U.S. prosecutors are adding employees to investigate New York-area financial firms for possible fraud linked to a global credit crisis that has wiped out $30 trillion of equity value in the past year.

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U.S. prosecutors are adding employees to investigate New York-area financial firms for possible fraud linked to a global credit crisis that has wiped out $30 trillion of equity value in the past year.

The extra personnel will use strategies that proved successful in prosecuting executives of Enron and Refco, said U.S. Attorneys Michael Garcia, of Manhattan, Benton Campbell, of Brooklyn, and Christopher Christie, of Newark, N.J. A central question will be whether executives lied to investors about securities linked to overvalued subprime mortgages that sparked the credit crisis, the three said in interviews.

“It usually boils down to some type of fraud, some type of misrepresentation,” said Garcia, whose office covers the headquarters of most U.S. financial companies as well as the exchanges where their shares are traded.

Triggered by bankruptcies or stock losses linked to the credit crisis, the U.S. has begun investigations of mortgage lending, securitization and failed banks.

Grand juries in Manhattan, Brooklyn and New Jersey are probing Lehman Brothers Holdings, according to the firm’s lawyer, Harvey Miller. Nationally, the FBI is looking into 26 firms, including Washington Mutual and American International Group, law-enforcement officials said.

The U.S. Attorney’s Office in Seattle announced Wednesday it is leading a federal task force to investigate whether any laws were broken at WaMu before it was seized by the FDIC and its banking operations sold to JPMorgan Chase.

Garcia’s white-collar-crime unit now has 20 prosecutors, up from 17, and he has assigned eight lawyers to a new mortgage-fraud division. One case this month led to a 10-year sentence for a man who duped homeowners facing foreclosure out of $2.5 million.

In addition to 12 prosecutors working on securities-fraud cases, Brooklyn’s Campbell has created a task force to probe the subprime fallout. He said he’s made white-collar crime a priority. Christie has added a prosecutor to his 10-person securities-fraud unit.

“There are various iterations — valuations questions, insider trading, material misrepresentations,” Campbell said. “What we are generally seeing is the same kind of fraudulent activity. But it’s the factual background to the fraudulent activity that’s different.”

In the last wave of white-collar prosecutions, capped by the imprisonment of WorldCom Chief Executive Officer Bernie Ebbers and Enron CEO Jeffrey Skilling, prosecutors convinced juries that executives knew their companies’ books were cooked.

Aware that jurors may get confused by financial instruments such as credit default swaps, the government is looking to simplify prosecutions in the same way.

In Manhattan, prosecutors this year won convictions against top executives at New York-based Refco, which engaged in complicated futures transactions. They focused on lies CEO Phillip Bennett and President Tone Grant told investors about the now-defunct firm’s operations.

“Refco is an example of a model” for future prosecutions, Garcia said.

Campbell, a former member of the Justice Department’s Enron task force, said his office has begun to see “classic” signs of fraud emblematic of the Enron era.

“How valuation questions were handled or how these structured finance vehicles were put together, for example, look very familiar,” said Campbell, who declined to discuss the specifics of his investigations.

The Brooklyn prosecutor has opened investigations into whether Lehman executives misled investors about the firm’s financial health and whether UBS lied to investors about securities backed by subprime mortgages, according to a person familiar with the probes.

At a hearing Thursday in U.S. Bankruptcy Court in Manhattan, Miller, the Lehman attorney, said 12 people have been subpoenaed as part of a grand-jury investigation. Prosecutors are focusing on the auction-rate securities market, Miller said.

Doug Morris, spokesman for Zurich-based UBS, and Lehman spokesman Hugh Burns declined to comment.

New Jersey U.S. Attorney Christie has subpoenaed documents to determine whether Lehman failed to fully disclose its eroding financial condition at the time of a $6 billion stock offering, according to people familiar with the matter.

The first challenge for the U.S. attorneys in prosecutions resulting from the subprime collapse will be distinguishing normal business activities from fraud.

“It’s not a crime to make bad business decisions,” Campbell said. “What gets people in trouble is when they lie, cheat or steal.”

Garcia said that prosecutors won’t begin a case merely because a company collapsed.

Rather, referrals from the Federal Bureau of Investigation or Securities and Exchange Commission, as well as allegations from witnesses who “walk-in through the door,” may generate subpoenas and grand juries in cases that will develop quickly, or possibly “take years.”