ACFE 31st Annual Fraud Conference Successful Virtual Turnaround

The ACFE had three months to plan a virtual 31st Annual ACFE Global Fraud Conference from scratch. The result is in the numbers and responses: 4,472 attended and 94 percent of the participants were satisfied. Lemonade never tasted so good.

Pivoting. Like everybody, the ACFE is doing it. We’re zipping in one direction. A major circumstance — let’s say, a pandemic — makes us pull the emergency brake. We blink our eyes, shake our heads and spin the vehicle 180 degrees. We gingerly apply a little pressure to the accelerator and gain a bit of speed. Soon we’re cruising into uncharted territory. Nervous but undaunted.

“Three months ago, I was in denial,” said Leslie Simpson, CFE, director of events at the ACFE. “I really fought the idea of canceling our live, in-person 31st Annual ACFE Global Fraud Conference in Boston,” she said.

“After 30 years of in-person ACFE Global Fraud Conferences, this year was going to be different,” said John Loftis, CFE, events manager at the ACFE. “It was a decision, quite frankly, that we did not want to have to make.”

“Obviously, we had to come to terms with it, which we eventually did,” Simpson said. “We learned so much about technology, ourselves and how people can inspire you daily.

“Our team was absolutely amazing in changing the conference delivery method so quickly,” said ACFE President and CEO Bruce Dorris, J.D., CFE, CPA. “Completely resetting what we have done for over 30 years took a Herculean effort to make it successful. The ACFE staff and speakers were outstanding in doing so much in such little time. Their actions showed we were ACFE Strong.”

‘Light the Way’

“For many of the ACFE staff, speakers and attendees, the annual conference is the one time we get to be together,” Loftis said. “Almost like a great big fraud-fighter family reunion. I’ve made so many friends throughout the years, and the thought of not seeing them in-person was a hard pill to swallow. 

“But in the true ACFE spirit, instead of phoning it in and giving up, we decided to rise to the occasion,” Loftis said. “If we could not be together in person, we were going to make this the best possible virtual conference anyone had ever participated in.”

During the conference, ACFE staff presented attendees several online platforms for watching general and concurrent sessions, and for communicating to staff and with each other. The “Discord” platform contained numerous general networking chat rooms plus separate rooms for accountants, auditors and chapter leaders, plus interests, such as compliance and ethics, cyberfraud, data analytics and tech, financial institutions, government and law, health care, investigators and corporate, risk management and women in the anti-fraud profession. Attendees could ask questions of speakers in each track and with conference speakers.

“As the coordinator of our Anti-Fraud Exhibit Hall and sponsorships, I was concerned with how we could replicate that same experience for both attendees and sponsors/exhibitors,” said Travis Kolaja, CFE, ACFE account executive. “In the end, we logged thousands of visits to our sponsor ‘booths’ in addition to countless live text and video chats between attendees and sponsors during the event.” Total conference attendance was 4,472 — the largest anti-fraud conference in the world so far. Ninety-four percent of the attendees were satisfied with the virtual conference.

Sixty percent of the attendees had never attended a virtual conference before, but 87% said they’d attend another virtual conference the ACFE sponsored. And 98% would recommend the ACFE Annual Global Fraud Conference to their colleagues.

“Our conference theme this year was ‘Light the Way,’ ” Loftis said. “I’d like to think our virtual conference did just that.”

During pandemic, ACFE holds keys to protection against fraud

“Life as we know it has changed,” Dorris said, during his opening message at the conference. “But even though we couldn’t control the quick pace of change caused by the pandemic, we can control how we react to it. … Because, as many of you know, it’s not a question of if we will see more fraud, but when and how much we will see.

“Removing components of our anti-fraud programs will likely cost us more money than it saves,” he said. “Now is the time for us to bolster our anti-fraud controls and ensure we have the tools, training and staffing we need to weather this inevitable storm. In our recent benchmarking study about fraud in the wake of COVID-19, 93% of respondents said they expect the level of fraud to increase over the coming year, with 51% believing this increase will be significant.

