Obama budget seeks more to fight financial fraud

WASHINGTON (Reuters) - The Obama administration is requesting a $96.8 million increase in the Department of Justice's fiscal 2011 budget to combat financial fraud, up 23 percent from fiscal 2010.

The increase is intended to fund the hiring of additional FBI agents, prosecutors, civil litigators and bankruptcy attorneys.

"These resources will enable the Department to aggressively pursue traditional law enforcement and litigation activities ranging from mortgage fraud, corporate fraud, and other economic crimes," the Justice Department said in a statement.

Financial fraud has become a hot political issue after a huge increase in mortgage scams and Wall Street trading scandals over the last few years.

An interagency task force led by the Justice Department was established recently to investigate, prosecute and deter financial crimes.

U.S. Attorney General Eric Holder said in a speech last month that the Justice Department was moving forward on more than 5,000 pending financial institution fraud cases and the FBI was investigating more than 2,800 mortgage fraud cases -- up nearly 400 percent from five years ago.

The Justice Department's request comes along with a $60.2 million increase sought by the Department of Health and Human Services to investigate and try healthcare fraud cases.

In May, the two departments established a joint Health Care Fraud Prevention and Enforcement Action Team to combat Medicare and Medicaid fraud.

The Justice Department said its proposed budgetary increase would include:

* $75.3 million to fund 367 positions, including 143 FBI agents, to combat mortgage, corporate, securities and commodities fraud cases. The department said that current levels of FBI agents "are inadequate to address existing demands, let alone the anticipated growth in case load during the next few years."

* $17.2 million to fund 109 positions, including 88 federal prosecutors, to investigate and try white collar crimes of all types, including mortgage and securities fraud, as well as public corruption cases related to the government's $700 billion bank bailout program and $787 billion economic stimulus.

* $550,000 to fund five positions, including three attorneys, to prosecute financial and mortgage fraud, procurement and grant fraud, and violations of the Foreign Corrupt Practices Act.

(Reporting by Dan Margolies; Editing by Gary Hill)