Fraud Insights

Mandy Moody
ACFE Social Media Specialist

I still remember the questions that ran through my mind when I heard the president of my former company say, “Mandy, we are going to have to let you go” back in the spring of 2009. How will I make my car payments? What could I have done differently? Where is the nearest bar?

As a life-long perfectionist and overachiever, I was dumbfounded to discover that I was “one of those people,” a casualty of a dwindling economy and unpredictable layoffs. All of a sudden the future did not look as bright as the keynote speaker at my college graduation promised it would be.

However, after picking my ego up off of the floor, seeking out advice from experienced professionals and researching resume best practices, I was able to rebound quickly and find a job within three months. Granted, I know it is not that easy for everyone, but I was thankful for the expert advice I received from people just like those that will be on-hand, ready and willing, to help attendees at this year’s Career Connection at the ACFE Annual Fraud Conference & Exhibition, June 17-22 in Orlando.

Here are just a few of the highlights you can expect to see at the Career Connection:

• NEW! Career Fair: employers and career strategists will be on-hand at the Career Connection’s first-ever Career Fair in the Exhibit Hall, Monday evening, June 18 from 4:00-7:00 p.m.
• Featured employers: representatives from some of the nation’s top employers like Capital One, Disney and ING Direct will be on-site. In exchange for a resume, you will receive a book written by one of our career strategists. The book exchange is limited to the first 100 resumes received. All resumes will be circulated among the featured employers for consideration with open positions.
• Career strategists will answer questions related to the anti-fraud profession. Donn Levie, Jr. and Kathy Lavinder are prepared to speak with attendees about career decisions like phasing into a new career, transitioning from the public to the private sector, elevating your role within your current organization, establishing yourself within your new role and defining your professional goals ($50 for 50 minutes). There will also be two strategists on hand for quick walk-up appointments.
• Professional development-related presentations: 15-minute presentations focused on starting your own fraud examination practice, maximizing your job search efficiencies and more.

 We look forward to seeing you in Orlando. Whether you are searching for a new job, a career change or just looking for some advice, be sure to stop by the Career Connection in the Exhibit Hall.

Laura Hymes, CFE
Managing Editor

When I began working at the ACFE 3½ years ago, I had almost no knowledge of common fraud schemes and the various methods that fraud examiners use to prevent and detect them. What I did have was a background in publishing and an interest in continuing to develop and edit books. Fast forward to today and not only have I had the opportunity to work on three of Dr. Joseph T. Wells’ casebooks (Internet Fraud Casebook, Financial Statement Fraud Casebook and the forthcoming Bribery and Corruption Casebook), but I’ve even earned my own Certified Fraud Examiner (CFE) credential.

Reading firsthand accounts of investigating and uncovering fraud drove home the immediacy of white-collar crime in a way I had not experienced before. For me, it added that human element that can be lost so easily when I’m reading a textbook or manual. Suddenly I knew the people behind the investigations, had working relationships with them, and understood their senses of humor and writing styles. If I didn’t quite grasp one of the finer points in a case, I had direct access to the examiner writing it, and every author from whom I sought clarification was kind and generous in explaining the nuances that a novice might not appreciate.

My experiences working on the Bribery and Corruption Casebook: The View from Under the Table were no different. Dr. Wells and I usually begin the casebook process by brainstorming new ideas, and this time around we decided corruption was the way to go. After we chose the topic for this new collection, we sent a request to CFEs for case submissions. When we reviewed submissions we were looking for a good mix of private industry and public corruption cases. This step is always the most difficult; we receive so many excellent ideas — hundreds for this latest collection — but there simply isn’t room to include them all.

After the cases have been selected, the real fun begins. That’s when I get to start collaborating with practitioners in the field who investigate white-collar crime daily. We work in drafts, communicating and discussing ideas at each stage. I move commas around, add adjectives and flesh out descriptions, and ask annoying questions like, “Can you make the difference between that kickback and this illegal gratuity more apparent?” For their part, the writers take my grammar-police tendencies in good humor and respond to my questions thoughtfully and in ways that, I hope, add value to the cases for our readers.

John Wiley & Sons Publishing released the new Bribery and Corruption Casebook: The View from Under the Table in April. I hope you enjoy reading the stories and learn something from the experienced ACFE members who investigated and wrote the cases — I certainly did.

And Dr. Wells and I are already in the brainstorming phase for our next book, so stay tuned!

John Warren, J.D., CFE
Vice President and General Counsel

As most readers are probably aware, every two years the ACFE publishes a new edition of the Report to the Nations, a global study on occupational fraud. This is one of our most important initiatives and one of the things we are most proud of as an organization. The Report provides information on the costs, methods, victims and perpetrators of occupational fraud – information that simply cannot be obtained anywhere else in the world.

We are now putting the finishing touches on the 2012 Report, which is scheduled to be released to the public May 8.  I have personally been involved in the production of every edition of the Report since 1996, and I can confidently say that the 2012 Report is the best and most complete study we have ever done. It contains a tremendous amount of information about how frauds are detected, the effectiveness of various controls, the characteristics of fraud offenders, the impact of fraud in various regions of the world, and more. The Report should be required reading for any anti-fraud professional and we hope it is something our members can use to educate their own clients and organizations about the risk they face from occupational fraud.