Dorris said fraud increases during recessions and economic instability, in part, because organizations and employees might feel pressure to falsify their financials to meet earnings targets or secure financing. “During the recession, we can expect not only more fraud to occur, but also more existing fraud to be discovered,” he said.

“As a community, we are committed to supporting you in your role by helping you prevent and detect fraud from wherever we are and through whatever means available,” Dorris said. 

“Hard decisions are being made every day by governments, companies and individuals,” Dorris said. “The dust will not settle for a long time, and we will continue to feel ripple effects in all areas of life for years to come. And although business practices may not be top of mind right now while we face these difficult changes, I know that we, together, hold the keys to protecting individuals and organizations from fraud.”

Packed with practical anti-fraud nuggets

Attendees learned practical concepts at more than 88 concurrent educational sessions in eight tracks. They ranged from Don’t be a Typhoid Mary: Health Care Fraud During a Pandemic to How to Slow Down Your Hamster Wheel of Emotions During Times of Crisis and How Do You Find Someone Who Doesn’t Want to be Found? and When Dreams Turn Into Nightmares: How Idealism Can Lead to Fraud in Nonprofits.

Keynoters provide practical information, hair-raising experiences

Attendees heard from keynoters Jules Kroll, pioneer of the modern intelligence and corporate security industry; Howard Wilkinson, Danske whistleblower; a whistleblowing panel moderated by Rebecca Jarvis, ABC News’ chief business, economics and technology correspondent and host of “The Dropout” podcast; Nicholas Thompson, editor-in-chief of Wired magazine; Javier Peña and Stephen Murphy, retired DEA agents and inspirations for the Netflix show, “Narcos” (see Murder, money laundering and the demise of Pablo Escobar); and Gary Foster, convicted fraudster (read his story on FraudConferenceNews.com ).

Jules Kroll stresses that practitioners can’t grow without innovating.

During his virtual keynote, Jules Kroll, the 2020 recipient of the ACFE’s Cressey Award, provided a whirlwind trip through his five decades of investigative experiences and offered attendees some counsel on innovation tactics. Kroll said the profession needs to continue to innovate to find new ways to combat fraud as he did when he was a pioneer of the modern intelligence and corporate security industry.

Kroll began J. Kroll Associates in 1972 (later Kroll Inc.) after he had to manage his ailing father’s Queens printing business and saw systemic purchasing corruption in the industry. “I vowed that I would try to do something about [the corruption],” Kroll said. “So, it began as a business looking at corruption, fraud and waste in the procurement area. … I had one employee, that was me,” he said.

Financial institutions began hiring Kroll’s firm to “do something we called ‘due diligence,’ which was a relatively new idea at the time.” His firm then began investigating alleged inflated values of companies involved in hostile takeovers.

Kroll worked with the FBI to investigate organized crime in the U.S. He then investigated the Ferdinand Marcos family in the Philippines, that was alleged to have stolen U.S. aid money, and many other strongmen around the world.

After Saddam Hussein invaded Kuwait on Aug. 1, 1990, the Kuwait government hired Kroll’s firm to investigate Hussein’s ill-gotten gains and understand his corrupt procurement system. The Saddam investigations have led to similar jobs in global governments, Kroll said. 

In 2019, K2 Intelligence merged with Financial Integrity Network to offer regulatory, compliance, risk management, anti-money laundering and other services. Kroll continues as K2’s chairman of the board.

Kroll said that hundreds of people who work for his firms around the world have the CFE credential. “It is the CFE … [who has] provided the bulk of the … analysis dealing with fraud,” he said. “It’s generally one individual — an accountant, a lawyer, former law enforcement — in the public or private sector, in our profession who figured out something that might be going on,” Kroll said.

For more information on Jules Kroll see Indefatigable investigator: Jules Kroll still revolutionizing corporate investigations, January/February 2020, Fraud Magazine.

