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The Justice Department attributes the decline in part to the resource-intensive nature of corporate fraud cases, which can involve dozens of prosecutors and FBI agents. And it suggests the downturn may be temporary. “This could be just part of the cycle and reflect movement into a period of investigation which could ripen into prosecutions,” says Evan Peterson, a DOJ spokesman.

In San Francisco, white-collar prosecutions have similarly declined. Since 2002, the annual number of white-collar indictments in the Northern District of California has fell by about 50 percent. At the same time, organized crime cases � largely ones involving street gangs � have risen. U.S. Attorney Kevin Ryan has said the trend does not indicate a shift in priorities, although white-collar defense lawyers say they see relatively little activity compared with earlier years.

To be sure, recent statistics charting new case openings and indictments by federal prosecutors don’t tell the entire story of the climate corporations have faced since the collapses of Enron Corp. and WorldCom Inc., in 2001 and 2002, respectively. Public companies have faced increased regulatory scrutiny by a beefed-up Securities and Exchange Commission empowered with the Sarbanes-Oxley Act of 2002. And the lengthy sentences handed down to executives at Enron, WorldCom and Adelphia have served notice to corporate executives that cooking a company’s books can land them in prison for decades.

Meanwhile, white-collar defense lawyers at the nation’s largest law firms say the gusher of large corporate fraud cases opened in 2003 and 2004 means they’re still busier than ever.

“If there’s a drop-off I’m not seeing it,” says Mark Hulkower, a white-collar defense lawyer at Steptoe & Johnson, whose clients have included Riggs Bank and Enron accountant Richard Causey. “It may be that the decrease is going to be felt six months from now.”

But the figures also come in the context of a steady decline in all forms of white-collar crime � a category the DOJ broadly defines to include not just corporate fraud but a range of crimes, such as bank, health care and telemarketing frauds. The number of those prosecutions has declined steadily from 8,820 cases in 2002 to 7,822 during the past fiscal year, according to Justice statistics. Syracuse’s TRAC, which tabulates federal prosecutions slightly differently, measures an even sharper decline.

In terms of the numbers, white-collar defense lawyers and former Justice officials suggest two main reasons for the decline in new prosecutions: a continued shift in resources toward terrorism investigations and other priorities and a focus on a smaller number of high-profile corporate fraud cases.

RACKING UP CASES

At the Justice Department the renewed focus on corporate fraud began with a speech on Wall Street by President Bush in July 2002. Enron had declared bankruptcy just eight months earlier, and WorldCom was teetering on the brink.

Among Bush’s proposals was the formation of a Corporate Fraud Task Force under then-Deputy Attorney General Larry Thompson. Wall Street reacted skeptically to the speech, in part because such task forces often amount to no more than a reshuffling of the government bureaucracy. But the Justice Department soon began to produce results. In 2003 federal prosecutors opened 224 new corporate fraud cases after opening just 130 the year before, and the number of defendants charged with corporate fraud by the DOJ surged from 180 to 313.

Those indicted included dozens of executives at A-list companies such as Enron, Merrill Lynch and Qwest Communications. In 2004 the heightened activity began to bear fruit, as the DOJ registered 258 convictions in corporate fraud cases � more than five times as many as it had just two years before. And its pace of new indictments and new investigations didn’t slacken.

That is, until last year. Though Justice’s efforts continued to win corporate fraud convictions at a furious pace and produce television footage of weeping executives such as WorldCom’s Bernard Ebbers, away from the cameras the feds opened fewer corporate fraud cases than they had in 2002. That, say some white-collar fraud experts, indicates a return to a more reactive approach and the end of the wave of corporate prosecutions.

“I think it’s crested,” says Peter Henning, a former federal prosecutor who now teaches law at Wayne State University. “We’re going back to where we were.”

SHIFTING TO TERROR

In June a federal court in Los Angeles sentenced Daren Lynne Tyger to 27 months in prison for embezzling nearly $300,000 from the A.C. Green Youth Foundation, a charity founded by the Los Angeles Lakers’ former rebounding specialist.

Green certainly won’t be the last professional athlete to be conned by those he entrusts with money. But Tyger’s case is something of a rarity in one respect: It’s one of a dwindling number of modest-size white-collar crimes the Justice Department has prosecuted in recent years.

Corporate fraud of the type that felled Enron represents just a small portion of the white-collar prosecutions brought by federal authorities. Tyger pleaded guilty to two counts of bank fraud, a crime the FBI has shown a declining interest in investigating since the Sept. 11 terrorist attacks. Since 2001, the number of agents dedicated to white-collar crime has shrunk from 30 percent to 20 percent of the FBI’s total force, according to the agency. That’s meant more smaller cases are being kicked down to state and local authorities.

“The thresholds have gone up,” says FBI spokesman Stephen Kodak. “Where we might have opened up a $10,000 fraud case in a district, [today] it might be a $100,000 fraud.”

Meanwhile, the number of agents focusing on counterterrorism and public corruption has spiked.

“Clearly, the FBI has rededicated itself to counterterrorism, and that will be a long-range trend that will decrease resources to white collar,” says Joshua Hochberg, a partner at McKenna, Long & Aldridge who led Justice’s Fraud Section until last fall.

In Los Angeles the restructuring of the FBI meant the 35 agents investigating bank fraud in 2000 had dropped to 17 in 2004, according to a report last year from DOJ Inspector General Glenn Fine. That trend has been mirrored when it comes to telemarketing, wire and mail fraud schemes. From 2000 to 2004 the number of agents nationwide investigating those types of crime fell from 304 to 179.

In some ways the statistics reflect success on the part of the FBI and Director Robert Mueller in shifting the bureau’s focus to terrorism. “When you get bodies for white collar, white collar gets prosecuted; when you get bodies for terrorism, you get terrorism cases,” says William Mateja, a former senior Justice official who is now a partner at Fish & Richardson.

Though the Corporate Fraud Task Force is cutting a much lower profile these days, Justice officials say it has not yet become obsolete. When it meets later this month, under the direction of Deputy Attorney General Paul McNulty, it’s expected to discuss problems in the hedge fund industry and the practice of backdating stock options. Should it choose to aggressively pursue both of those issues, the number of new prosecutions could soon jump into the hundreds, says Wayne State’s Henning.

And though the DOJ’s prosecution statistics may be dropping precipitously, the fall may also reflect the success the government has had in changing the climate on Wall Street through its high-profile convictions over the past three years.

“What is it we’re really trying to accomplish here?” says Christopher Wray, a partner at King & Spalding who headed Justice’s Criminal Division from 2003 to 2005. “Is it just racking up scalps or focusing on the cases that involve the most harm and are most crying out for federal intervention?”

Jason McLure is a reporter with Legal Times, a Recorder affiliate based in Washington, D.C.