The successful fraud fighter

Fraud examiners who succeed have passion, integrity and grit. Regardless of the stage of your career, all of us need to be reminded why we decided to become fraud examiners or investigators.

As a private investigator and consultant, I was once asked to review a police department's voluminous policies and procedures and then review the details of an incident that resulted in an arrest and the injury of a civilian. The injured party had a long history of previous arrests. My natural instinct was to lean toward taking the police officer's side, but I refrained from taking that position during my review. I discovered clear violations of the police department's policies and procedures as well as critical omissions in official police reports. It looked like a cover-up.

Next, I reviewed the reported internal affairs inquiry into the complaint and found that all the potential witnesses hadn't been interviewed, and those interviews that had been conducted favored the police officers. Some of the questions the investigators asked actually included suggested answers, they didn't ask any logical follow-up questions and the interviews included too many closed-end (yes or no) questions.

Conclusion? No matter where you are in your career, conduct your fraud examinations and investigations objectively, thoroughly and completely. And with integrity.

Components of a successful fraud examiner

You might be at the start of your career, or maybe you've tallied quite a few fraud examinations by now. But it's always profitable to remind ourselves that the successful fraud examiner must:

• Possess integrity (be honest).
• Have specific job skills (acquired through training and/or experience).
• Have knowledge of many aspects of law (e.g., right to privacy, the rules of evidence, and the elements of criminal offenses).
• Be dedicated to the job (willing to go beyond the call of duty).
• Be persistent (not willing to give up just because the going gets tough).
• Be self-motivated (don't need someone else telling them what to do or when to do it).
• Be resourceful (maximize the use of resources and be cost conscious when possible).

Fraud examiners and investigators should also have good planning, organizational and communication skills (oral and written). It also helps to be creative and clever. Of course, fraud examiners can obtain many skill sets in a classroom or in the field. However, a few characteristics often are instilled in some people early in their lives; in others, never at all. For example, the U.S. Army taught me the importance of persistence. The military teaches troops to never give up no matter what. Persistence is a valuable commodity.

If you have the pig, you have made it

To sum it up, the three most important characteristics, skills, attributes or traits that a successful fraud examiner or investigator possesses include passion, integrity and grit (PIG).

Passion for your work is critical to enjoying the job. No matter what your profession, if you enjoy your work, the job really isn't about the paycheck; it's about the pursuit and accomplishment of the goals. Having passion for catching bad guys, righting wrongs, pursuing justice and helping others can make it fun to go to work every day.

Grit might be described as the willingness to persevere while pursuing long-term goals despite the naysayers, and despite obstacles and hindrances.

Obviously, a listing of additional characteristics, skills or traits of a successful fraud examiner or investigator would take several more pages. "Street smarts" are invaluable in the investigative field but not usually a requirement to become a fraud examiner (sometimes I think they should be). A fraud examiner should also be computer literate, logical and analytical. He or she also needs to be pretty good at math. Perhaps every fraud examiner and investigator should possess a strong sense of curiosity.

A fraud examiner doesn't necessarily have to be good at everything to be effective. Knowing your own limitations as well as having a willingness to learn from others makes all the difference.

Effective fraud examiners also need to show concern. Fraud examiners who have a genuine concern for victims, complainants, harmed organizations and their employers' or clients' interests typically will be more motivated to accomplish their investigative objectives. Many of us have seen investigators who carry a case file in their hand but just don't seem to care whether they solve the case or not. Others seem to investigate with a sense of urgency like there's no tomorrow. The latter fraud examiners normally have the respect of their peers and others and regularly accomplish more.

A fraud examiner must also keep an open mind and remain objective. A tragic mistake is to have fixed or preconceived notions (witness the opening case in this article) about the results of the fraud examination before it's complete. It's okay to have hunches; in fact, good fraud examiners always conjecture hypotheses at the beginning of fraud examinations.

However, over the years, I've seen some investigators set out to obtain only the information and evidence that fits their original hypotheses, objectives or agendas. Some investigators go so far as to document only the information that meets their objectives. Two causes of reaching faulty conclusions are confirmation biases and availability heuristic.

Confirmation bias

Confirmation bias occurs when people assign more value to information that goes along with their beliefs or hypotheses. When an investigator or fraud fighter consciously or subconsciously has that bias, the consequences can include wrongly charged individuals, actual criminals not charged and complaints wrongly dismissed.

Availability heuristic

An availability heuristic occurs when someone consciously or subconsciously overvalues information that's right in front of him or her. An example might be when a fraud examiner or an investigator makes a conclusion about a suspect based on information one person "reported," and the investigator assumes it "must" be true. Failing to thoroughly investigate based on this mental shortcut could result in a wrong conclusion.

