Stolen S&L money still unrecovered Government lags in forcing restitution, GAO reports.

February 07, 1992|By Robert A. Rosenblatt | Robert A. Rosenblatt,Los Angeles Times

WASHINGTON -- The federal government has collected just $365,000 out of $83.6 million in court-ordered fines and restitution from individuals convicted in the nation's top savings and loan fraud cases, the General Accounting Office reported yesterday.

The finding raises questions about the government's effectiveness in recovering funds stolen or misappropriated by corrupt thrift operators. Hundreds of S&L failures nation wide, many linked to fraud, are expected to cost taxpayers more than $500 billion over 40 years.

The Justice Department has made prosecution of thrift fraud one of its highest priorities. The GAO said the government has successfully prosecuted thrift fraud cases, but found that it has been highly ineffective in collecting stolen money.

The GAO report involved the top 100 criminal referrals of thrift fraud made to the Justice Department. The cases involved individuals at 55 failed thrifts nationwide.

In the surveyed cases, the government obtained indictments against 219 individuals whose fraudulent activity caused losses of $597 million, the GAO said. The government won conviction of 145 defendants in those cases.

The court ordered those convicted to make restitution of $79.1 million to the government and to pay fines of $4.5 million, the GAO said. But only $349,810 in restitution and $15,200 in fines has been collected, the agency said.

In a hearing before the consumer subcommittee of the Senate Banking Committee yesterday, Ira Raphaelson, the Justice Department special counsel in charge of S&L cases, said that recovering funds from those who committed fraud is difficult. Often, he said, "the money is not there."

When skeptical senators pressed him, Mr. Raphaelson said the department doesn't have full responsibility to recover the money. He also said that courts won't tell the department when fines are imposed and that he would need an expensive new computer system to track the money.

Democratic senators were incredulous. "This is the kind of thing that drives the public crazy," said Sen. Richard Bryan, D-Nev. "We ought to do a lot better job in recovering from thieves who stole from the S&L industry."

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