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New Fed Task Force Subpoenas 11 in Mortgage Fraud Probe

Mark Wilson/Getty Images(WASHINGTON) -- A new federal and state task force was created Friday to investigate mortgage fraud that contributed to the 2008 financial crisis, and the panel immediately subpoenaed 11 financial institutions.

Attorney General Eric Holder said the new unit would consist of 55 Justice Department lawyers and analysts and 10 FBI agents to work with state attorney general’s offices to investigate how mortgage backed securities were created, sold  and valued by financial institutions. The creation of the unit was announced by President Obama in his State of the Union address on Tuesday.

“The Working Group will streamline and strengthen current and future efforts to identify, investigate, and prosecute instances of wrongdoing in the packaging, selling, and valuing of residential mortgage-backed securities,” Holder said at a press conference on Friday.

Making the announcement the attorney general disclosed that the Justice Department has sent civil subpoenas to 11  financial institutions as part of the investigation. They did not identify the targets of the subpoenas.

“You can expect more to follow,” Holder said in reference to the subpoenas being sent out. “Of course, I can’t go into detail about our existing investigations.  But I can tell you that significant efforts are moving forward, by both federal and state authorities.”

The working group will be co-chaired by the heads of the Justice Department’s Civil and Criminal Division, John Walsh the U.S. Attorney from Colorado,  Robert Khuzami the SEC Enforcement Director and Eric Schneiderman the New York Attorney General.

Although the FBI, SEC and Justice Department have been investigating numerous aspects of the financial crisis, officials hope the new working group may be able to use New York State’s Martin Act, which gives investigators broad powers to investigate fraud.  The act allows New York to bring criminal and civil fraud charges without needing to show intent to commit fraud.

Copyright 2012 ABC News Radio

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