This U.S. federal prosecutor will help you review the courtroom requirements for presenting evidence and testimony, attorney-client privilege and how it affects fraud examiners, the work product doctrine, and other necessary law topics.
From the first day of an examination, a fraud examiner must be thinking of one destination: the courtroom. And while you are meticulously cataloging every scrap of evidence, you would do well to review the legal issues and practical considerations of your fraud examination.
Portions of this article are based on a chapter in the yet-to-be-published textbook “Scientific Evidence in Civil and Criminal Cases,” 5th Ed., by Moenssens, Starrs, Henderson and Inba, The Foundation Press Inc., Westbury, New York.
As a fraud examiner, forensic accountant, or financial investigator, you probably will spend hours sitting next to a judge providing testimony on cases you have examined. However, the courts also may spend hours determining whether you are suitable to testify or be an expert witness who is asked hypothetical questions based on the facts to prove a case.1 According to the well-known Daubert test, financial expert testimony is admissible when it is based on sufficient facts, the testimony is the product of reliable principles and methods, and the witness has applied the principles and methods reliably to the facts of the case.2 A review of Daubert, and its progeny, indicates that the courts’ rejection of expert testimony is the exception not the rule. In practice, a ruling that one expert’s testimony is reliable does not make contradictory expert testimony unreliable, because the courts’ focuses are on principles and methodology and not the ultimate opinions of the experts. For example, proponents of forensic accounting expert testimony do not have to show their experts are correct, just that they are reliable.3
While there are many legal issues surrounding the collection and preservation of evidence,4 two issues are preeminent: chain of custody and best evidence. Chain of custody requires that documentary and physical evidence obtained during the course of an investigation should be marked, identified, inventoried, and preserved to maintain its original condition and to establish a clear, distinct list of those who have handled it until it is introduced at trial.5 This is normally required when the exhibit is not readily identifiable, unique characteristics of the exhibit are not noted, and/or its condition is critical to an issue in dispute. For example, chain of custody may be important in a dispute in which a prosecutor claims that the parent corporation of a subsidiary has electronically altered the subsidiary’s records. Chain-of-custody authentication of documents or business ledgers can be tricky but not insurmountable. For example, in a criminal case, the defendant may not be available to authenticate his or her own records but they could be authenticated through circumstantial evidence, including the documents’ distinctive characteristics and the circumstances surrounding the discovery of the document.6
The best evidence rule, which applies to documentary evidence,7 says that the best proofs of documents’ contents are the documents themselves. However, if an original has been destroyed or is in the hands of another party and it is not subject to legal process by search warrant or subpoena, an authenticated copy of that original may be substituted as evidence.8 Duplicates are generally admissible as originals in all cases except when there is a genuine issue about the authenticity of the original or when admission of the duplicate instead of the original would be unfair.9 For example, when a casino card dealer underreported his income from tips, the tax court did not violate the best evidence rule by admitting a photocopy of another card dealer’s diary containing his financial records, including income from tips. This was proper because there was no dispute that the duplicated diary was in fact the diary of the second card dealer.10