Admission-Seeking Interviews

Admission-seeking interviews, in which a professional interviews a subject whose involvement in fraud or theft has been reasonably established, are the most critical and challenging tasks for a fraud examiner. “NYPD Blue” this ain’t! In this column, Robert Hogan, an experienced fraud examiner offers his thoughts and experiences on admission-seeking interviews for those who are new to the field. One important thing to pay attention to is his preparation and thought process prior to the interview. While we each have our own style, techniques and research habits, Hogan has a lot of good suggestions to offer new and budding fraud examiners. 

About Interviews 

Conducting an interview can be a daunting task, even for an experienced investigator. As you learn proper techniques, don’t approach interviews as interrogations (as Hollywood often does). These interviews often end up being unproductive – or worse – detrimental to an open investigation. Keeping in the right frame of mind is the most important tool an examiner can utilize in conducting fraud examination interviews.

No evidence is stronger than the guilty party’s signed confession. Unfortunately, this is also the most difficult piece of evidence for any investigator to secure. As long as there’s the slimmest chance that suspects might get away with their misdeeds, they will refuse to confess. The admission-seeking interview process will allow you to break down the barriers to get those confessions. Before starting, it’s important to remember that this process should be reserved for subjects whose culpability is relatively certain to avoid undue stress on potentially innocent parties.

Preparation 

While conducting an examination of inventory discrepancies for a major electronics retailer, I identified a theft and fraud scheme that involved employees (mostly high school students) who would remove items from the inventory system and then physically take them out of the building and sell them to classmates and others. I analyzed the inventory system data and conducted interviews with third parties and accomplices. It was time to interview the suspected ringleader of the operation – a 21-year-old store associate we’ll call Bill.

In preparing for this interview, I resisted the urge to make a list of questions for Bill. Instead, I had an outline for the evidence and material facts that had been collected up to that point. In approaching Bill, I wanted him to confirm the facts that had already been established, but at the same time I wanted to leave the opportunity for him to offer additional information that I might have missed or he had concealed from me earlier in the investigation.

Location, Location, Location 

Finding a suitable interview venue is a critical first step in building a rapport with the subject. I selected a manager’s office that had a comfortable temperature with minimal distractions. The room had no windows that opened to common areas to help relieve Bill’s possible fear or embarrassment.

The only participants in the interview were Bill, the store’s loss prevention manager and me. The number of people in the interview should be kept to a minimum. However, there might be instances when an employee has the right to have a representative during the interview. For example, if the employee is a member of a union, he or she might have a right to have a union representative present. Accordingly, it’s always best to check with the legal and human resources departments before conducting admission-seeking interviews. 

Rapport 

When it was time for the interview, I invited Bill into the room, and we greeted him in a non-intimidating manner. I then tried to build rapport by being straightforward about my intentions without divulging more information than I needed to.  “I’ve been asked to follow up on the inventory count, and I would like your help with the matter,” I said. Bill was quick to offer his help. Typically a guilty party wants to find out how much you know about what he’s done.

I decided that Bill probably would be comfortable with answering my questions, so I asked a few simple ones to set the tone of the interview. I asked him about his job duties, tenure with the company, his manager, and other non-threatening topics as a quick way to lead him to talk about himself and build rapport with him. Bill’s answers, vocal inflections, and body language showed that he was quick to respond, easygoing and cooperative. 

Building Up 

I then wanted Bill to begin confirming the facts I had already gathered and fill in gaps in the case. I decided to ask open-ended questions to get him talking. Obviously, the more he talked, the more I would learn. I asked Bill these questions:

• What responsibility do you have in adding and removing inventory from the system?

• What’s the process you use to check inventory into and out of the system?

• What access do you have to physical inventory in the warehouse and on the sales floor?

• What’s the company’s policy on the accounting for inventory?

Importantly, I already had the answers to all these questions, but Bill didn’t necessarily know that. I critically analyzed his answers to assess whether he was providing misleading or erroneous information. Bill was either going to be honest with me, lie to me, or refuse to answer my questions. If Bill was truthful at this point, then we would have established the company’s rules and guidelines, and Bill’s specific responsibilities and limitations. Therefore, when I would later ask Bill why he had violated inventory control procedures or performed tasks that were outside of his position’s parameter, he can’t feign ignorance or lack of intent.

However, if Bill were to provide false or misleading answers, then I would circle back to the areas in which I think he’s lying and rephrase questions to see if he’ll contradict his previous answers. If he were to stick to a story that I believed was a lie, I wouldn’t want to show frustration or emotion of any sort so I could maintain the rapport we had. I would then pursue another line of questioning and look for opportunities to explore the cracks in his story in more detail.

If Bill now had been reluctant to answer my pointed questions, then I would find out why. Again, the straightforward approach was the best way to break down Bill’s defenses. Simply asking Bill why he didn’t want to answer the questions could have gotten us back on track if I could have alleviated his objections. However, if Bill was still defiant, then he was probably aware that I had caught him and wasn’t yet ready to admit his guilt.

