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| Long title | An act to improve enforcement ofmortgage fraud,securities fraud and commodities fraud, financial institution fraud, and other frauds related to Federal assistance and relief programs, for the recovery of funds lost to these frauds, and for other purposes. |
|---|---|
| Acronyms(colloquial) | FERA |
| Enacted by | the111th United States Congress |
| Effective | May 20, 2009 |
| Citations | |
| Public law | 111-21 |
| Statutes at Large | 123 Stat. 1617 |
| Codification | |
| Titles amended | 18,31 |
| U.S.C. sections created | 18 USC §27 |
| U.S.C. sections amended | 18 USC §20 18 USC §1014 18 USC §1031(a) 18 USC §1348 18 USC §1956(c) 18 USC §1957(f) 31 USC §3729 31 USC §3730(h) 31 USC §3731(b) 31 USC §3732 31 USC §3733 |
| Legislative history | |
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TheFraud Enforcement and Recovery Act of 2009, orFERA,Pub. L. 111–21 (text)(PDF),S. 386, 123 Stat. 1617, enactedMay 20, 2009, is apublic law in the United States enacted in 2009. The law enhanced criminal enforcement of federalfraud laws, especially regardingfinancial institutions,mortgage fraud, andsecurities fraud or commodities fraud.
U.S. SenatorPatrick Leahy ofVermont, aDemocrat and the chairman of theSenate Judiciary Committee, sponsored the bill.
On April 27, 2009, the Senate invokedcloture on the bill as amended (S. 386) on an 84–4 vote, with eleven not voting. Only four Senators voted no, allRepublicans (Tom Coburn,Jim DeMint,James Inhofe, andJon Kyl).[1] On April 28, the Senate passed the bill on a 92–4 vote, with three not voting; the same Senators who voted against cloture voted against the bill.[2]
On May 6, theUnited States House of Representatives passed the bill with its own amendment on a 367–59 vote, with six Representatives not voting and one Representative, DemocratAlan Grayson ofFlorida, votingpresent. All 250 Democrats casting votes, as well as 117 Republicans, voted yes; all of the 59 no votes were cast by Republicans.[3]
The Senate then added an amendment to the House's amendment. The House accepted the final version of the bill on a 338–52 vote on May 18, with 43 Representatives not voting. All 224 Democrats casting votes, as well as 114 Republicans, voted yes. Fifty-two Republicans voted no.[4]
PresidentBarack Obama signed the legislation into law on May 20 along with theHelping Families Save Their Homes Act of 2009, a bill concerned with mortgage foreclosure prevention.[5]
The Act changes the definition of afinancial institution for the purposes of Federal criminal law to includemortgage lending businesses, which are defined as "organizations which finance or refinance any debt secured by an interest in real estate, including private mortgage companies and any subsidiaries of such organizations, and whose activities affect interstate or foreign commerce."18 U.S.C. § 1014, which makes it afederal offense to falsify loan documents submitted to a broad range of financial institutions, is amended to include mortgage lending businesses in that range, and for good measure also includes any other person "that makes in whole or in part a federally related mortgage loan".[6]
The crime of major fraud against the United States (18 U.S.C. § 1031), which previously covered only fraud in government procurement and contracts for services, is amended to include a wider range of government involvement, including grants under theAmerican Recovery and Reinvestment Act of 2009, transactions under theTroubled Assets Relief Program, and any "other form of Federal assistance".[7] FERA amends the definition ofsecurities fraud,18 U.S.C. § 1348, to include fraud related tocommoditiesfutures andoptions in addition to the existing category of registered securities under theSecurities Exchange Act of 1934.[8]
Finally, the Act definesproceeds in themoney laundering statute (18 U.S.C. § 1956) as "any property derived from or obtained or retained, directly or indirectly, through some form of unlawful activity, including the gross receipts of such activity".[9] Previously, the term was left undefined, and was interpreted by theUnited States Supreme Court inUnited States v. Santos by a plurality of the justices as excluding gross receipts.[10][11] A "Sense of the Congress" section suggests that senior prosecutors, such as aUnited States Attorney or superior, should be involved before certain kinds of money-laundering cases are instigated, and directs theAttorney General to deliver a yearly report on such cases for the next four years.[12]
Section 3 of the Act authorizes additional funding to detect and prosecute fraud at various federal agencies, specifically:
These authorizations are made for the federalfiscal years beginning October 1, 2009 and 2010, after which point they expire, and are in addition to the previously authorized budgets for these agencies.[13]
Section 4 of FERA restates part of theFalse Claims Act, to "reflect the original intent of the law". This amendment is in reaction to the Supreme Court's 2008 decision inAllison Engine Co. v. United States ex rel. Sanders, in which the Court held that the mere involvement of Federal money was insufficient to bring a fraudulent claim or invoice within the scope of the False Claims Act. The amended subsection (a) of31 U.S.C. § 3729 effectively reverses theAllison Engine decision, weakening the requirement to "a false record or statement material to a false or fraudulent claim", where aclaim includes "any request or demand" related to a government program and which will be paid from funds supplied by the government.[14][15]
Finally, section 5 of the Act created theFinancial Crisis Inquiry Commission, a legislative commission with each house of theUnited States Congress represented by three members appointed by the majority party and two members appointed by the minority, none of whom may be employees of the Federal government or any state or local government. The purpose of the commission is "to examine the causes, domestic and global, of the current financial and economic crisis in the United States."
This bill would amend the Federal money laundering statutes (18 U.S.C. Sec. 1956, 1957) to correct an erroneous Supreme Court decision in 2008 that significantly weakened these statutes. InUnited States v. Santos, the Supreme Court misinterpreted the money laundering statutes, limiting their scope to only the `profits' of crimes, rather than the `proceeds' of the offenses. 128 S. Ct. 2020 (2008). The Court's decision was contrary to Congressional intent and will lead to criminals escaping culpability simply by claiming their illegal scams did not make any profit.