‘Accidental whistleblower’ decries corporate irresponsibility

Howard Wilkinson, the recipient of the 2020 ACFE Cliff Robertson Sentinel Award, admits that he’s a bit of an accidental whistleblower. And if his employer had been more responsible, he wouldn’t have been a whistleblower at all.

“Back in summer 2012, I had to help someone in the Estonian branch of Danske Bank where I was working [as a trader] get some financial information on a client,” Wilkinson said, during the lunch general session. “The client was a British limited liability partnership (LLP), so I went to Companies House, which is the U.K.’s official government agency that collects all the company information and annual financial statements,” he said. “I paid one pound, and I downloaded this company’s financial statements.

The website said the company was dormant with no trading or assets. But Danske Bank records indicated it was still a client. “Something was wrong, so I reported it in the branch,” Wilkinson said. “I was told the [British] company had made a mistake, and they would just file some corrected financial statements. Nothing to worry about.”

Fast forward a year to September 2013. “The [British] company — together with a number of related companies and a few private individuals — all had their accounts in the branch closed for AML reasons,” Wilkinson said. He waited a few months, checked the Companies House site and found that the British company was still false. He thought some collusion could be going on in the local branch. “I made a whistleblowing report to top management in the bank’s head office in Copenhagen, including to one executive board member.

He then dug up financial statements of 15 large clients of the branch that were structured as LLPs. “They all had the same registered address, and they have the same signature in the accounts. … They all basically look the same. And none of the accounts had anything to do with the actual business levels we were seeing in the bank.” 

Wilkinson then made two more internal whistleblower reports about these companies, and then a fourth and final one about a similar issue with Danish limited partnerships that had somehow ended up as clients of the Estonia branch

“You should never really have heard of me. Something bad had happened in the branch, and we all know bad things happen,” Wilkinson said. “Top management failed to step up to the plate.”

In November 2018, Wilkinson testified before committees of the Danish Parliament and the European Parliament. By then, the U.S. Department of Justice, the Securities and Exchange Commission, and Danish and French prosecutors had begun investigations.

For more information, see The smoke detector, Fraud Magazine, March/April 2020.

Whistleblowers are better protected but still face retaliation

Is this a good time to be a corporate whistleblower? Probably, according to a panel of watchdog experts, with some caveats.

Panelist Stephen Kohn, a longtime counsel to whistleblowers (including Howard Wilkinson), said employees should think twice before they report problems internally.

“My message to members is, don’t fall on your sword,” said Kohn, chairman of the board of the National Whistleblower Center and partner, Kohn, Kohn & Colapinto LLP. “If you raise a concern, if you issue an audit report, if you make an internal complaint — and you get resistance from the company — don’t set your hair on fire,” he said.

“You have an alternative way to report anonymously and confidentially, and get that information to appropriate law enforcement officials.” That alternative is the U.S. Securities and Exchange Commission (SEC) Office of the Whistleblower managed by Jane Norberg, another panelist

Panelist Tom Mueller, author of Crisis of Conscience: Whistleblowing in an Age of Fraud, said organizations’ top management must always send the message that they celebrate their employees’ right to speak out truthfully. Organizations must “incentivize and promote people who blow the whistle in a way that actually brings facts forward,” Mueller said. “That they’ll be embraced and not punished. … [Management] needs to signal to everyone in the organization [that whistleblowing] is a key role as a good employee and they’re not loose cannons that need to be silenced.”

Rebecca Jarvis, ABC’s chief business, economics and technology correspondent, moderated the wide-ranging panel discussion.

“The SEC will not identify directly or indirectly the identity of a whistleblower outside of the commission except in certain limited circumstances,” Norberg said. “The whistleblower can also report to the SEC anonymously as long as they have counsel that we can communicate with.” (Norberg said that anything she said during the panel discussion were her own views and weren’t necessarily reflective of the SEC commissioners or the SEC staff.)

