Joseph R. Dervaes teaches fraud lessons and awards first scholarship named in his honor at PNW Chapter Annual Conference

ACFE Regent Emeritus Joseph R. Dervaes, CFE, gave his final presentation and awarded the Pacific Northwest Chapter’s scholarship, renamed in his honor, at the chapter’s first hybrid annual fraud conference held in Tacoma, Washington, in May.

“Joe Dervaes is a bit of a local legend here in the Pacific Northwest ACFE community,” says Victoria Kitts, senior manager in the audit and assurance department at Clark Nuber and the PNW Chapter secretary/treasurer. “He founded the PNW Chapter in 1993 and was involved with the board for many years. His ‘Rolodex’ of fraud-fighting professionals is extensive.”

Dervaes was chair of the ACFE Board of Regents and became the first ACFE Fellow in 2000. He served on the PNW Chapter’s Board of Officers for 25 years and was appointed president emeritus in 2003, the same year he received the ACFE’s Cressey Award for a lifetime achievement in fraud deterrence and detection. And in 2007, Dervaes earned the ACFE Outstanding Achievement in Community Service and Outreach award. He also authored Fraud Magazine’s “Fraud’s Finer Points” column for 13 years and was inducted into the ACFE Hall of Fame in 2021.

“It seems that everyone knows Joe, either from having worked with him through the chapter, during his tenure at the Washington State Auditor’s Office, reading his articles or benefiting from his network connections,” says Kitts.

At the 2023 PNW Chapter Annual Fraud Conference, Dervaes delivered a presentation titled “My 80-Year Life Journey to the ACFE Hall of Fame — ‘Leadership Through Service’,” in which he imparted 13 life lessons every fraud examiner should incorporate into their career. Lessons included the importance of developing a strong work ethic early in life and dealing with difficult supervisors.

“It’s because of Joe’s lifelong pursuits and accomplishments that the chapter decided to rename our annual chapter scholarship after him in 2020,” says Kitts. But as the name change occurred during the pandemic and there were no eligible candidates at the time, it wasn’t until this year that the PNW Chapter could award its first Joseph R. Dervaes Scholarship.

The PNW Chapter awards one $1,500 scholarship per year to a deserving student who fulfills the requirements for the ACFE Foundation’s Ritchie-Jennings Memorial Scholarship Program and attends a qualifying four-year college or university in the state of Washington. The PNW Chapter renamed the higher-education scholarship in Dervaes’ honor in 2020.

“I was very pleased and immensely honored when the chapter renamed its student scholarship program,” says Dervaes. “This change presented an amazing opportunity for me to continue touching the lives of some of the most deserving students in the state of Washington who will ultimately become the future of our profession.”

This year’s recipient, Grace Brenner, is majoring in accounting and business administration at St. Martin’s University and plans to become a Certified Fraud Examiner (CFE). The PNW Chapter also awarded two additional chapter scholarships, which Dervaes also presented at the conference. (See https://pnwacfe.org/page-18102 for more information about PNW Chapter scholarships.)

“I was pleasantly surprised to be able to personally make the first student scholarship presentations since the name of the scholarship program was changed,” says Dervaes. “It was an honor and privilege to meet these extraordinary students.

“I dedicated my entire career to educating others about fraud’s finer points and can’t think of a better way to expand the impact this scholarship program will have in developing the next generation of fraud fighters. We must do a better job protecting the organization’s resources, and I know this scholarship program is a great start in that direction.”

FRM update addresses new external fraud threats, augments data analytics info

The rapid pace of technological change means that organizations face an ever-evolving fraud landscape. The latest edition of the Fraud Risk Management Guide helps fraud examiners keep apprised of those latest threats and the multiple ways they can tackle them.

Co-published by the ACFE and the Committee of Sponsoring Organizations of the Treadway Commission (COSO), the recently released guide covers strategies for addressing looming fraud risks related to ESG, cyberfraud, cryptocurrencies, ransomware, identity theft, COVID-19 response efforts, remote work and much more.

“In light of technological developments, the global pandemic, and shifts in the general business and regulatory environment, COSO and the ACFE recognized the need for updated guidance for organizations in building, implementing, and maturing their anti-fraud programs to address current and emerging fraud risks and threats,” says Andi McNeal, CFE, CPA, ACFE’s vice president of education and member of the fraud risk management update task force.

