FBI Probes Possible Fraud at Collapsed Firms

WASHINGTON, Sept. 23, 2008— -- The FBI has opened preliminary investigations into several financial institutions whose collapse created chaos on Wall Street, law enforcement officials tell ABC News.

Investigators are probing investment bank Lehman Brothers and insurer American International Group, or AIG, for possible fraud, according to law enforcement officials.

A senior official tells ABC News that lending giants Freddie Mac and Fannie Mae are in the government's sights, as well.

The news comes as the Bush administration attempts to hash out with lawmakers a $700 billion bailout plan for financial institutions that are staggering.

Sources tell ABC News the investigations are looking into whether company officials systematically misled investors about the financial strength of their institutions.

In congressional testimony last week, FBI Director Robert Mueller confirmed that the bureau is investigating 24 financial institutions, "large corporations, where the allegations would be that there were misstatement of assets," he said.

FBI spokesman Richard Kolko added to Mueller's figure, saying in a statement to ABC News that "the FBI currently has 26 pending corporate fraud investigations involving subprime lenders. As we have seen, this number can fluctuate over time; however, we do not discuss which companies may or may not be the subject of an investigation."

According to FBI and Justice Department officials, the FBI investigation is multifaceted and the net is much deeper than the major firms officials confirmed today.

After the collapse of the subprime markets in 2007, the FBI set up a task force to examine how brokers set up and sold mortgage and asset-based securities.

The bureau cast a wide net on firms that had dealt in collateral debt obligations (CDOs), or debt pools traded as securities.

The bureau's investigation has expanded from 14 major financial firms to 26 in less than a year.