Private investigators and Certified Fraud Examiners have always used their unique skills to help each other in fraud examinations. However, many PIs now are realizing the value of adding CFE to their names. 

Growth of the private investigative profession might be considered a 24-hour Le Mans endurance race, compared to the drag-race speed of the expansion of Certified Fraud Examiners. Private investigation has been a noble source of income since the 1800s and today the Bureau of Labor Statistics reports that 43,000 private detectives and investigators work in the U.S. alone. But in 18 short years, more than 17,000 professionals achieved the CFE designation and the growth curve remains sharply angled up.

Some professionals see the need to pursue both paths. They've found many similarities between them and some very important differences. To date, 339 CFEs list PI as their primary occupation. My dual roles as a private investigator and CFE could illustrate the need for both.

A MARKET EXPANSION
In the beginning, my motivation to add the CFE to my name was purely business. I became a CFE in 2002 to become more professionally attractive to a large group of potential clients for the firm I own and operate. Through a referral, one day I was presenting my firm's services to a regional head of KPMG's forensic consulting practice. He thought I would be a suitable hire except I didn't come from the realm of federal agency investigators, a background expected by their clients. And one doesn't argue with clients about their expectations. His advice to me at the time was to get the CFE. It's the only other background his clients would consistently accept.

The market's perception of the benefits of the two professions affects the kind of work I get. The market assumes that one might find a PI doing financial investigations but rarely a CFE doing surveillance on a suspected spouse. Frances Zuniga, CFE, EA, and president of the Los Angeles Chapter of the ACFE, describes the differences. "Few PIs have an accounting background so they come to me for that," says Zuniga. "And I don't want to go dumpster diving and I don't want to do surveillance so I work with PIs for those things." (However, a prospective CFE does have to study investigation techniques, one of four major categories, to pass the exam and earn the certification. The investigation category includes such topics as analyzing documents, interview theory and application, covert examinations, accessing information online, and others.)

Professionals from different backgrounds seem drawn to either the PI or the CFE. According to the Bureau of Labor Statistics, private investigator applicants typically have related experience in areas such as law enforcement, insurance, the military, or government investigative or intelligence jobs. CFEs often come to the field with some business or accounting experience. While many PIs have college degrees, there are no formal education requirements for most private detective and investigator jobs.

I came to the PI business in 1998 with an advanced business degree from Harvard University, several years' experience as an executive in Fortune 500 companies, and a stint with the State Bar of California investigating attorney misconduct. When I finally went through the process of becoming a CFE, I did it after analyzing the opportunity and market demand plus my own expertise, strengths, and weaknesses. Fraud looked like a high growth market, and although there are a host of types of fraud, occupational fraud seemed to be a good niche upon which to concentrate. Because the victim - the client - is a business it's more likely to have the impetus and resources to do something about a loss due to fraud.

Continued growth is predicted for each profession. Experts predict that employment of private detectives and investigators is expected to grow above average at upwards of 20 percent annually through 2014. Increased fear of crime, litigation, and the desire to protect confidential information and property are listed as top reasons. Similar projections for growth in the CFE community aren't yet available but fraud is a booming industry and recognition of the designation has spread wide.

One aspect might foretell a divergence in growth, however. Because of the high level of competition for private investigator jobs, most opportunities are expected to be found in entry-level jobs with detective agencies or in stores that hire detectives on a part-time basis. Those seeking to advance could be attracted by the premium the CFE places on potential income. (See the ACFE "2006 Compensation Guide for Anti-Fraud Professionals" included in this issue.)

SIMILAR BUT NOT THE SAME
There are hard line differences between the two professions, even beyond the market perceptions. CFEs aren't regulated nor licensed; PIs are both. The concept of the private investigator has evolved over a much longer length of time without the aid of the singular vision of ACFE founder and Chairman Joseph T. Wells, CFE, CPA, which he articulated through a single body. The majority of states and the District of Columbia require private detectives and investigators to be licensed. Licensing requirements vary, however: seven states - Alabama, Alaska, Colorado, Idaho, Mississippi, Missouri, and South Dakota - have no statewide licensing requirements, some states have a few requirements, and many other states have stringent regulations.

Some states have reciprocal registration agreements that allow PIs licensed in one state to work in another. A California registration allows work in Florida, Georgia, Louisiana, and Oregon. Zuniga points out an omission in the California legal code for all professionals but attorneys, CPAs, and licensed private investigators. "Only these three groups can conduct interviews in this state," says Zuniga. "Being employed by one of these entities qualifies as well, so I made sure I'm always engaged by one of the groups before starting an investigation."