The Fraud Risk Management Guide was first published in 2016 to help organizations of all sizes manage risk, design their own fraud risk management programs and perform periodic risk assessments. It’s built around five principles of fraud risk management — establishing fraud risk governance policies; performing fraud risk assessments; designing and deploying fraud preventive and detective control activities; conducting investigations; and monitoring and evaluating the total fraud risk management program.

“Fraud risk management and strong internal controls are key themes in COSO’s mission,” says COSO Chair Lucia Wind, CFE. “The updated guide explains how internal controls and fraud risk management are related and support each other. Fraud prevention and detection is as critical in today’s business world as ever and the new guide outlines tools and thought leadership related to emerging topics.”

For the latest edition, COSO and ACFE solicited feedback from anti-fraud professionals on areas where the guide could be improved and updated. The resulting guide addresses current anti-fraud developments and technologies, including expanded instruction on incorporating data analytics into fraud prevention and detection control activities.

“To help all practitioners stay ahead of such changes, the guide highlights the importance of data analytics and provides extensive thought leadership on the use of specific data analytics through all five fraud risk management principles,” says Wind.

The guide now includes a data analytics point of focus for each of the five fraud risk management principles, explaining how organizations can incorporate different data analysis techniques into every area of their fraud risk assessment programs. And, along with the expanded data analyses instruction, the guide contains links to tools that organizations can use to enhance their risk management endeavors.

“These resources can be used for free by organizations of all sizes, in all industries, around the globe to improve their fraud risk management programs,” says McNeal. (See ACFE.com/FraudRiskTools to access those resources.)

“The combination of the updated guidance and the enhanced suite of implementation tools provides a comprehensive toolkit for anti-fraud professionals and organizational management to effectively protect against the harms of fraud.”

In recent years, many organizations have started to incorporate environmental and social initiatives into their governance plans. As such, the updated guide includes information on the U.S. Securities and Exchange Commission’s Climate and Environmental, Social, and Governance (ESG) Task Force Reports and the types of questions that organizations should ask themselves concerning ESG reporting requirements and how they’ll handle disclosing and reporting problems.

External threats to organizations are constantly evolving. Indeed, fraudsters have cooked up new ways to target organizations since the first edition of the guide with numerous cyberfraud schemes, identity theft, cryptocurrency and ransomware — just to name a few. The new edition of the Fraud Risk Management Guide leads organizations through the process of identifying new fraud schemes and risks by monitoring news media and the dark web for emerging threats.

Since the first edition was published, a worldwide pandemic in 2020 generated a shift to remote working and altered the way organizations look at fraud risks. According to the Fraud Risk Management Guide, fraud risk assessments conducted in mid-to-late 2019 were outdated by the spring and summer of 2020, so organizations will need to go beyond periodic reviews based on a snapshot of time and implement continuous reviews of their risk management programs. (See Fraud Risk Management Guide, Second Edition, COSO and ACFE.)

“As a result of the pandemic, companies have adopted more technologies and automation to operate remotely or in a hybrid environment, changing the game for many fraud schemes, including asset theft, expense management, billing or currency use,” says Wind. “Physical handoffs of documents, manual checks or physical approvals are becoming controls of the past as all companies adopt a stronger digital footprint.”

Board of Regents suspends member

The ACFE Board of Regents voted to suspend Vicente Alvarez, CFE, of Northridge, California, from the ACFE for two years. This decision was based on Mr. Alvarez’s repeated failure to properly conduct and document engagement quality reviews, as well as his failure to maintain appropriate standards and policies regarding such reviews, as required by the relevant auditing standards. The Board noted that Mr. Alvarez quickly and fully cooperated with the ACFE’s investigation in considering its decision.

Reporting disciplinary cases

If you believe an ACFE member has committed a violation of the ACFE rules of conduct, you can report directly to the ACFE Legal Department, Legal@ACFE.com. The ACFE also maintains an anonymous hotline. For more information, visit ACFE.com/disciplinary.

Reader's response

[Sidebar: “A reader’s response to the March/April 2023 feature article, ‘When subjects admit guilt but they’re innocent’.”]

In her recent article, “When subjects admit guilt but they’re innocent,” Ms. Mohr made a number of inaccurate statements about the Reid Technique. In the text below I have italicized several of those comments followed by the correct information.

• “The Reid Technique and others like it are based on a step-by-step process that focuses on presumption of guilt and eliciting confessions.”

