Following the Money

Today, the Oversight and Government Reform Committee held a hearing with testimony from Neil Barofsky, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

When the Troubled Asset Relief Program (TARP) was created under the Emergency Economic Stabilization Act of 2008, Congress enacted several independent oversight entities and processes to ensure accountability and protect taxpayers including the Congressional Oversight Panel, GAO oversight and audits at Treasury, and an Inspector General to monitor the Treasury Secretary's decisions. Mr. Barofsky presented SIGTARP’s third quarterly report to Congress and their first audit report on how recipients have used TARP funds at the hearing.

Oversight Committee Chairman Ed Towns’s opening statement:

Chairman Towns:
“Congress may have given Treasury some leeway when it comes to the TARP, but we didn't give them a blank check. The problem is we can't even say whether the TARP programs are working or not, because the information that would allow Congress and the taxpayers to analyze whether they are getting a good return on their investment has not been made available. I hope today's hearing, and the Special IG's report, will be a wake-up call to the Treasury and the Fed that our financial system cannot be run behind closed doors.”

In addition to reviewing the various TARP programs and making recommendations for the operation of TARP, SIGTARP's report to Congress outlines their investigative and audit functions, reporting that their “Investigations Division has developed rapidly and is quickly becoming a sophisticated white-collar investigative agency”:

Through June 30, 2009, SIGTARP has 35 ongoing criminal and civil investigations. These investigations include complex issues concerning suspected accounting fraud, securities fraud, insider trading, mortgage servicer misconduct, mortgage fraud, public corruption, false statements, and tax investigations. Two of SIGTARP's investigations have recently become public:

Federal Felony Charges Against Gordon Grigg: On April 23, 2009, Federal felony charges were filed against Gordon B. Grigg in the U.S. District Court for the Middle District of Tennessee, charging him with four counts of mail fraud and four counts of wire fraud. The charges are based on Grigg's role in embezzling approximately $11 million in client investment funds that he garnered through false claims, including that he had invested $5 million in pooled client funds toward the purchase of the TARP-guaranteed debt. Grigg pleaded guilty to all charges and is scheduled for sentencing on August 6, 2009.

FTC Action Against Misleading Use of “”: On May 15, 2009, based upon an action brought by the Federal Trade Commission (“FTC”), a Federal district court issued an order to stop an Internet-based operation that pretended to operate “,” the official website of the Federal Making Home Affordable program. According to the FTC's complaint, the defendants purchased sponsored links as advertising on the results pages of Internet search engines, and, when consumers searched for “making home affordable” or similar search terms, the defendants' ads prominently and conspicuously displayed “” Consumers who clicked on this link were not directed to the official website, but were diverted to sites that solicit applicants for paid loan modification services. The operators of these websites either purport to offer loan modification services themselves or sold the victims' personally identifying information to others. SIGTARP is providing assistance to FTC during the investigation.

More than half of SIGTARP's ongoing investigations came from tips or leads provided on SIGTARP's Hotline (877-SIG-2009 or accessible at — if you are aware of fraud, waste, abuse, mismanagement or misrepresentations affiliated with the TARP, contact the SIGTARP Hotline>>

Read SIGTARP’s Quarterly Report to Congress>>

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