US enforcement collapse opens door for financial fraud

Federal white-collar crime prosecutions in the US have dropped by half from 20 years ago and a sixth from five years ago.

In the six months to March 2026, prosecutors brought 2,008 white-collar cases, on track for about 4,000 by end of fiscal year.

The decline in prosecutions predates Donald Trump's dismantling of the Department of Justice and is driven by a shift in focus to counterterrorism, immigration, and drug enforcement.

Financial fraud cases require dozens of lawyers working for years, making them more vulnerable to budget cuts than other crime types.

John Kenneth Galbraith's concept of the 'bezzle' suggests undiscovered embezzlement grows during market euphoria, raising concerns about undetected fraud.