At a conference on July 28, 2009, Neil Barofsky, the Special Inspector General for TARP, outlined the types of fraud that his office was investigating. He indicated that review of the Capital Purchase Program is his primary objective at this time, and that the office is investigating allegations of securities fraud, accounting fraud, falsified financial statements, criminal misrepresentations, and fraudulent practices involving mortgage modifications. Barofsky noted that his office is currently conducting “10 or 11” audits involving government spending that could lead to criminal fraud charges.
The focus appears to be on “application-stage” fraud, involving actions taken by entities when they were applying for Capital Purchase Program funds. Barofsky noted that “these are banks that are cooking their books, whether it’s false valuation of assets, whether it’s round-trip transactions — really whatever we’ve seen recently in large accounting fraud, we’re investigating, looking at institutions that did that in order to get TARP funds.”