investigative techniques for the general practitioner? erik h. lindquist, cfe presenter national...
TRANSCRIPT
Investigative Techniques for the general Practitioner?
Erik H. Lindquist, CFEPresenter
National Society of AccountantsFall Webinar Series
September 17, 2009
What are you looking at?
• Before looking for data, know your case• Two approaches
– Finding the fraud– Looking for the conversion/cash
• Systems and Processes in Place• Personnel• Defined time frames
Know the Case
• What is the predication?• Cash/Inventory/Intellectual Property• Available Data is Clean? Missing? • Internal Controls and Weaknesses• What is missing—how could it be ‘converted’• Background checks on targets and inner circle.
Establish a preliminary assessment
• Personnel File• CV and Co-worker interviews• Workspace observations and lifestyle ($$)
reviews
Conversion Searches
Performed for two reasons: (1)to determine the extent of embezzlement (2)to gather evidence that can be used in
interrogations to obtain a confession
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Conversion Searches
Information can be gleaned from:(1)federal, state, and local agencies and other
organizations (2)private sources of information(3)online sources of information(4)using the net worth method of analyzing
spending information
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Conversion Searches
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Public Records
Internet SearchesOnline DatabasesPrivate SourcesGovernment
FederalStateLocal
Utility RecordsPrevious AcquaintancesTrash CoverCredit AgenciesFinancial Institutions
SubscriptionPer-search FeeFree
GoogleAltaVistaEtc.
Government Sources of Information
Federal ServicesDepartment of Defense
– maintains records on all military personnel, both active and inactive
Department of Justice– enforcing federal criminal and civil laws
Bureau of Prisons– operates the system of federal prisons, correctional
institutions, and community treatment facilities
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Government Sources of Information
Federal ServicesInternal Revenue Service
enforces all internal revenue laws (except those dealing with alcohol, firearms, tobacco, and explosives)
Secret Serviceresponsible for protecting the president of the
United States and other federal dignitariesCentral Intelligence Agency
investigates security matters outside the United States
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Government Sources of Information
Federal ServicesPostal Service
– responsibility for U.S. mail and for protecting citizens from loss through theft that involves the mail system
– Postal inspectors can be very helpful in investigations of employee fraud, investment scams, or management frauds
Social Security Administration– has information about individuals’ Social Security
numbers
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Government Sources of Information
State ServicesState Attorney General
– enforces all state civil and criminal laws, in cooperation with local law enforcement agencies
Bureau of Prisons– maintains the network of state prisons and
administers state corrections departments for each state
– OTIS
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Government Sources of Information
State ServicesSecretary of State
– maintains all types of records relating to businesses and Uniform Commercial Code (UCC) filings
Department of Motor Vehicles – Maintains driver’s license records
Department of Vital Statistics– maintains birth records
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Government Sources of Information
State ServicesDepartment of Business Regulation
– maintains licensing information about various professionals
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Government Sources of Information
Local ServicesCounty Clerk
– maintains numerous records on local citizens, including voter registration records and marriage licenses
County Land Office and Tax Assessor’s Office– contain real estate records for land located in the
countyCounty Sheriff and Other Officers
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Government Sources of Information
Local ServicesLocal Courts
– maintain records on past law violators, including pretrial information like personal history, employment history, personal and physical information, prior charges, divorces and property settlement agreements, personal injury lawsuits, financial claims and litigation, fraud claims and co-conspirators, bankruptcies, wills, and probates
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Government Sources of Information
Local ServicesPermit Departments
– supply information on fire permits (hazardous chemicals), health permits (pollutants), elevator permits, and building permits
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Private Sources of Information
• Utility records (gas, electric, water, garbage, and sewer
• Private Acquaintances • “Trashing”• Shredded documents • Original files on computers
**Be sure you have the legal rights to gather and use the information
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Private Sources of Information
Credit reporting companies maintain:• Consumer information, such as addresses,
ages, family members, and incomes• Account information, such as payment
schedules, items purchased, and buying habits• Marketing information, such as customer
breakdowns by age, sex, and income levels• Information on current and former employees
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Online DatabasesExamples: Accurint AutoTrackXP Black Book Online ChoicePoint EBSCO Publishing PublicData Public Record Finder SEC’s EDGAR Database Web Detective
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Internet Search
Examples:Google, Altavista, Zabasearch and Yahoo!
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Internet Search
Searching Methods• Search by phrase• Minus search terms• Domain restrictions
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Internet Search
Google Search Tools:• Google Groups• Cached results • Google News• Google Images• Google Earth• Google Public Records – new as of April 28,
2009
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Data Bases-Where Do You Start?
• Janitorial Purchases example…
• Simple sorts lead to complex analysis– Benfords Law – Matasos Matrix
Data Analysis – Matasos Matrix
One way to view the results of multiple indicators is to use a chart called a Matasos matrix:
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Contract WinningVendor
Number of Red Flags
Lost Bids Brand Names
Last Bidder Winner
Sequential Bid
Security Number
100221 Direct Corp. 1 0% 70% 0% 0%
523332 Satyoo 2 0% 68% 0% 100%
351223 Danicorp 1 0% 72% 0% 0%
387543 Under Inc. 3 0% 70% 100% 100%
Benford’s Law
What do these do for us?
• What data would be best suited to Benford?
• What data would work best with Matasos?
What Now…
• No one approach will be the silver bullet• Be creative – where could the breadcrumbs
be?• If you are tempted to go after data without
proper authority – DON’T• Build the case with the detail available and
use deposition and interrogatories to drill further
For More InformationErik H. Lindquist, CFE
Lindquist & Associates, LLC [email protected]
Resources:Association of Certified Fraud Examiners www.acfe.comFraud Examination W. Steve Albrecht et alThird EditionFraud Casebook – Lessons from the Bad Side of Business edited by Joseph T. Wells, CFE, CPA
About ConnectEd:Sally Brassé
NSA Director of Education Programs
800-966-6679 Ext 1307
Genet SesseNational Society of
Accountants800-966-6679 Ext [email protected]