Successful SIU

Building a Special Investigation Unit That Works

By Matthew J. Samuelson, CFE, CPA

Special Investigation Units, in the private and public sectors, can fight fraud more effectively by developing professional relationships with prosecutors, marketing capabilities, and keeping current on fraud examination issues and techniques. 

In February of 2000, the Texas State Auditor Office's Special Investigations Unit (SIU) received a phone call alleging that the state had been defrauded of several hundred thousand dollars. The person making the allegations provided a heavily redacted copy of a state check to the SIU. However, the caller refused to provide any other details.

Using the amount and date of the check - the only information that was not redacted - the SIU investigators quickly identified the contractor to whom the check was made payable. Through interviews and review of documents, the investigators also found that the contractor had falsified at least one invoice, inflating the matching costs required by the contract.

The SIU (of which I am an investigator) presented its findings to the Travis County District Attorney's Office Public Integrity Unit (PIU), which agreed that the case had merit. The unit issued a subpoena to the contractor for information related to the contract. The contractor sent a rental truck filled with about 2,000 pounds of documents, six file cabinets, and three dilapidated computers. PIU and SIU investigators reviewed these documents and found that every invoice the contractor provided to the state contained false information, inflated labor costs, and non-existent rental costs. The altered invoices inflated labor costs by more than $114,000. The total amount of the fraud was $400,000.

Patty Robertson, an assistant district attorney with the PIU, presented the case to a grand jury. The grand jury returned indictments for 19 counts of securing execution of a document by deception against the contractor (each a third-degree felony), 27 counts of securing execution of a document by deception against the contractor's controller, and 25 counts of securing execution of a document by deception against the contractor's president.

After plea negotiations between the indicted individuals and the prosecutor, the contractor and the controller were each convicted of one count of securing execution of a document by deception. The president was not convicted.

The SIU obtained 42 indictments from September 2000 to August 2002 and eight convictions. Numerous indictments are awaiting trial. Prosecutors have also accepted numerous other investigations to be presented to grand juries.

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