Our staff puts a tremendous amount of work into making sure the Report contains accurate, insightful information that will be useful in fighting fraud. The ACFE research department spends months reading every case we receive, organizing the data, analyzing it and compiling it into the final Report. And our graphic design team does a tremendous job taking the thousands of pieces of data we have assembled and organizing it so that key facts are accessible and easy to read. 

But the ACFE staff is not the only group responsible for the information you see in the Report to the Nations.  The data we compile and present to you is only available because of the wonderful contribution of Certified Fraud Examiners (CFEs) from around the world who took the time and effort to participate in our survey and provide information about specific fraud cases they had investigated.  In the 2012 study we received nearly 1,400 cases of occupational fraud, which gives us a tremendous data set with which to work and allows us to produce what is widely recognized as the world’s most comprehensive study on occupational fraud. It is a testament to the dedication of our members that they are willing to give their time and share this information not for any personal gain or notoriety, but simply to contribute to our growing understanding of occupational fraud and to support the anti-fraud community.

If you have been a member of the ACFE for any length of time, you have no doubt heard our founder and Chairman, Dr. Joseph T. Wells, CFE, CPA, and our President and CEO, James Ratley, CFE, talk about the ACFE’s focus on being the best association in the world. We work to achieve that goal through the outstanding efforts of our highly trained and dedicated staff and our leadership’s constant commitment to excellence. But the quality of our organization extends far beyond ACFE headquarters; we also have the best members in the world, and the Report to the Nations is evidence of that fact. As you read the 2012 Report in the coming weeks, I have no doubt you will find information that is informative and helps you in your career. Please keep in mind the contributions of all the committed CFEs who made this Report possible and who support the ACFE, their fellow anti-fraud professionals and the communities and organizations in which they work and live every day. 

The 2012 Report to the Nations on Occupational Fraud and Abuse will be available in electronic form on May 8 on ACFE.com.

Lester Rosen, J.D.
CEO, Employment Screening Resources

On April 25, 2012, the Equal Employment Opportunity Commission (EEOC), the agency that enforces federal laws prohibiting employment discrimination in the U.S., issued updated Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.

On a Q & A page, the question on how the EEOC’s updated Enforcement Guidance differs from earlier policy statements is answered:

• It discusses disparate treatment analysis and gives examples of applicants with the same qualifications and criminal records being treated differently because of race or national origin in violation of Title VII.
• It explains the legal origin of disparate impact analysis.
• It explains two circumstances where employers may consistently meet the “job related and consistent with business necessity” defense: 1) The employer validates the criminal conduct exclusion for the position in question in light of the Uniform Guidelines on Employee Selection Procedures; or 2) The employer develops a targeted screen considering the nature of the crime, the time elapsed, and the nature of the job, then provides an individualized assessment to determine if the policy is job related and consistent with business necessity.
• It states that federal laws and regulations that restrict or prohibit employing individuals with certain criminal records provide a defense to a Title VII claim.
• It says state and local laws or regulations are preempted by Title VII if they “require or permit the doing of any act which would be an unlawful employment practice” under Title VII.

The Enforcement Guidance also recommends “best practices” for employers using criminal records:

• Eliminate policies or practices excluding people from employment based on any criminal record.
• Train managers, hiring officials and decision makers about Title VII and its prohibitions on employment discrimination.
• Develop narrowly tailored written policy and procedures for screening criminal records.
• Determine specific offenses that may demonstrate unfitness for performing such jobs.
• Determine the duration of exclusions for criminal conduct based on all available evidence and include an individualized assessment.
• Record the justification for the policy and procedures.
• Note and keep a record of consultants and decision makers on how to implement the policy and procedures consistent with Title VII.
• Limit inquiries about criminal records to records for which exclusion would be job related for the position in question and consistent with business necessity.
• Keep information about criminal records confidential and only use for the intended purpose.

Mr. Rosen will share best practices on using background checks as part of your anti-fraud program at the 23rd Annual ACFE Fraud Conference at his session, Employment Background Checks: Stopping Employee Fraud at the Point of Entry.

Leslie Simpson, CFE
Membership Director

As a Certified Fraud Examiner, I find myself constantly thinking of where I’m going to find interesting CPE that allows me to stay up-to-date with the happenings in the anti-fraud profession. If you are like many professionals, training budgets are tight, which can make finding timely and interesting CPE options a bit of a challenge. You are not alone; in fact, we field similar questions from others in the same boat. Look no further, here are three ways to get quick, affordable CPE from the ACFE:

1.  Archived Webinars are available to ACFE members at no cost and offer 1 CPE credit per webinar. This is probably the simplest way to earn CPE credit. All you have to do is login to ACFE.com and select “My Account,” and you’ll find these free webinars under the announcements section. Recent topics include:
   • ACH/Wire and Online Banking Fraud: The Impetus Behind FFIEC's Guidance for Layered Security,
   • Transaction Auditing and Monitoring: Protection Against Mistakes and Organized Fraud
   • There's Something in the Air: What's on the Horizon in the Mobile Cyber Threat and Fraud Arena
   • Manage the Risk of Inefficiency and Occupational Fraud in Day-to-Day Business Processes
   • Emerging Technologies to Detect and Prevent

 

Tip: Be sure to check back regularly because the ACFE adds new webinars 4-6 times a year. 

