The attorney as fraud investigator

When management suspected a corporate officer of embezzling company funds a few years ago, the board had to quickly scramble to address years of fraudulent activity that could damage the company’s reputation and stock price.

The case was complex. The perpetrator had been handing out lucrative but unnecessary contracts that required very little work. In return, he received substantial kickbacks. Perhaps most damaging of all, the executive’s actions had caused the company to file financial reports containing material misstatements with government regulators for the previous two years. The board quickly determined that those contracts violated company policy and terminated the suspect. But then it had to decide on whether to hire an investigator or an attorney to conduct the internal investigation. The board eventually settled on an investigator who was also an attorney.