Norberg said that the SEC, via the Office of the Whistleblower, which the U.S. Dodd-Frank Act enabled, has awarded more than $500 million to 83 whistleblowers since issuing its first award in 2012.

Kohn said he supports the U.S. Senate’s Whistleblower Programs Improvement Act of 2019, which he said would shorten governmental delays in whistleblower cases and fix the U.S. Supreme Court decision, Digital Realty Trust v. Somers. The decision, he said, removes whistleblowers’ retaliation protections under the Dodd-Frank Act.

Mueller said it doesn’t matter if whistleblowers come forward because they care about the future of the world or they hate their bosses. “As long as people come forward with actionable information about wrongdoing … we shouldn’t care why,” he said.

Employees still need to confront the corporate “cults of secrecy and money” and the “bonus culture that focuses on milestone payments” so that corporations can serve society and themselves, Mueller said.

Matthew Caruana Galizia Said Guardian Award Will Help Continue and Protect His Mother’s Legacy

Emily Primeaux, CFE

“The Guardian Award recognizes my mother’s work, not just as a personal achievement, but as a legacy that belongs to all journalists, all people who fight fraud, to all people who protest corruption all over the world,” said Matthew Caruana Galizia. Matthew accepted the posthumous 2020 Guardian Award on behalf of his mother, journalist Daphne Caruana Galizia, who was murdered in a car bombing in Malta in 2017.  

Speaking virtually from his home in Malta, Matthew detailed the corruption of Malta’s ruling elite and how Daphne’s dogged pursuit of the truth led to her untimely death. “Exactly four years ago, I was in the middle of a tsunami of press reports that were hitting the world,” Matthew said.

The tsunami was the Panama Papers — an exposé about a widespread system of global tax evasion and money laundering based on leaked internal documents from the Panamanian law firm and corporate service provider, Mossack Fonseca.

The documents were leaked to journalists at the German newspaper, Süddeutsche Zeitung. However, they were unable to handle the mass of data, so they reached out to the International Consortium of Investigative Journalists (ICIJ) for help. Matthew worked as a software engineer for the ICIJ and was pulled onto the project.

As journalists raked through the documents, Daphne was unknowingly working on a related investigation. For years, she’d questioned and investigated the networks of influence and interest that propelled Malta’s former prime minister, Joseph Muscat, to power in 2013. Daphne had long suspected that the people closest to him in his role of prime minister — his chief of staff, his star minister — were implicated in illicit activity.

In February 2017, Daphne wrote in her blog, “Running Commentary,” about a mystery company in Dubai called 17 Black Limited. She alleged it was connected to Maltese politicians. Eight months later, Daphne was murdered, which renewed interest in her many different claims. Reuters and other media have started to unravel the mystery of 17 Black, and in 2018, police arrested three men in connection with the car bombing. In 2019, Fenech was arrested while trying to flee Malta on board his yacht. He denies accusations of complicity in the killing.

Despite his anger and grief, Matthew moved back to Malta to continue his mother’s work, and he said the situation remains as difficult as it was around the time she was murdered.

“If my mother’s memory and legacy are destroyed, the criminal and corrupt that she investigated and who are responsible for her assassination will have triumphed, and the universal values that my mother worked so hard to defend will have failed,” Matthew said.

“On behalf of journalists around the world who have told and retold her story, on behalf of everyone who keeps her memory alive and continues to campaign for justice despite the personal risks, they, too, have helped protect my mother’s memory and have become part of her legacy,” he said.

For more information on Daphne and Matthew Caruana Galizia, see Daphne’s message lives on, Fraud Magazine, May/June 2020.

Your responsibility to uphold a high-trust society

Courtney Howell, CFE

When Nicholas Thompson, editor-in-chief of WIRED magazine, came on screen he spoke from his cozy, book-lined attic office. But Thompson had prepared a series of decidedly un-cozy questions designed to challenge the very way we think about, interact with and implement technology into our lives:

How hard is it to disappear?

