The Fraud Examiner

'Fraud Doesn't Exist in Isolation — It is Part of a Greater Ecosystem'


October 2014

ACFE Member Profile

Scott Swanson, CFE, CFCI, is a VP and practice leader of Global Risk and Compliance at Doculabs, a Chicago-based boutique strategy and consulting services firm. With a background as a government contractor who has provided analytical support and planning for the U.S. Department of Defense and the intelligence community, Swanson brings a unique range of experience to his role as a Certified Fraud Examiner (CFE). In this Q&A he shares how he uses what he learned in the intelligence field to assess risk and fight fraud.

What does your role as a practice leader of Global Risk and Compliance entail?

My responsibility is to build a service delivery capability that can support new and existing clients to help them with regulatory issues or aspects of global threats to their businesses. At the same time, I look at emerging trends and new innovations to stay cutting edge and agile to “stay to the left of bang.” Doculabs has given me the opportunity to look at risk and compliance from less conventional approaches, which I am passionate about.

Which types of fraud cases are the most interesting to you, personally?

I love anything to do with front companies and cloaked transactions. I particularly like any fraud that is trying to circumvent sanctions or a country using covert money movement. Asset discovery cases and third-party schemes using correspondent banks always leave a trail. Those always suck me in as a challenge to outmaneuver the bad actor.

Would you tell us a little bit about your work in global intelligence and counter-terrorism?

I have always been in a contracted capacity in support of the Department of Defense and intelligence community. My roles were in analytical intelligence, mission planning and discrete activities either in support of others or directly. As it relates to counter-terrorism, I was heavily involved in irregular approaches to deter and deny hostile activity, disrupt supply chains, identify illicit transnational and transcontinental value exchanges, and map social networks. The federal cutbacks put an end to a lot of that, which is really a shame since we were making such headway and a lot of that institutional knowledge capital has been lost.

How have you parlayed some of your military intelligence experience into your work as an anti-fraud professional?

My entire career has used strategic intelligence to identify threats, vulnerabilities and risks. The formal intelligence experience has shown me things that people can’t imagine exist. I have had to leverage a large amount of social psychology and behavioral analysis to think like an adversary and act as a red teamer to penetrate and thwart security mechanisms. This has been so valuable in the fraud business since I have been on the sides of enforcement, risk operations, but also getting in the mindset of the criminal. In short, I look at everything from those three eyes to secure, control or break something. There is a lot that I will never be able to share, but there are things that I can’t forget and can identify when I see it. That is a huge value to those looking to protect their business or critical infrastructure. I also use the experience to train and build Financial Intelligence Units.

What do you think are some of the most important things for fraud examiners to keep in mind when working to prevent and detect fraud?

From a behavior standpoint, many fraud examiners are still in their own mindset. They need to get into how the fraudster would do it. This isn’t a Jedi skill, it's being able to understand social, culture, political, behavioral and of course the mechanics and typologies that can be associated with a crime. It’s complex. Frankly, that’s why corruption and crime can be so profitable. It’s hard to investigate and harder to get in front of if you don’t have years of experience. A degree and a certificate with some consulting templates and tools won’t cut it. Many fraud consultants also talk too much. The key is to ask questions and listen. Finally, documentation is everything. From chain of custody to information governance, information is everything for defense or prosecution.

What advice do you have for other fraud examiners who would follow in your footsteps?

This is a tough question, as I have fallen into a lot of opportunities. It really depends on the level of risk and the topic that interests the examiner. I have no problem going into a hostile environment where there is a large degree of risk. The last major investigation I was involved with, prior to my current role, included illegal acts such as: medical billing fraud, money laundering, prostitution, weapons, sexual harassment and abuse, loan fraud and other regulatory compliance infractions. Yes, all in one! They even called in a bomb threat, slashed tires and made personal threats against the team. It was a mess that most consultants wouldn’t touch with a 10-foot pole. We did our job using a combination of mobile device forensics, interviewing, investigation, forensic accounting and even some safe drilling – with a court order. If a fraud examiner can find an opportunity like that, it has so many disciplines involved that a whole picture is seen by the examiner. Fraud doesn’t exist in isolation, it is part of a greater ecosystem. Where there is smoke there is fire, but unfortunately, it’s often hidden behind walls, floors and ceilings. For a fraud examiner to be willing to get so immersed, they can only emerge a better examiner.

In general, do you think the global problem of fraud is getting better – or worse?

I think fraud is getting worse globally. Scarcity and shifts between the haves and have-nots will mean that someone isn’t getting something. Pervasive information sharing and accessibility of resources to fraudsters makes it easier to commit crimes. Ironically, laws that don’t seem to protect the innocent appear to protect criminals. Investigations are tough, and many fraud examiners and consultants have to worry about liability. When you consider the range of frauds occurring from expense reimbursement to corruption and financial manipulation, you can almost close your eyes, throw a dart and hit something that shouldn’t be happening.

Where are you from?

Born and raised in Chicago with a lot of frequent flier miles globally and equally as many hotel points.

You are also an author of a military black-ops fiction thriller, SAFE HAVENS: Shadow Masters, published under your pen name, J.T. Patten. How long have you been writing, and is another book in the works?

Ah, you‘ve been doing your own investigating. Yes, I published a book last year that is a quasi-espionage action adventure novel. I had been spending a lot of time away from home and in some areas that were less permissible to enjoy sights and activities. I was dared to write the book and found a passion as it developed. The second in the series, SAFE HAVENS: Primed Charge, is in the works, but I have less time for personal writing as I am getting the practice up and going and delivering client services with less extended time away. Lately my writings have all been LinkedIn Pulse articles and Doculabs’ blog posts.

Do you have any other hobbies or special interests?

Work certainly takes up the bulk of my time, but I have been coaching youth soccer for more than 25 seasons. Identifying what others may be missing is a challenge though to me, and while it is exhausting, I find myself buried in crime, terrorism and global event research as a hobby. Even my next book covers covert money movement. I just can’t keep away from it.