2. Fraud Magazine CPE Quizzes are another affordable way to earn CPE credit. For only $69 you can earn 10 hours of fraud-related credit. Simply read the feature articles and columns from any five issues of Fraud Magazine® and complete the quizzes located at the back of the printed issues (you may also retrieve the CPE quizzes online

 

3. Online Self Study Courses allow you to expand your anti-fraud knowledge while earning anywhere from 2 to 20 NASBA-compliant CPE credits. Prices range from $59 to $159 for ACFE members and are available in a variety of multimedia formats like DVD, CD-ROM and workbook. An added bonus, the ACFE offers several courses that focus on ethics, helping you satisfy your fraud and ethics requirements at the same time.

These are only three low-cost ways to earn CPE credit; however, the ACFE offers a variety of seminars and conferences worldwide, live webinars and self-study courses on a wide range of topics. If you have any questions or would like help determining the best CPE option for you, I encourage you to call, email or chat with an ACFE Member Services Representative. We are here to help and are more than happy to do so. Happy learning.  

Daniel Tannebaum, CFE
Head of Compliance - Americas, Travelex and Chief Compliance Officer, Travelex Currency Services Inc.
New York, NY

When I worked for the U.S. Treasury Department, I almost always began my public remarks with the nine most terrifying words in the English language, “I’m from the government and I’m here to help.” Americans always made light of those remarks from President Reagan in 1988, but when did civil servants stop serving the taxpayer and begin to embody that statement?

For all of my adult life I’ve worked in varying compliance roles with the government, in the private sector, back to the government and then ultimately back to the private sector. In all of that time I’ve faced the same question from multiple perspectives: “Just what are the regulators looking for?”

In my role at the Office of Foreign Assets Control (OFAC) I provided guidance and clarification to the financial services industry on how to best comply with OFAC regulations.

In Summer 2005, the five functional U.S. banking regulators (Federal Reserve, FDIC, OCC, OTS and NCUA) joined forces to release a landmark compliance document. The consolidated Federal Financial Institutions Examination Council (FFIEC) Examination Manual, the so-called “bible” of consolidated supervision guidance, was to serve as a critical piece of any institution’s compliance program as now the regulators were using one uniform examination practice. This document contained the key components of all AML compliance programs, something that previously differed from regulator to regulator.

Sounds great, right?

That wasn’t the entire story. As conversations with regulators continued, it became evident that the examination outline laid out in the manual was essentially the bare minimum that a company could do in order to pass an examination. Many compliance officers asked, “But, how could I not only pass, but excel in an examination?” The response typically given is consistent with what most government employees say, “I’m sorry, I can’t help you with that.”

Speaking from personal experience, when I was a compliance officer at OFAC, my department’s mission was that of guidance and clarification. That same team is now charged with “enforcement and case evaluation.” How, within just five years, can a mission so pure and helpful to American businesses change so harshly?

OFAC isn’t alone, as other regulators have seemingly changed their tone, now honing in on enforcement rather than assistance. As we’ve all seen, fines have grown exponentially in the compliance space over the past five years. We’re at the point now that a $1 billion penalty may not have the same impact that an $80 million fine had in 2005.

So back to my original point, why can’t regulators just share with us how we can run clean businesses? It seems relatively counterintuitive as we all try to ensure that our organizations are stable and are providing good product offerings. Why make the relationship more adversarial than is necessary? As I write this article I’m preparing my company to be examined by one state in the union who has given us conflicting requests for the upcoming examination.

And the cycle continues…

Tannebaum will address these questions and more at during his session, “How to Build an Effective AML/OFAC Compliance Program” at the 23rd Annual ACFE Fraud Conference & Exhibition in Orlando, June 17-22, 2012. Already have some thoughts? Share them in the comment box below.

Sheila Keefe, CFE, CPA
CFO, Professional Power Products Inc.

Segregation of duties aims to deter fraud by eliminating the ability of any one individual to complete enough steps in a transaction that they are able to both steal and conceal. With properly designed segregation of duties, employees can still steal, but they would have to enlist the help of a co-worker, increasing the possibility of detection. According to the soon-to-be-released Board Member and Audit Committee Survival Guide, conspiracies are hard to maintain over the long-term, making segregation of duties an appealing fraud deterrence tool.

The following table illustrates an advisable segregation of duties. However, not all organizations have sufficient staff to allow appropriate segregation of duties to be accomplished using just finance department staff. Creative organizations can make use of the receptionist and the owner to handle tasks that cannot be adequately segregated with one- and two-person finance departments.

When owners endeavor to pick up critical control duties, they are most likely to retain check-signing authority. Some owners stop there, assuming that seeing all checks written will effectively limit embezzlement. Not so fast; there are other ways fraudsters manipulate the accounting records to conceal their wrongdoings. Additional steps owners should consider performing include opening bank statements and periodically (perhaps quarterly) reviewing credit memos, General Journal entries, changes to the master vendor file and the master payroll file.

