Character traits of the effective fraud examiner

Fraud examination is often challenging work, which involves various investigative skills. Be more successful in your engagements by focusing on these four traits that are shared by effective fraud examiners.

In season two of HBO’s “The Sopranos,” a group of FBI agents ring the doorbell of Mafia boss Tony Soprano’s elegant New Jersey residence. “Tony Soprano, we have a warrant to search your house, property and family vehicle,” declares Supervising Special Agent-in-Charge Dwight Harris.

Harris tells Soprano they’ve been seeking stolen airline tickets. The alleged theft constitutes mail fraud, wire fraud and many other federal violations. Soprano asks for a warrant. Harris shows him the warrant and the stolen airline tickets that he’d already discovered in Soprano’s SUV. The agents then calmly place Soprano under arrest and begin to search the house.

The scene is a master class in how to execute an investigation. The FBI agents clearly did their homework. They were familiar with the nature of their suspect and the case, and they conducted as much groundwork as possible before confronting Soprano at his home.

They coordinated with the prosecutor and judge. They were well-versed in the relevant statutes and were prepared to be challenged. They obtained the stolen tickets before they rang the bell. They took the time and expended the necessary effort to ensure that the raid and arrest went as smoothly as possible. They embodied four characteristics of the effective fraud examiner: communication, organization, preparation and determination.

Communication

In the wee hours of a frigid autumn morning in 2016, I found myself sitting in a car at the end of dark residential block. The large municipality I worked for as an internal investigator had a residency ordinance, which required city employees to live within city limits. I was waiting for a blue-collar worker, a residency violator, to leave his home in a small rural community and begin his long commute for the early shift. My plan was to follow him to work, maybe take a few photos and later confront him with the evidence.

Suddenly, night turned to day. I shielded my eyes from blazing lights, blinked rapidly and tried to clear my vision. I could just make out two patrol cars — roof bars flashing — with their spotlights trained right at me. Apparently, a nosy neighbor had noticed a strange car and called the local police department. The cops’ presence threatened to expose the whole operation.

An officer got out of his cruiser and approached my car. I identified myself and, in general terms, explained my activity. The officer accepted my account but told me that in the future I should call ahead and apprise the local cops of my plans. Whether that was the wisest course of action was debatable (word gets around in small towns), but the officer raised an important point: Communication is a critical component of an effective investigation.

Fraud examiners need to regularly update colleagues and superiors on case progress, liaise with attorneys and support professionals, and coordinate with external agencies. Fraud examiners add value to organizations and strengthen allegations when they’re willing and able to communicate clearly and accurately, build rapport and keep pertinent parties informed. Don’t be daunted by the number of colleagues you must communicate with during complex cases. Everybody has to be in the loop.

As a postscript to the residency ordinance case, I’m glad to report that my subject, miraculously, was oblivious to the cruiser spotlights. I was able to successfully substantiate the allegation.

Organization

When I walked into my first investigator job, eight case files were waiting on my desk. The organization that hired me provided a decent amount of training, but the environment was fast-paced and the caseload was heavy. New investigators were expected to begin working cases almost immediately and learn on the go.

I was quickly overwhelmed by the volume of documentation generated by each case. I struggled to track the myriad subpoenas, reports, memos, interview requests and documentary evidence floating in the investigative ether. Inevitably, I made my first mistake: I misplaced a subpoena request. My chief — a curmudgeonly yet good-intentioned type — summoned me into his office and fixed me with his sternest look.

The tenacity to see a case through to its conclusion separates the mediocre examiner from the truly good examiner.

I immediately cleared my schedule and began the task of finding a case-tracking solution. My background is in accounting, so it was probably inevitable that I clicked on the Microsoft Excel desktop icon. I spent the entire day creating an Excel workbook for all of my cases.

Each workbook was composed of four sheets: one each for evidence, communications and requests, interviews and surveillances, and a timeline of events. Each sheet included fields that detailed dates, parties, descriptions and other data.

Whenever I worked on a case, I had the corresponding spreadsheet open in the background and updated it in real time. To this day, I use the spreadsheet case-tracking method. I never lost track of another subpoena.

An effective investigator is an organized investigator.

Preparation

During a recent interview, I was working to prove insurance fraud by establishing the subject’s ties to a particular municipality. The subject was hostile. He denied all allegations and worked hard to discredit my assertions. Midway through the interview, I hit him with one of my trump cards.

I asked him, “How do you explain the driver’s license you were issued in 2016 reflecting the address where you deny you ever resided?”

The subject’s eyes lit up. He shot me a most unsettling grin. “That’s not possible. I wasn’t issued a driver’s license in 2016 at all.”

My stomach dropped. I was face-to-face with every examiner’s worst fear — confusing facts and looking the fool during a subject interview. To make matters worse, my supervisor was present.

I consulted my file. Turns out I was right all along. The subject was, in fact, issued a driver’s license in 2016 to the address I specified. The subject had mixed himself up trying to keep his lies straight. I allowed myself an internal sigh of relief.

I emerged from the interview with my credibility (and my pride) intact, but the experience reinforced a lesson I’d relearned many times before — preparation is an investigator’s best friend. Anyone who’s sat on the witness stand, met with their boss to discuss a case or stared down a subject during a contentious interview knows they’ll have no worse feeling than the realization that they’ve neglected an important piece of information.

Don’t be that investigator. Prepare.

Determination

Working a case can be a real slog. Information requests can take months to bear fruit. Discovery often produces boxes and boxes of documents to sift through. It can take days to include all the relevant evidence in a final report. The fraud examination field can be fun, even riveting. But, man, there are times when it can seem interminable.

The tenacity to see a case through to its conclusion separates the mediocre examiner from the truly good examiner. The willingness to carefully peruse those financial statements, precisely write that report and follow up on that information request are crucial traits for achieving investigative excellence. The best interviewing or surveillance technique in the world is useless without grit and the ability to deliver a final, detailed accounting of the facts.

A municipal employee I once investigated took a year’s leave to care for his cancer-stricken father — or so he claimed. He used a combination of Family Medical Leave Act time and city leave programs. His wife regularly delivered forms, signed off by a doctor, attesting to her husband’s activity caring for his dad. Except that he was actually in prison.

The employee spent the year in a state penitentiary on an aggravated DUI charge. He and his wife, in cahoots with an unethical doctor, perpetrated this fraud to keep his job, seniority and benefits with the city. As if that weren’t enough, his father passed away during the subject’s time in prison, yet he continued to have his wife deliver the medical forms attesting to his role as his father’s caretaker.

I subpoenaed the prison for the subject’s incoming and outgoing phone calls during his incarceration to ascertain whether he’d discussed the scheme with anyone on the outside. Unsurprisingly, he had. But to get to that information, I had to sit through hundreds of hours of unrelated and often deeply unpleasant conversations and track each phone call in a giant (what else?) Excel spreadsheet. But I was determined, and I listened to most of them, while my colleagues chipped in on the rest.

Embody these traits

The multi-faceted nature of fraud examination work calls for a varied skill set. But without the four core character traits that define the truly effective fraud examiner — communication, organization, preparation and determination — technical skills are of little value. Embody these traits, and you’ll find more success in your investigations as a fraud examiner.

Joshua Wiesenfeld, CFE, is a forensic accounting supervisor at Wiss & Company. Contact him at Joshua.wiesenfeld@gmail.com.