On Thursday, the House of Representatives passed, by a vote of 367-59, the House version of S. 386, the Fraud Enforcement and Recovery Act of 2009 (FERA). The House version of the bill is similar to the version passed by the Senate on April 28, 2009. Both versions of the measure would expand the government’s ability to combat financial fraud by:
- Extending the prohibition against making false statements in a mortgage application to employees and agents of a mortgage lending business.
- Applying the prohibition against defrauding the government to fraudulent activities involving the Troubled Asset Relief Program or any federal economic stimulus, recovery, or rescue plan.
- Expanding the concept of monetary proceeds under federal anti-money laundering statutes to include gross receipts, a response to the Supreme Court’s decision in United States v. Santos et al. (No. 06-1005) (June 2, 2008).
- Providing resources to the Attorney General, Department of Justice, SEC and Postal Service for investigations, prosecutions, and civil proceedings involving federal assistance programs and financial institutions (although the House bill would appropriate $30 million more in 2010 and 2011 than the Senate version, including $20 million for the Secret Service).
- Amending the False Claims Act to expand liability for making false or fraudulent claims to the federal government and imposing liability for presenting a false or fraudulent claim for payment or approval.
- Establishing a legislative branch Financial Markets Commission, complete with subpoena power, to examine the causes of the current U.S. financial and economic crisis.
In addition to these measures, the House version would express the sense of the Congress that prosecutions under the new money-laundering provisions must be approved by a top Justice Department official. This provision was a concession to those concerned about expansive use of broad new prosecutorial powers under anti money-laundering provisions. The House version also would further modify and expand provision of the False Claims Act relating to intervention by the federal government in civil actions for false claims, including authority for the government to amend a qui tam complaint to “clarify or add detail” and to “add any additional claims” and to permit the government to sharing information with a qui tam claimant.
It is not yet clear whether the House and Senate versions of S. 386 will proceed to a conference committee to reconcile the differences between the two bills, or if the House version will proceed to the Senate for final passage.