Segregation of duties, scalable to the size of the organization, remains one of the most effective fraud deterrence tools and remains within reach for even the smallest organizations. Remember, trust is not a control.

Read more of Sheila’s insights on her blog, Business Done Right.

Jeff Kubiszyn, CFE
Chapter Development Manager

Involvement in an ACFE chapter can be much more than just an inexpensive lunch. Not only does participation in a chapter offer you the chance to earn CPE credits, network and develop leadership skills it also opens the door to opportunities for members to have a positive effect in their community. Members in the Pacific Northwest (U.S.) chapter are prime examples.

The Pacific Northwest chapter is very active in its community. Chapter members routinely volunteer their time to groups and schools. Last year the chapter added to the growing list of organizations it supports, and this has carried over into 2012.

The chapter began a joint program with the King County, Wash. Prosecutor’s Office Elder Abuse Project to assist seniors in need. Several chapter members volunteered to provide advice and counsel on elder abuse cases and provide volunteer fraud examination services.

The chapter also collaborates with the City of Bellevue, Wash. Police Department to provide volunteer fraud examination services. Chapter members meet with detectives to review cases and documentation, speak with victims, advise detectives during the investigation, summarize accounting details and provide help to officers in recognizing other violations. The volunteers contribute 10 hours a month and go through a rigorous application process.

For some, the experience gained is invaluable. As one volunteer put it, "it gave me the experience I needed, but couldn't find in traditional accounting jobs, to prepare for full-time employment fighting fraud." This year the chapter hopes to have additional members volunteer to continue this pro-bono fraud examination work for the department.

Supporting local law enforcement agencies and fraud victims alike is one of the many ways ACFE chapters give back to the community. Contact your local chapter if you want to help serve your community.

Mandy Moody
ACFE Social Media Specialist

How much could a background check save your company? One million dollars, according to the Roman Catholic Archdiocese of New York. That is how much money a 67 year-old woman embezzled over a seven-year period while working as a volunteer bookkeeper at St. Patrick’s Cathedral in Manhattan. When the bookkeeper was hired in 2003, the archdiocese did not conduct criminal background checks and, subsequently, didn’t catch the documentation of the woman’s former grand larceny conviction.

While the archdiocese does conduct background checks now, this story is a fair warning to those still hesitant about whether they are worth the cost and time. Also, companies wonder if it is enough to solely conduct a criminal background check. A frequent misconception is that there exists a massive, centralized data repository that stores every piece of information the government has ever collected on every person. In truth, information is often incomplete, and fragmented between different agencies and non-governmental organizations.

Given that the level of depth and scope will vary based on the purpose of the search there is not a universal way to perform a background check. The background check for a construction worker will not be the same as that for a high level manager and a check on an individual will differ greatly from one performed on an organization.

It is because of these questions, concerns and costly embezzlements like the one described in the story above that we recently released a new self-study course, Conducting Effective Background Checks. This course breaks down the fundamentals of performing background checks and details how to develop a background check policy.

It also covers major laws that govern background checks including the Fair Credit Reporting Act, various anti-discrimination laws, financial and health privacy laws, considerations for state-specific laws and anti-corruption statutes.

Insight: watch this short preview of the course to find out more.

John Gill, J.D., CFE
ACFE Vice President of Education

Last week, Bruce Dorris, J.D., CFE, CPA and ACFE Program Director, and I had the great pleasure of flying to Singapore to teach the first CFE Exam Review Course outside the U.S. Although Bruce and I have taught the U.S. version of the course many times, this was the first time we taught the international version for the public.

The reception we received could not have been warmer. Everyone in the class was so nice, and they were so excited that we held the first international class in the Asia-Pacific region. We met people from Singapore, Indonesia, India, the Philippines, Hong Kong, Australia and even Kenya! It was really exciting to have such an international crowd.

As I mentioned, I teach about a dozen classes in the U.S. each year, and I travel from Las Vegas to New York City to Los Angeles to teach the Review Course. What struck me the most last week was not how much the Singapore class was different from the courses I teach in the States, but how much it was exactly the same. It really hit home to me that ACFE members have a strong bond that knows no borders. It doesn’t matter where we are located, how much experience we have or even what industry we work in. We all share the same passion: to understand how fraud is committed and do everything we can to find those responsible. The dedication to fighting fraud I saw in each person was very inspiring.

I can’t tell you what a thrill it was to meet them (even though it took me 25 hours to get there!) and I am proud to be a part of such a truly global association.

Pictured: Krishnamah Sanmugam just after she found out she passed the first part of the CFE Exam. View more photos from the event on our Facebook page.

Executive Search Specialist and Career Coach at the 23rd Annual ACFE Fraud Conference & Exhibition, June 17-22, in Orlando, Fla.

For people looking to make a career change, how can you use existing experience to transition into a different field?

This continues to be a tough environment for those wanting to use their skills in a different field or setting. It’s not easy, but it’s not impossible either. Create a skills-based résumé that details all relevant and transferable skills. Make sure the résumé has an opening paragraph that delivers your “value proposition.” This section should connect everything you’ve done that’s relevant into a cogent argument for your suitability for the role. Don’t ever expect the reader to do that - the reader isn’t equipped to do that and won’t have or take the time.  

