession of the 
United States.

           *       *       *       *       *       *       *

Sec. 1031. Major fraud against the United States

  (a) Whoever knowingly executes, or attempts to execute, any 
scheme or artifice with the intent--
          (1) * * *

           *       *       *       *       *       *       *

[in any procurement] in any Federal assistance in the form of 
financial relief or stimulus provided by the Government, 
including through the Troubled Assets Relief Program, whether 
through grant, contract, subcontract, subsidy, loan, guarantee, 
insurance, purchase of preferred stock, or otherwise, or any 
procurement of property or services as a prime contractor with 
the United States or as a subcontractor or supplier on a 
contract in which there is a prime contract with the United 
States, if the value of [the contract, subcontract] such grant, 
contract, subcontract, subsidy, loan, guarantee, insurance, 
purchase, or other form of financial relief or stimulus, or any 
constituent part thereof, for such property or services is 
$1,000,000 or more shall, subject to the applicability of 
subsection (c) of this section, be fined not more than 
$1,000,000, or imprisoned not more than 10 years, or both.

           *       *       *       *       *       *       *

                         CHAPTER 63--MAIL FRAUD

Sec.
1341. Frauds and swindles.
     * * * * * * *
1348. Securities and commodities fraud.

           *       *       *       *       *       *       *

Sec. 1348. Securities and commodities fraud

  Whoever knowingly executes, or attempts to execute, a scheme 
or artifice--
          (1) to defraud any person in connection with any 
        commodity for future delivery, or any option on a 
        commodity for future delivery, or any security of an 
        issuer with a class of securities registered under 
        section 12 of the Securities Exchange Act of 1934 (15 
        U.S.C. 78l) or that is required to file reports under 
        section 15(d) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78o(d)); or
          (2) to obtain, by means of false or fraudulent 
        pretenses, representations, or promises, any money or 
        property in connection with the purchase or sale of any 
        commodity for future delivery, or any option on a 
        commodity for future delivery, or any security of an 
        issuer with a class of securities registered under 
        section 12 of the Securities Exchange Act of 1934 (15 
        U.S.C. 78l) or that is required to file reports under 
        section 15(d) of the Securities Exchange Act of 1934 
        (15 U.S.C. 78o(d)); shall be fined under this title, or 
        imprisoned not more than 25 years, or both.

           *       *       *       *       *       *       *

                              ----------                              

           OMNIBUS CRIME CONTROL AND SAFE STREETS ACT OF 1968

           *       *       *       *       *       *       *
TITLE I--JUSTICE SYSTEM IMPROVEMENT

           *       *       *       *       *       *       *

                            Part J--Funding

                    AUTHORIZATION OF APPROPRIATIONS

  Sec. 1001. (a)(1) * * *

           *       *       *       *       *       *       *

  (27) There is authorized to be appropriated to carry out part 
MM--
          (A) $25,000,000 for fiscal year 2010;
          (B) $28,000,000 for fiscal year 2011;
          (C) $31,000,000 for fiscal year 2012;
          (D) $34,000,000 for fiscal year 2013;
          (E) $37,000,000 for fiscal year 2014; and
          (F) $40,000,000 for fiscal year 2015.

           *       *       *       *       *       *       *

   PART [JJ] LL--LOAN REPAYMENT FOR PROSECUTORS AND PUBLIC DEFENDERS

SEC. [3001.] 3021. GRANT AUTHORIZATION.

  (a) * * *

           *       *       *       *       *       *       *

           PART MM--NATIONAL WHITE COLLAR CRIME CENTER GRANTS

SEC. 3031. ESTABLISHMENT OF GRANTS PROGRAM.

  (a) Authorization.--The Attorney General is authorized to 
award grants and enter into contracts with State and local 
criminal justice agencies and nonprofit organizations for the 
purpose of improving the detection, investigation, and 
prosecution of covered criminal activities.
  (b) Covered Criminal Activities Defined.--For purposes of 
this part, the term ``covered criminal activity'' means a 
criminal conspiracy or activity or a terrorist conspiracy or 
activity that spans jurisdictional boundaries, including the 
following:
          (1) Terrorism.
          (2) Economic crime, including financial fraud and 
        mortgage fraud.
          (3) High-tech crime, also known as cybercrime or 
        computer crime, including internet-based crime against 
        children and child pornography.
  (c) Criminal Justice Agency Defined.--For purposes of this 
part, the term ``criminal justice agency'', with respect to a 
State or a unit of local government within such State, includes 
a law enforcement agency, a State regulatory body with criminal 
investigative authority, and a State or local prosecution 
office to the extent that such agency, body, or office, 
respectively, is involved in the prevention, investigation, and 
prosecution of covered criminal activities.

SEC. 3032. AUTHORIZED PROGRAMS.

  Grants and contracts awarded under this part may be made only 
for the following programs, with respect to the prevention, 
investigation, and prosecution of covered criminal activities:
          (1) Programs to provide a nationwide support system 
        for State and local criminal justice agencies.
          (2) Programs to assist State and local criminal 
        justice agencies to develop, establish, and maintain 
        intelligence-focused policing strategies and related 
        information sharing.
          (3) Programs to provide training and investigative 
        support services to State and local criminal justice 
        agencies to provide such agencies with skills and 
        resources needed to investigate and prosecute such 
        criminal activities and related criminal activities.
          (4) Programs to provide research support, to 
        establish partnerships, and to provide other resources 
        to aid State and local criminal justice agencies to 
        prevent, investigate, and prosecute such criminal 
        activities and related problems.
          (5) Programs to provide information and research to 
        the general public to facilitate the prevention of such 
        criminal activities.
          (6) Programs to establish National training and 
        research centers regionally, including within Virginia, 
        Texas, and Michigan, to provide training and research 
        services for State and local criminal justice agencies.
          (7) Any other programs specified by the Attorney 
        General as furthering the purposes of this part.

SEC. 3033. APPLICATION.

  To be eligible to be considered for an award of a grant or 
contract under this part, an entity shall submit to the 
Attorney General an application in such form and manner, and 
containing such information, as required by the Attorney 
General.

SEC. 3034. RULES AND REGULATIONS.

  The Attorney General shall promulgate such rules and 
regulations as are necessary to carry out this part, including 
rules and regulations for submitting and reviewing applications 
under section 3033.

                                  
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