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© 2015 Association of Certified Fraud Examiners, Inc.© 2018 Association of Certified Fraud Examiners, Inc.

Principles of Fraud

Examination

Legal Issues

© 2018 Association of Certified Fraud Examiners, Inc. 2 of 27

Practical Problem

After reading John Wilson’s personnel file and

discovering the remittance advices, you decide to

go through his desk to see if there is anything to

indicate that he is involved in a fraud. You notice

that Wilson’s computer has been left on. The

company has a networked computer system,

including interoffice email, to which Wilson has an

account. Also, you do a directory search on his

desktop and discover that within the word

processing program there is a subdirectory

named “W&W” that is completely unrelated to the

Jolie Company.


Practical Problem

Questions:

1. Does the information known thus far give you

predication to take further steps in the

examination?


Rights and Duties of Employees

▪ Duty to cooperate:

• So long as what is required is reasonable

▪ Contractual rights

▪ Whistleblowers:

• Protection against retaliatory action for making

protected disclosure


Employees’ Constitutional or

Fundamental Rights

▪ U.S. Constitutional rights:

• Fourth Amendment—search and seizure

• Fifth Amendment—right to remain silent

• Sixth Amendment—right to counsel

▪ European Convention of Human Rights:

• Article 8(1)—right to respect for private life and

correspondence

• Article 6—right to fair trial


Practical Problem

Questions:

2. Can you legally search Wilson’s desk? If so,

what items can you examine?

3. One of the drawers is locked; can you open it

without his permission?


Employees’ Privacy Rights

▪ United States—Generally, the Fourth

Amendment does not apply to private

employers.

• But the Fourth Amendment still has implications for

private industry via law suits for invasion of privacy.


Employees’ Privacy Rights

▪ The reasonable expectation of privacy:

• Is it free from intrusion?

• What circumstances indicate this expectation?

▪ Does the employee have this expectation in

the area searched?

▪ Does the employee have exclusive control?


Practical Problem

Questions:

4. Can you look at or copy the contents of the

“W&W” directory on his computer? Can you

seize the computer and take it with you?

5. Can you read his email? Why or why not?


Practical Problem

Questions:

6. What steps could Wilson’s employer take to

lower employees’ expectations of privacy in the

workplace?


Policies Regarding Workplace

Privacy and Searches

▪ Notify the employee that desks, office, email

communications, computer, etc., are subject to

search:

• Within legal environs

▪ Notification process should be continuous.


Investigations

▪ Right to investigate is

implicit:

• No special authority is

required.

▪ A fraud examiner may:

• Interview witnesses.

• Gather evidence.

• Collect and review

documents.

• Examine public records.


Defamation

▪ Untrue statement of fact:

• Not opinion

▪ Published to third parties

▪ Unprivileged occasion:

• Absolute

• Conditional

▪ Damaging to reputation


Violation of Individuals’ Privacy

▪ Publicity of private facts:

• Unreasonable publicity to true, but private,

information:

• Publicized broadly

• Private facts

• Highly offensive to reasonable person

• Speaker does not have legitimate interest

▪ Intrusion upon seclusion:

• Intentional intrusion into plaintiff’s solitude

• Intrusion must be highly offensive to reasonable

person


False Imprisonment

▪ Restraint of freedom:

• Locking the interview room

• Standing in front of an exit

• Refusing to let the suspect leave


Electronic Discovery

▪ It is a process of collecting evidence pertaining

to litigation from information system.

▪ Must establish document retention policy.

▪ Litigation hold procedures suspend any

destruction of potential evidence.

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