Once you have a résumé that articulates your suitability for the new role, network with people who can open doors, make introductions, or provide guidance and direction. Let your professional contacts know what you’re trying to do and why you think you’d be good in the new role. Don’t ask anyone to find you a job; ask them for their suggestions and have them relate some of their relevant personal experiences. All the while, gather information so that your efforts will be more targeted, efficient and effective. Learn everything you can about the new field so that you can demonstrate in conversations your appreciation for not only the industry or business sector, but also the issues and concerns in that field. Informational interviews are great, if you can get them.  

When you get a job interview, don’t just sell yourself; sell the benefits of your fresh perspective, your motivation, and the passion that you’ll bring to the new role and environment. Be honest about experience gaps, while you stress your openness to learn and a strong desire for professional growth. If you truly know yourself and know that you’ll be a valued contributor in the new role, there’s likely to be a hiring manager who will be convinced. 

What do you most hope attendees will take away from the Career Connection at this year’s Conference?

I hope attendees will feel empowered after they leave the Career Connection. I expect they will have made important new connections, gathered practical information and learned things they didn’t know. Make no mistake about it, there are great opportunities out there in the marketplace in the area of fraud prevention and detection. This field has a bright future ahead with an ever-expanding need for talent. Demographics alone are creating new opportunities and advantages for early and mid-career professionals.

I hope that sense of empowerment comes with a commitment to avoid passivity, resting on one’s laurels and the rejection of a “good enough for now” attitude. At the end of the day, it is up to each individual to chart his/her career course. I know they’ll leave the Career Connection with new ideas, tactics and strategies for charting that course.

Speak with Lavinder and other career coaches at this year’s ACFE Annual Fraud Conference, June 17-22, 2012, in Orlando, FL.

Executive Search Specialist and Career Coach at the 23rd Annual ACFE Fraud Conference & Exhibition, June 17-22, in Orlando, Fla.

What is the biggest hurdle you see facing those attempting to find a job in today’s market?

Without a doubt the biggest hurdle to finding a new job in today’s market is that there is so much competition for every opening. Millions of people lost jobs in the recession, and many people are still trying to re-enter the work force. Millions more are trying to make a job change. A recent survey of 250,000 people by The Ladders found that more than 60 percent of the respondents want to change jobs now that the economy is improving. Other surveys indicate that job seekers would be willing to make a lateral move just to get into a new company. And many have the attitude that it does not have to be a promotion to bring a new challenge. 

All of this pent-up demand means that the candidate pool for every job will be full to overflowing. Job seekers need to think about how they can stand out from their competition and receive serious consideration by HR gatekeepers and, ultimately, by hiring managers.

There is no one way to stand out; there are many approaches to try:

1. Make a business case: I encourage candidates to put together a résumé that makes a business case for the particular job they’re seeking. I’ve seen candidates create spreadsheets with metrics that measure how they align with particular job specifications. Clearly, it is more work to tailor a résumé to an opening or create a spreadsheet that details how you match the role, but these tactics can help. 
2. Connect with an insider: Find “a real live person” within your target organization and send a résumé directly to that person by politely requesting your résumé be forwarded to them. Simply submitting a résumé to a job board or through a company website is a low-effort, low-return tactic these days.     
3. Show YOU want the job: Recently I’ve been bombarded by email blasts of résumés sent by offshore services that circulate résumés to companies and recruiters for a fee. Save your money. I immediately delete those and most other recruiters do as well. If you want the job, make the effort yourself and, by all means, take the time to craft a compelling and persuasive cover letter. Anything less than that looks lazy.

Tune in tomorrow for more career advice from Kathy. Also, speak with her and other career coaches at this year’s ACFE Annual Fraud Conference, June 17-22, 2012, in Orlando, FL.

Allan Bachman, CFE
ACFE Education Manager

With 34 countries represented by the more than 200 attendees, the ACFE European Fraud Conference once again showed how truly successful an international meeting of anti-fraud professionals can be. Speakers from countries like Israel, Saudi Arabia, Belgium, Italy, Latvia and the Czech Republic delivered training and shared their professional expertise with an eager group.

The Conference kicked off with ACFE faculty member Cynthia Hetherington, CFE, who, in her unique style, brought the 21st century to the Old World. Her session on using social networks in fraud examinations was a huge success and left attendees wanting more. Using “live-fire” exercises with real-time social media interaction, she demonstrated ways to gather information about suspects and their likes, dislikes and interests without being detected. She clearly illustrated that what someone will not tell you to your face, they will broadcast to the world via social networks if you only know how to look for it.

ACFE President and CEO James D. Ratley, CFE, opened Monday in his inimitable style. His session on conducting internal investigations was the tip of the iceberg, but left attendees scribbling notes long after he had finished his session. His laid back approach and humor were refreshing to European attendees, and his tips on obtaining a confession even caught the attention of one attendee and his YouTube channel, The Fraud Tube (watch the video here).

The luncheon speaker, Carman Lapointe, CFE, CIA, CCSA, Under-Secretary-General of the Office of Internal Oversight Services at the United Nations, detailed her mission. Her attempt to recruit for some of her mission’s more dangerous assignments brought home the real personal risk to anti-fraud professionals.

