By Kate Gibson

The Federal Bureau of Investigation is braced for a potential crime wave involving fraud and corruption related to bank bailout money and the economic stimulus package, FBI director Robert Mueller warned Tuesday.

"These funds are inherently vulnerable to bribery, fraud, conflicts of interest and collusion. There is an old adage, that where there is money to be made, fraud is not far behind, like bees to honey," Mueller told an afternoon gathering of business executives.

Law enforcement agencies faced a similar scenario after Hurricane Katrina, with a task force created in the wake of the 2005 storm so far convicting 246 people of fraud and other crimes related to relief funds in Mississippi and Louisiana, Mueller said.

Given the trillions and trillions of dollars involved in the government's current moves to stem the economic crisis, "from the purchase of troubled assets to improvements in infrastructure, health care, energy and education -- even a small percentage of fraud would result in substantial taxpayer losses," said Mueller, a former U.S. attorney who had specialized in white-collar crime litigation while a lawyer in private practice.

After 9/11, counterterrorism became the FBI's top priority, even as the agency grappled with corporate crime such as the Enron and WorldCom scandals, said Muller, who took the helm of the FBI on Sept. 4, 2001, just one week before the terrorist attacks.

"Today, we continue to balance the risk of terrorist attack - as evidenced by the planned attacks on synagogues in the Bronx - against the growing risks to our economy and our communities, from financial fraud to violent crime. Unfortunately, we do not have the personnel to investigate every criminal threat," he said.

The 9/11 attacks prompted the FBI and other government agencies to divert resources from financial fraud and other corporate crimes to fighting terrorism, including the transfer of 2,000 agents tracking white-collar crime to counterterrorism, Mueller said.

-By Kate Gibson, 415-439-6400; AskNewswires@dowjones.com