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Government focuses on mortgage and securities fraud

According to a recent USA Today analysis, the Obama administration is going after fewer cases of defrauding government benefits program and increasingly prosecuting fraud schemes connect to mortgage lending, financial institutions and Medicare.

One of the conclusions of the analysis is that individuals who engage in fraud schemes involving food stamps, Social Security, or other government benefits are not as likely to face federal charges as they have been in years past.

The USA Today analysis is based on data recently released by the Justice Department. According to that data, the number of criminal prosecutions involving fraud against government benefits programs has decreased roughly 20 percent in the two years since President Obama took office. That is apparently the lowest number of prosecutions in a decade. That number is corroborated by other researchers.

Sources said 678 cases of government benefits fraud were prosecuted last year. Around 8 percent fewer cases per year have been referred for prosecution, and prosecutors are refusing to prosecute a larger percentage of referrals.

At the same time that federal prosecutors have deemphasized prosecution of government fraud, government benefits programs have become increasingly large, which in turn increases the risk of fraud. Last year, According to the Bureau of Labor Statistics, nearly 49 percent of households in America received Social Security, food stamps, housing assistance or other forms of federal benefits.

Generally speaking, Medicare and securities fraud are high-cost fraud schemes, and some feel the Obama administration's focus on those areas makes sense. Still, many feel that even if the administrations direction makes sense, no type of fraud scheme should go unnoticed.

Source: USA Today, "Fewer prosecuted in benefits program fraud," Brad Heath, 29 June 2011.

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