The evening networking reception was well attended and a great respite from a long day of serious discussion. Well attended and a chance to make evening plans, these receptions are always a good opportunity to take it down a notch.

Tuesday opened with a keynote from Stephen Harrison, current head of the UK’s National Fraud Authority. Mr. Harrison was detailed in discussing their important strategic objectives, priorities and the NFIB’s (National Fraud Intelligence Bureau) efforts to coordinate fraud reporting and enforcement. The initiative has produced informational videos detailing their goals and tips on how to prevent fraud.

Once again the breakout session and closing panel were captivating and generously complimented. Luncheon speaker and author Nick Kochan was blunt in his assessment of the current state of money laundering, a subject about which he has written extensively.

Like all good things, this too had to come to an end. Mr. Ratley is off to Istanbul, the attendees are off to their respective home countries and I am left to begin to think about how to top this next year.

Want more? View photos from the 2012 ACFE European Fraud Conference on the ACFE's Facebook page.

James D. Ratley, CFE
ACFE President and CEO

In less than one month, I will pack my bags and board a plane bound for the most magical place on earth. No, I’m not referring to Disney World, but rather one of my favorite annual events, the 23rd Annual ACFE Fraud Conference and Exhibition in Orlando, Fla., June 17-22.

As you look through the planned events at FraudConference.com, I hope you are as excited as I am to find a unique combination of world-class speakers, relevant educational sessions and unparalleled networking opportunities. I am confident attendees will walk away with the most current anti-fraud resources, connections, tools and knowledge available anywhere in the world.

More than 50 countries will be represented this year in Orlando. To that end, we have added breakout sessions and topics that address international trends and regulations to keep in stride with the global challenges all anti-fraud professionals face.

We have also added an additional education track titled, “Professional Development: Taking Your Career to the Next Level.” We are certain that you will find these sessions valuable no matter what stage you are at in your career. Whether you are opening your own practice, developing your team, managing clients or just starting out as a CFE, this track has something for you.

You may see me chatting with attendees in the hallways throughout the week. If you do, I hope you will stop and introduce yourself. I would welcome the opportunity to meet you and learn more about your needs as an anti-fraud professional.

Find more details about the ACFE Annual Fraud Conference and register by Friday to receive $200 off!

Andy Egloff, CFE
Fraud Investigations Manager EMEA, Dow Europe GmbH
Horgen, Switzerland

No day is like another for Andy Egloff, CFE and Fraud Investigations Manager for Dow Europe. As the investigations manager for Europe, the Middle East and Africa, Egloff faces more than just the usual challenges of fraud's improving technology and evolving trends. "I am confronted with many different cultural, ethical and investigative challenges," Egloff said. "It's not just about conducting research, reviewing data and documents, and making investigative decisions. It is also about keeping ethics and compliance committees informed, consulting with legal counsel, involving human resources, communicating with relevant stakeholders and coordinating with outside agencies and authorities."

What made you decide to become a Certified Fraud Examiner (CFE)?

It was by coincidence that I became a fraud and corruption fighter. I spent the first decade of my career in the financial sector, assisting customers in investing money rather than tracing assets. It was my exposure to insurance fraud cases and experience in risk assessment that triggered my interest in fraud examination. It eventually allowed me to transition into audit and, more specifically, anti-corruption and financial investigation. It is the combination of a challenging, interesting, diverse but also very rewarding work by being able to reduce the detrimental if not devastating effects of fraud and corruption that led me to pursue my career in this profession.

What trends are you currently seeing in fraud investigations? Do you see any trends specific to your region?

Crime has – unfortunately – gone global. In my view, the primary differences in diverse regions are the different cultures and value systems, not so much the modi operandi, although the state of technological development can make a difference.

Fraud and financial crimes are becoming more and more complex – as far as the schemes, the tools, but also the legal challenges (e.g. data protection and privacy laws in different jurisdictions) are concerned. In particular the risk of high-tech crimes is constantly increasing. One of the challenges associated with this trend is that today a large set of skills is needed including specialists with legal, accounting, information technology, fraud examination, law enforcement and other backgrounds to successfully detect but also prevent fraud. This requires a team approach, often across borders.

What were some of the more challenging tasks you've faced as a CFE?

There are many challenges a CFE faces every day. However, in my experience, it is often less the task itself but more the constraints and surrounding circumstances that can be challenging. Managing expectations of stakeholders, management and whistleblowers can be far more challenging than the investigation itself. The other challenges are resources. With appropriate resources – be those financial or human – almost any financial investigation can lead to good results, but resource constraints and cost/benefit considerations can jeopardize investigations. Also time constraints, often in combination with scarce resources, create challenges. Lastly, legal and political challenges in the form of restricting requirements or conflicting interests can hamper investigative progress.

Read Andy's full profile here.

Tiffany Couch, CFE, CPA/CFF
Principal, Acuity Group PLLC

Few things can damage an investigation (or your professional reputation) faster than an unhappy client. If you have ever managed a fraud investigation, then you probably know that performing the work of the actual investigation is often easier than managing your client's expectations. We often meet our clients at their worst possible moments. Faced with the loss of funds, often by someone they trusted the most; they are emotionally charged and looking to us for a quick fix.