The Non-Confrontational Confrontation 

After I built a rapport with Bill and he answered my questions, it was time to accuse him directly. I avoided using words that implied criminal activity. For example, “I have evidence that you stole $5,000 in inventory, didn’t you?” would have been a poor accusation. I wanted Bill to admit he did something wrong, so if I had used words such as “evidence” and “stole” I would have created a psychological barrier that would have prevented him from admitting his guilt. Also, I wanted to make my accusation a statement, which is significantly more difficult for a guilty suspect to deny than a question.

So I said, “My examination shows that you removed $5,000 in inventory from the store and sold that merchandise to other people.” From a psychological perspective, if he was innocent he would be angry that I had questioned his integrity. On the other hand, if he was guilty, my accusation would create doubt and fear that would cause him to reassess his situation and attempt to find a way out.

Bill knew that I’d caught him, but he didn’t respond because he clung to the hope that he could still get away with his crimes. I now capitalized on our rapport and used Cressey’s classic fraud triangle to help Bill admit his guilt. The answers to my opening questions went a long way to establish that he had had the opportunity to steal merchandise and manipulate the inventory system. I also knew that he had led a lifestyle that was beyond the means of a 21-year-old retail salesman, and he felt pressure to maintain that lifestyle to impress his friends.

I asked him about the expensive items he had purchased – a car, jewelry, high-end electronics, and a trip for friends. I established that Bill had spent far beyond what he made in salary and commission. When I confronted him with specific numbers, he admitted that he had spent beyond his means. Yet he still refused to admit his guilt. So I asked him if he felt the company had fairly compensated him, and he said they hadn’t. That provided me with the last side of the fraud triangle: rationalization.

Bill didn’t provide an alibi, but many suspects do to try to prove they lacked the opportunities to commit the misdeeds. Interviewers must diffuse these alibis to get admissions of guilt. The easiest way to do that is to produce just enough evidence to disprove the alibi. Again, keep your cool and be tactful; it might take patience and multiple explanations to obtain the admission.

Empathy Goes a Long Way 

I had everything I needed from Bill except his admission of guilt, so I empathized with him to try to get him to confess. “I understand your situation, Bill,” I said. “You do the best you can to be the company’s best salesman out, but the company just doesn’t pay a fair commission. So you take a couple items out of inventory, sell them to some friends, and make a little extra cash.” Bill didn’t respond, but he lowered his head in shame; I now had him. “So when you need a little more money to go on vacation with your friends, you take a couple more items, and before you know it, you’re in over your head, right?”

Bill nodded without saying a word, admitting his guilt. He then began to cry. Emotional outbursts are typical in this type of high-stress situation. As an investigator, it was my job to keep this interview on track, so I used calming statements to ease Bill’s emotions. I wanted to be sympathetic, but at the same time my work wasn’t done.

I wanted Bill to verbalize his guilt, so I used what I learned about his pressures and rationalization and asked him what led him to steal the inventory. I said, “Did you take $5,000 in merchandise out of the store without permission because you wanted to impress your friends or because the company didn’t pay you a fair wage?” If Bill chooses either of these options, he’s admitted to the crime.

After Bill admitted his guilt, I led him to provide a more complete verbal confession by asking questions that prompted him to verbally state the material facts of the case, especially those facts that only he would know. It was essential that Bill admitted that he knew what he was doing was wrong, which proved intent. If he had stated anything that was contrary to the material facts or the physical evidence of the case, I would need to resolve those contradictions.

Finally, I transcribed the material facts of the case and admission of the intent on the spot; Bill and a witness, the loss prevention manager, signed them. The loss prevention manager then officially terminated Bill’s employment, and Bill was subsequently taken into custody.

One Shot to Get it Right 

Typically, you’ll only get one shot to get your suspect to sign a written confession; don’t let it slip through your fingers. Each fraud examiner will bring his or her style into the interview process, but Bill’s case is an example of applying a proven framework for interviews: building rapport to reduce resistance, obtaining an admission of guilt, developing the admission of guilt into a confession, and professionally closing the interview with a signed transcription of the material facts of the case and the subject’s admission.

As we learn from the ACFE’s Fraud Examiners Manual, effective interviewing is difficult even for the most experienced fraud examiners; it’s seldom mastered without considerable practice. But as you begin your careers, these techniques are invaluable for obtaining truthful, reliable and legally valid information.

[For more information see “Interview Theory and Application” in the “Investigation” section of the ACFE’s Fraud Examiners Manual and the new book, “Fraud-Related Interviewing,” by Don Rabon and Tanya Chapman, both in the online ACFE Bookstore. – ed.]

Robert Hogan is a forensic accountant and fraud examiner with more than 12 years of experience in providing fraud detection and prevention services to corporations around the world.  

Colin May, M.S., CFE, is a forensic financial investigator with a government agency (the views in Starting Out are his own) in Baltimore, Md. 

Mark F. Zimbelman, Ph.D., CPA, Educator Associate Member, is a professor of accounting and Selvoy J. Boyer Fellow at Brigham Young University in Provo, Utah. 

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