I've seen reputable investigators at well-known and respected agencies who intentionally omit factual information from reports simply because it didn't fit what they wanted to prove. That's how innocent people end up in prison! I've concluded that some of these one-sided investigators conducted investigations in that manner because that's what was expected of them. In the real world, some "professionals" are more concerned about putting points on their own personal scoreboards, getting notches on their belts or getting promoted than pursuing justice and/or establishing the truth.

Fraud examiners and investigators who do their jobs to the best of their ability, seek assistance when needed, report facts and never omit critical information have generally done all that most can expect of them.

Can't control the outcomes

Often the outcome of a fraud examination depends on who receives the information (the decision maker). For example, a fraud examiner can prove the wrongdoings of an employee, but the business owner might give the employee a slap on the hand or a verbal warning. A prosecuting attorney might receive an airtight case and then blow it when presenting the facts at trial (that doesn't happen very often). Worse yet, the fraud examiner might provide a solid case and the prosecutor, for many reasons, might decline to accept the case for prosecution. A judge or jury might determine that the presented evidence doesn't prove the case. Of course, a fraud examiner can't control these outcomes.

Other things can affect the outcome of an investigation. Sometimes victims, complainants and witnesses lie or are mistaken. In those cases, the matters you're investigating might not have ever happened or didn't happen as reported. Also, in some cases, there just isn't enough information to complete the investigation. With limited resources, fraud examiners and their supervisors have to prioritize how they spend their time. Case overloads sometimes cause fraud examiners and investigators to almost work like MASH units and do the best they can as quickly as they can. Realistically, of course, we can't solve every single case. We have to remember that when investigations don't result in convictions, that doesn't necessarily mean we didn't do our jobs as well as we could.

When we investigate, we might find problems beyond the scope of a narrow fraud examination — serious underlying weaknesses in systems.

 

Systemic weaknesses

A systemic weakness might be described as something that causes fundamental problems with the efficiency and effectiveness of a system or process.

When I conducted criminal, civil, and administrative investigations for the federal government, my final investigative reports had to mention whether I had identified any systemic weaknesses during the course of the investigations. If I did, I had to prepare a separate report identifying the weaknesses and make recommendations for corrective action and/or improvement.

As an agent, I didn't get paid extra for identifying systemic weaknesses, writing the supplemental reports or making suggestions for improvement. (These supplemental reports sometimes are called management control deficiency reports, fraud vulnerability reports or some other similar name.)

Through the years, I came to realize that many successful investigators I knew never or seldom reported that they identified any systemic weaknesses during their investigations and therefore seldom (if ever) wrote supplemental reports or recommendations for improvement. After all, how could anyone prove whether an investigator identified any weaknesses or not? And if investigators never looked for system weaknesses in the first place, odds are they wouldn't find any.

Simultaneously investigating fraud (criminal and civil violations), waste and abuse as well as searching for systemic weaknesses is a lot to ask of a fraud examiner or investigator. And to be even more thorough, the investigator also should include many other investigative methods plus attempt to link or identify additional offenses and/or wrongdoers.

However, as a private investigator and consultant, I still investigate in this thorough and complete manner unless my clients/employers want to limit the scope of the work. Regardless, my brain still thinks along those lines even when clients want less thorough investigations. Though it might take more time to complete my investigations, the results are worth it.

Ten simultaneous investigations

This more thorough investigative methodology is the equivalent of conducting 10 or more separate but related investigations simultaneously. I'm investigating for:

• Criminal violations.
• Civil violations.
• Administrative violations.
• Indications of waste/abuse.
• Indications of system weaknesses.

I'm also investigating to determine:

• If the same suspect committed similar or related wrongful acts.
• If the same suspect committed other wrongful acts.
• If others might have or might be committing the same type of wrongful acts.
• How others might commit the same or similar acts in the future.
• How the organizations can improve their systems to prevent future occurrences.

When investigating an individual, we should always be mindful of possible involvement of accomplices, co-conspirators and others who might have assisted before, during or after the offense(s).

The missions of many investigative organizations are only to investigate criminal violations and perhaps civil violations. However, it makes more sense to investigate for all wrongdoing; fraudsters often commit related crimes that we shouldn't ignore.

Someone who has committed fraud often can be considered for both criminal and/or civil prosecution. However, suspects who have been involved only in wrongs resulting in waste and/or abuse normally aren't considered for criminal prosecution and usually not for civil prosecution. They could, however, sometimes be held responsible administratively, demoted in rank/position, reassigned, or perhaps be terminated.

We all need a pep talk

Please accept my words as a token of encouragement. Regardless of the stage of your career, all of us need to be reminded why we decided to become fraud examiners or investigators.

When you set out to conduct fraud examinations with passion, integrity and grit you'll excel in a profession that will, in the words of the ACFE Anthem, "help make the world a better place."

Charles E. Piper, CFE, CRT, is the owner of Charles Piper's Professional Services in West Tennessee. He had a 30-year career in law enforcement, including 20 years as special agent-criminal investigator with the U.S. Department of Defense. He's the 2014 recipient of the ACFE's Hubbard Award.

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