It was late on a Friday afternoon when my office phone rang. Before I could say, "Hello," I realized I had a potential new client on the line. Without stopping to breathe, she rattled off who had referred her to me, that she believed she was the victim of a fraud (at the hands of her bookkeeper), and that she was SO upset and didn't know what to do or where to start. I told her to start by taking a deep breath. And then, I offered to come down to her office right away (there went my quiet Friday afternoon).

When I arrived, she was in tears, her staff bewildered and no one seemed to know what to do next. After identifying the key issues, I quickly came up with a plan of action and then told her, "I'm truly sorry this has happened to you. It isn't fair. I can assure you that I can help. But, I won't be able to solve it all today. And, neither will you. Go home, try and relax, and let's revisit this on Monday morning."

As my former client likes to tell the story, it was as if I had lifted the elephant off of her shoulders. Simple words, certainly. But those simple words told my client a few things:

I cared. Remember, our clients need more than our financial expertise; they often need our counsel. It's never a waste of time to listen.

I could handle it. As experts, our job is to cut through the chaos, identify a preliminary plan of action and thus show our ability to lead the client through the process.

I was realistic. Communicating to your client that the process of an investigation takes time and isn’t solved “overnight” is imperative.

Certainly, the work we do can help bring closure to certain aspects of the problem(s) our clients face. However, our work is best done in an environment where communication and understanding are just as important as properly collecting evidence and conducting interviews. In fact, the key to your future success (i.e. ongoing client referrals) is your ability to manage your client’s expectations. 

Join Couch at the 23rd Annual ACFE Fraud Conference & Exhibition in Orlando, June 17-22, 2012, where she will discuss in-depth how to best manage client expectations.

Investigative Journalist and Freelance Writer and keynote speaker at the ACFE European Fraud Conference, 25-27 March in London

You plan to address “The Corruption Challenge” in your presentation. What are some of the current challenges you see anti-fraud professionals facing?

The Western investigator faced with investigating funds introduced into his country’s banking system from a foreign power or individual has a number of challenges. First, he has to negotiate complex political systems in the country from which the funds have been allegedly stolen to obtain evidence. His capacity to investigate the funds may be impeded if the funds are not recognised as stolen, or not removed as a result of a corrupt act.

For example, those engaged at the highest levels of many countries will seek to form conspiracies with business entities and their owners, to blend corrupt money with legitimate proceeds of the business. This is a classic money-laundering technique to disguise sources, and it tests the investigation to seek to disinter the corrupt from the quasi-genuine. That said, the businessman who connives with the corrupt politician is a party to the laundering, and he is likely to be a beneficiary as a result of providing a favour to the politician.

The investigator’s task of extracting details from a country where political corruption is rampant is likely to be coloured by a regime of fear and silence. Even where investigations are triggered by a change of regime (such as recently in the Arab Spring), information from new incumbents may not be forthcoming, it may not be reliable, or it may have been obtained in ways that are not supportable in a UK or European court.

The investigator’s ability to gain orders from a Western court to require a bank to supply information from bank accounts suspected of being used to harbour corrupt money is likewise impeded by the status of an investigation in the country of the funds’ source. Investigators need very clear and clearly substantiated bases for requesting such orders and many countries in a state of political turmoil have legal systems equally in a state of flux.

What do you most hope attendees will take away from your address?

For all the complications, Western countries are increasing their efforts to explore corrupt money and unmask the handlers. There are a number of reasons for this. Corrupt money, especially when it has a political origin, is very likely to be hot money and move very quickly between banks and global institutions. This is destabilising to the financial system of a Western country. Likewise, the country that harbours corrupt money is equally likely to be used by the politicians to further their other ends, such as providing a bolthole in the event they lose power.  This is a political risk, to which many countries would not wish to be subjected.

Read more about Kochan and the other keynote speakers at this year’s ACFE European Fraud Conference here.

Kevin Taparauskas, CFE
ACFE Director of Marketing and Events

At the conclusion of each ACFE Annual Fraud Conference, we ask attendees for feedback on the event. We get comments on nearly every component of the 2000+ attendee conference – from speaker and topic selection to room temperature to networking opportunities. We take this feedback very seriously and scour each and every response in detail. What we are really trying to learn is how we can make it better.

I like to think we do make it better each and every year. ACFE staff works tirelessly to upgrade our flagship conference to make it more valuable for our members and attendees. This year’s 23rd Annual ACFE Fraud Conference & Exhibition in Orlando, June 17-22, is no exception.

Here are a few reasons I am convinced this year’s event will be better than last year’s:

Keynote Speakers – I am not exaggerating when I say that this year’s keynotes will be our highest-rated group on record. I have seen several of them speak and heard great things about the others. They are a dynamic group of individuals with truly fantastic stories to share.

Conference Program – Based on numerous requests, we have added a 12th track focused entirely on Professional Development. In addition, we have updated our speaker and topic lineup to better reflect our growing global presence. For the first time, many of our top speakers from our international conferences will be coming to Orlando to share their expertise.

Shuttle Services – While we aim to hold the Conference in very close proximity to a majority of the hotel rooms, some Conference locations are better for walking, dining, shopping and entertainment. Orlando is not necessarily one of those cities. We listened to attendees and are providing evening shuttle service to some great local hotspots. Whatever you can’t find on-site at the Gaylord Resort, you will be able to get to conveniently by taking a short shuttle ride.