By contrast, the regulation of the CFE is simple and easy to understand. One body sets the standard of how to qualify and maintain the certification and the standard for performance, which applies everywhere in the world. In an era of increasing globalization, this seems a rather intelligent vision on the ACFE's part. The ACFE is also out there promoting the prestige of the CFE. Its policy of continuing education enhances the image of the CFE being on the cutting edge of fraud examination.

The state-by-state licensing of the private investigation side of my work forced some geographical limitations on my firm. I'm licensed in only two states and it can become a nightmare working through the differences. In this era when people are so mobile, the industry's difficulty in obtaining respect and confidence partly stems from lack of uniformity and coherence.

But instead of stopping to think about what hat I'm wearing or in what jurisdiction I'm working, I've finally simplified things by deciding that an investigation is an investigation is an investigation. I regard it as my duty to give the client the benefit of one's best professional expertise. This means a thorough, legally conducted, and balanced investigation and report of findings within the framework of what was agreed upon and paid for. I decided that if I'm doing this, I'm not running afoul of any standards of conduct that may be applicable to the situation.

MARKETING THE SERVICES
My start in the PI business also gives me a major source of referrals. To complete the 6,000-hour requirement before licensing, I worked at the State Bar of California investigating attorney misconduct. I eventually took the licensing exams in both New York and California, and in 1998, I started out on my own. I got a few calls from attorneys I had worked with on investigations either as witnesses and even ones I had investigated as respondents as to what I was going to do once I left the State Bar. When I told them, they hired me, and I was off. Later they recommended me to other attorneys or to their clients who had needs or problems not necessarily related to litigation.

My years in business provided the second marketing push for my investigative efforts. When I thought that competitive business intelligence would be a good specialty for me because of those years in corporate America, I contacted some of the people I'd worked with during my business career. They recommended me to business contacts they had, and that's how that specialty of my private investigation business got started. I've been lucky, because I have been able to get referrals for people who had prior experience with my work before becoming an investigator or from satisfied clients afterwards.

FUTURE MOVES
Demand for fraud examiners and private investigators is sure to stay high as white-collar crime rises, which ensures continued growth for both professions. But industry factors might sway professionals to obtaining proficiency in one area over the other. Consider the privacy concerns that kicked off discussions in many state legislatures about limiting private investigators' access to records needed in investigations. Of course, PIs aren't the only or even the main problem in unlawful intrusions into individuals' privacy, although there's no doubt unseemly conduct on the part of a few has gotten a lot of unfavorable publicity. However, the number of private investigators and their degree of unity never would be likely to create many strong advocates for the industry in the halls of nearly any legislative body, so the industry is an easy target as legislators attempt to satisfy voters that they are doing something about the problem.

Zuniga anticipates legislative action to expand the right to interview in California. Not just CFEs, but also newly developing fields such as computer forensics experts need to conduct interviews to get the job done. "Maybe now that the CFE has gained wide recognition, we can lobby our state assembly to change the statutes," she says. "The challenge is that there is no state licensing entity like that for CPAs or PIs that ensures consumer protections." The market's perception of relative value of the two professions might continue to drive professionals to wear both hats. CFEs and PIs need each other and often are one and the same.

Sarah J. Carson, CFE, MBA, CA PI 17758, NY PI 11000088041, is owner and operator of Carson Investigations and a Principal of Carson, Huffer, and Giordano, LLC. Her Web site addresses are: www.carsoninvestigations.com and www.chgadvisors.com.

Cynthia Harrington, CFE, CFA, is a contributing writer for Fraud Magazine.

VIDOCQ WAS PRECURSOR TO MODERN PI

Many people think that private investigation began with Alan Pinkerton and was refined further by a journalist named Nick Harris. In fact, the profession probably began with a French criminal turned investigator, Eugene Francois Vidocq. Born in 1775, Vidocq, a master of disguise and subterfuge, unabashedly flaunted a lifestyle contrary to conventional mores, but, at the same time, was a compassionate man in his willingness to champion the oppressed and the wrongly accused.

Vidocq progressed from criminal to police informant to the first appointed chief in 1811 of the newly formed detective bureau of the French police at which the investigators he supervised were also former criminals. He later founded the first private detective agency and credit bureau, Le Bureau des Renseignments. Called the "father of modern criminal investigation," Vidocq introduced a number of innovations into police work including record keeping, ballistics, plaster-of-Paris casts of foot and shoe prints, indelible ink, and unalterable bond paper, among others.

Though few know of him today, he is thought to be the model for Sherlock Holmes, Jean Valjean and Inspector Javent in "Les Miserables," Vautran in Balzac's "Pere Goriot," and the fugitive in Dickens' "Great Expectations."
- Sarah Carson

Sources: www.corporatecrimecontrol.com, www.crimelibrary.com, and www.vidocq.org 

[Some source links referenced in this article are no longer available. — Ed.]