In 2009, WIRED conducted an internet experiment. After noticing a trend of people disappearing from their lives, they wanted to find out just how difficult it was to disappear in the digital age. Keep in mind this was 11 years ago, but even back then, it was difficult to disappear. 

WIRED offered readers the chance to win $5,000 if they could find Evan Ratliff, a writer for WIRED, before a month’s end. A reader did find Ratliff, and Thompson ended his story by telling attendees that today it’s even harder to disappear. “The number of ways we touch the internet, the number of ways we touch information technology has gone up, created more ways for fraud and for people to hack into us, and also to be found,” he said.

Just as fraudsters have new tools at their fingertips, so do you. In fact, Thompson shared, it’s now possible to track somebody’s location just because of the strength of signal between a base station and an internet of things (IOT) device. If you walk between your Rumba and its base station, your Rumba logs that you were in the room. It logs how often you pass through that room. This is the type of information that’s very useful for an investigation.

It’s also useful information for someone, or a company, that wants to track you.

With technology, there’s no clear-cut good or bad position. It’s all in how we use it and in what exactly we’re willing to give up. Which brings us to Thompson’s next question.

How will we think about security and privacy?

“What’s interesting to me is the evolution of our thinking about this,” Thompson said with a hint of wry laughter. “Basically, I feel like from the beginning of the internet until roughly 2018, we just did not care.”

Thompson illustrated how companies asked for our information and how we willingly gave it to them. They expanded the borders of exception with very little resistance from consumers. It wasn’t until 2018, until what Thompson calls the “tech backlash,” that we started to see a dramatic shift in privacy concerns. That’s when the Cambridge Analytica story broke and people realized their data had been taken and used in ways they didn’t understand or comprehend. There were other facets of this backlash, but either way, the consequence was that people really started to care. However, we’re experiencing yet another about-face in consumer sentiment with the coronavirus.

Thompson shared a graphic with attendees that showed sentiments regarding privacy and health concerns. The statement was, “I am willing to give up more of my personal health and location tracking information to the government than I normally would in order to help track and contain the spread of the virus.”

Thompson stated that it’s an interesting trade-off, and he encouraged attendees to start thinking about what happens when the threat of the coronavirus isn’t quite so real. What happens a year from now, two years from now? Will our norms of privacy have changed so much that we’ll have given up something we didn’t want to give up?

So, where else will we surveil in the future?

WIRED recently covered a story about a school in Ohio that’s planning to put Bluetooth trackers on all students to ensure that they remain six feet away from one another, but Thompson cautions — do we really want that?

Some countries have been able to manage the coronavirus better, Thompson pointed out, largely in part to the acceptance of a surveillance state. Extreme technological surveillance has been deployed in countries like China and South Korea to stop the spread. If you cross the border into South Korea, you must install a tracking system and there are people watching and analyzing your every move. But again, it comes back to the question of cost. Are we willing to give up privacy for the benefit of public health? What about a few years from now when there’s not a global pandemic breathing down our neck? How will our reluctance or acceptance shift?

Thompson walked attendees through eight more thought-provoking questions, tying them each into the fraud examiner’s role and responsibility to uphold a high-trust society:

• What businesses are going to boom?
• How will I know if anything is real?
• How should we think about redemption?
• Can we keep our elections safe?
• How do we stay safe when we all work from home?
• What will happen to the nature of work?
• What happens to the U.S. and China?
• What is the known good vs. the unknown harm?

Your work in the anti-fraud profession is tied closely to technology. Criminals will use it to their greatest advantage, so you must use it to your advantage as well. Thompson recognized that you interact and have an impact on which direction our technological future goes, and he encouraged attendees to reach out if they’ve encountered something that touches on any one of these big questions. “Everybody watching this, everybody listening to this… if you have a good story, you have something that might make for a nice narrative, you can see my contact information at the bottom of the slides.”

We’ll keep his email address private for now, but you can always find him on Twitter: @nxthompson.

Visit FraudConferenceNews.com for more coverage of the 31st Annual ACFE Global Fraud Conference.