The Reid Technique always begins with a non-accusatory, non-confrontational investigative interview in which the investigator is a neutral, objective, non-judgmental fact finder.

The interview consists of investigative questions which deal with the issue that is under investigation. One of the first things the investigator should do is ask the subject an open-ended question that invites the subject to tell their story. If it is a victim, what happened? If it is a witness, what did they see or hear? If it is a suspect, what were their activities on the day in question? After the subject relates their initial story or version of events the investigator will then ask a series of questions to develop additional details and to clarify the who, what, when, where, why and how of the incident under investigation.

Interrogation only becomes appropriate when the information developed during the investigation indicates the subject’s probable involvement in the commission of the issue under investigation.

On our YouTube channel – The Reid Technique Tips – we have numerous video presentations that detail this process.

• “The technique’s creators believe that nobody would falsely confess to a crime they didn’t commit, so any amount of psychological pressure is justifiable in obtaining a confession.”

To the contrary, we understand the fact that false confessions can occur. In fact, over the years John E. Reid and Associates has assisted the Innocence Project (New York) on several cases as expert witnesses on proper interview and interrogation techniques, as well as the exoneration of one of their clients by obtaining a confession from the actual offender. This case was detailed in the story, “I Did It” in New York Magazine. We have also assisted other attorneys (for example, Kathleen Zellner) in wrongful conviction cases.

We teach in our courses and have published in our books extensively about false confessions – here are two articles from our website: “False Confessions: The Issues to be Considered” and “What Questions Should be Asked to Determine the Voluntariness and Validity of a Subject’s Confession?”

The core principles of the Reid Technique are:

Here are several of the Best Practices that we espouse:

Conduct an interview before an interrogation. Absent a life-saving circumstance the investigator should conduct a non-accusatory interview before engaging in any interrogation. During the interview, the investigator can establish rapport with the suspect, assess their credibility, develop investigative information and establish a behavioral baseline. Also, during the interview, the suspect is more likely to reveal information that can be used to develop an interrogation strategy.

Conduct an interrogation only when there is a reasonable belief that the suspect is guilty or withholding relevant information. The belief that a suspect is guilty of a crime or is withholding relevant information may be based upon investigative information, evidence, the suspect’s demeanor or verbal responses to interview questions. The investigator should avoid conducting an accusatory interrogation as a technique to separate innocent from guilty suspects.

Consider a suspect’s behavior in conjunction with case facts and evidence. The assessment of a suspect’s credibility during an interview will be enhanced and likely more accurate if it is based not only on the suspect’s verbal and nonverbal behavior, but also on case facts (the suspect’s established opportunity, access, motive and propensity to commit the crime) as well as forensic or testimonial evidence.

Attempt to verify the suspect’s alibi before conducting an interrogation. The most efficient means to prove a suspect’s innocence is to verify his or her purported alibi. Conversely, when it is determined that the suspect provided a false alibi, this finding offers support for the suspicion of the suspect’s probable guilt.

A single investigator should be the lead communicator. While it is often appropriate to have a third person in the room during an interrogation, perhaps as an observer or witness, there should only be one primary investigator communicating with the suspect at a time. A guilty suspect is more likely to offer a voluntary confession to a single investigator who has established a rapport and trust with the suspect. A tactic to be avoided is to have two or three investigators simultaneously bombarding the suspect with themes or alternative questions, or working as a “tag team” wearing the suspect down over an extended period of time.

Do not threaten the suspect’s well-being or make threats of inevitable consequences. It is clearly improper to threaten a suspect, directly or indirectly, with physical harm or pain. This would include threats directed at the suspect’s family members or loved ones in an effort to obtain a confession. Similarly, an investigator should never attempt to falsely convince a suspect that he or she is in a helpless situation and that the only way to avoid an inevitable consequence is by confessing.

Do not offer the suspect promises of leniency. An investigator should not offer the suspect a quid pro quo promise of leniency in exchange for a confession. In other words, there should be no promise that the suspect will receive a less severe punishment if the suspect confesses.

Do not deny the suspect his legal rights. An investigator is legally obligated to honor a suspect’s rights whether it be a custodial suspect’s Miranda rights, a military suspect’s Article 31 rights or, within the private sector, a union member’s rights.