Career Fair – While the Career Connection offers something for all attendees, whether they are looking for a job or not, this year’s new Career Fair is primarily for those looking to make their next moves. The event will be Monday, June 18 from 3:00 – 7:00 p.m. and will feature top employers from nearly every sector.

Conference App – This one is still in development so I can’t reveal too much at this point. But I will say that, beyond the basics of the Conference, our new app will be a great way to connect with other attendees and engage in social media.

Just a few months to go…see ya in Orlando!

Phillip Rodokanakis, CFE, EnCE, ACE, DFCP
U.S. Data Forensics, LLC
Herndon, Va.

In my last blog post, “Follow the Digital Tracks to Uncover Fraud,” I discussed how following the digital tracks has replaced the old technique of “follow the money” in uncovering and solving fraud schemes. The post included case examples where digital data left behind on a computer was instrumental in solving complex fraud investigations.

The operating system (OS) keeps track of digital data in allocated clusters (e.g., the used space on the drive) which are occupied by active files (e.g., files that are actively tracked by the OS). Data no longer tracked by the OS resides in unallocated clusters (e.g., the free space on the drive). 

The data in unallocated clusters can include complete files no longer tracked by the OS (e.g., deleted or temporary files) or file fragments (e.g., partial files or remnants from files that were previously stored on the drive). Digital forensic examiners usually refer to these remnants as file artifacts.

In addition to file artifacts, OS generate many logs and system files that can contain artifacts of interest in a digital examination. For example, a user’s Internet surfing history is usually captured in system databases that record a plethora of details about the user’s surfing activity. Additionally, as different websites are visited, the pages are downloaded to the browser’s cache, which consists of system generated files and folders that temporarily store the information accessed online.

With today’s gargantuan hard disk drives, temporary or deleted files, or their file fragments can reside on a drive for a long, long time. For example, it’s not unusual to be able to retrieve Internet browsing history going back a year or longer.

These sorts of digital artifacts may enable a fraud examiner to follow the money. For example, the browsing history may include visits to financial institutions that may disclose the existence of bank or investment accounts. Better yet, if the user accessed online items like cancelled checks or account statements, they may have been downloaded and left behind in the browser’s cache.

Another fruitful area in fraud examinations may be the type of file remnants left behind from webmail sessions. Webmail describes online email services like Gmail, Hotmail, Yahoo, etc. Usually these services are accessed through an Internet browser, meaning that file artifacts from online webmail sessions can be found and retrieved from hard disk drives. Computer users frequently use webmail for their private communications, particularly when using a computer at work. Such webmail artifacts can and often do contain information of great use to fraud examiners. 

My next post will examine other digital artifacts that can come in handy in fraud examinations and white-collar crime investigations.

Brian Willingham, CFE
President, Diligencia Group Inc.
Brewster, N.Y.

I am a private investigator — not the “snooping” type who sits in a car, drinking black coffee, smoking cigarettes and chasing unfaithful spouses. Gone are the trench coats, “secret sources” and back-alley handshakes. I am a 21st-century PI who gathers information, analyzes it and then turns that information into something useful. My job is to find information legally and ethically. Keeping up with ever-changing technology is just as much a part of my everyday life as understanding how to get audited financial statements from a broker-dealer. (In case you are wondering, in the U.S. you can send an FOIA request to the SEC for the X-17A.)

There are no textbooks for what I do. I make it up as I go along, and I have learned mostly by doing. While books and research have taught me many things, I just could not learn everything from them. Here are a few things I didn’t learn from textbooks (your experience may vary):

Frame of Mind

When I first started in this business, I quickly realized that investigators thought differently. Most people trust their senses and believe what they hear or see; investigators don’t. They are skeptical and do not believe much of anything without proof. But, they aren’t just skeptical. They also have a different frame of mind when approaching investigations. Strong investigators know there is something out there for them to find — they just need to find it.

Instinct

After more than 10 years doing this work, I can spot the characteristics of an embellisher, a fraudster or people who I would simply avoid from a mile away. I have been asked to share my thoughts on boyfriends or girlfriends (I have about a 98.2 percent success rate in relationship advice). You develop an instinct for these things. At first, I was so involved in the mechanics of what I was doing that I couldn’t see the forest through the trees. Now I can see the forest and the trees.

Experience

“I’ve been in this business for 35 years!” Sound familiar? People like to pull the “experience card” as a compelling reason why they are good investigators. You will never hear me say that. While experience is helpful in any business, it will not get you anywhere unless you can use the wisdom and knowledge learned through that experience to be better at what you do. Experience will teach you when to go down a certain path or change the direction of an investigation, and it will tell you where to look and the right questions to ask.

Confidence

People in their 20s think they know everything. I certainly did. I see it often in new investigators, too. Confidence is not only believing in yourself; it’s also being able to admit that you don’t know everything. Be humble. If you think you know it all, you are going to be out of this business as quickly as you came in. I don’t know everything... and neither do you. So go ahead and read some more textbooks.

Brian Willingham is a New York private investigator and president of Diligentia Group.