When interrogating a non-custodial suspect, do not deprive the suspect of his freedom to leave the room. The suspect’s exit from the interrogation room should not be blocked by positioning the investigator’s chair between the suspect’s chair and the door. The room should not be locked from the inside (requiring a key to open the door) and the room should not be in an area that requires a key or passcode to exit the building. Finally, the investigator should not make verbal statements implying that the suspect is not free to leave the room, e.g., “You’re not going anywhere until we get this clarified!”

Exercise extreme caution when interrogating juveniles, suspects with a lower intelligence or suspects with mental impairments. This class of suspect is more susceptible to false confessions and, therefore, the investigator should be cautious in utilizing active persuasion such as discouraging weak denials, overcoming objections or engaging in deceptive practices. Proper corroboration of a confession will be critical with this class of suspect.

When using interrogation tactics involving deception the investigator should not manufacture evidence against the suspect. Courts make a distinction between false verbal assertions, e.g., “We found your fingerprints in her bedroom,” which are permissible and manufacturing evidence, which is not permissible. An example of manufacturing evidence is taking the suspect’s fingerprints and transferring the prints to an evidence card which indicates that the prints were found in the victim’s bedroom.

When a suspect claims to have little or no memory for the time period when the crime was committed the investigator should not lie to the suspect concerning incriminating evidence. While it is not uncommon for guilty suspects to feign memory loss, an overriding concern is an innocent suspect who experiences true memory loss for the time period when the crime was committed. Under this circumstance, if the investigator lies to the suspect about incriminating evidence and the suspect confesses, it may be argued that presenting false evidence caused an innocent suspect to believe that he had committed the crime.

Do not reveal to the suspect all information known about the crime. A legally admissible confession should include corroboration. One form of corroboration is information only the guilty suspect would know, e.g., the method of entry in a burglary, a memorable statement made to a victim, the denomination of money stolen, etc. When interviewing a suspect or offering information to the news media, the investigator should carefully guard this protected information so that the only person who would know it would be the investigator and the person who committed the crime.

Attempt to elicit information from the suspect about the crime that was unknown to the investigator. The best form of corroboration is information not known to the investigator about a crime that is independently verified as true. Examples of independent corroboration include the location of a knife used to kill the victim, where stolen property was fenced or the present location of a car the suspect stole.

The confession is not the end of the investigation. Following the confession the investigator should investigate the confession details in an effort to establish the authenticity of the subject’s statement, as well as attempt to establish the suspect’s activities before and after the commission of the crime.

If these best practices are followed there is an extremely high probability that a confession will be a true statement of guilt.

The purpose of an interrogation is to learn the truth. In most instances, this consists of the guilty suspect telling the investigator what he did regarding the commission of the crime under investigation. The obvious reason for this outcome is that interrogation should only occur when the investigative information indicates the suspect’s probable involvement in the commission of the crime.

However, there can be several other successful outcomes:

• “According to the Reid Technique materials, the process begins with isolating and secluding the subject, followed by an investigator’s friendly rapport building that suddenly ends with the investigator saying they’re absolutely certain of the subject’s guilt.”

We do recommend that interviews and interrogations take place in a private setting, but we never teach investigators to detain non-custodial suspects or to isolate suspects and prevent them from contacting others. In a custodial interrogation, the suspect is advised of their Miranda rights and if they invoke those rights the interrogation is immediately terminated.

We never teach or recommend that the interrogator should try to increase the suspect’s feeling of despair or hopelessness. In fact, we teach that it is improper to tell the suspect that he is facing inevitable consequences. We reference numerous cases in our book in which threatening inevitable consequences can be a high-risk factor in causing a false confession.

It is interesting to note that the U.S. Supreme Court understands the need for interrogations to be conducted in a private setting: “Often the place of questioning will have to be a police interrogation room because it is important to assure the proper atmosphere of privacy and non-distraction if questioning is to be made productive.” [Culombe v. Connecticut (1961) 367 U.S. 568, 579.]

• “Investigators present to subjects fabricated physical evidence and fictitious statements from supposed co-conspirators, and then lie to subjects about the investigators’ knowledge of the facts of the case and subjects’ guilt.”

With respect to misrepresenting evidence, in 1969 the United States Supreme Court ruled in Frazier v. Cupp that misrepresenting evidence to a suspect (in this case falsely telling the suspect that his accomplice had confessed) “is, while relevant, insufficient in our view to make this otherwise voluntary confession inadmissible. These cases must be decided by viewing the ‘totality of circumstances....’ ”

We teach the following guidelines regarding this issue:

Introducing fictitious evidence during an interrogation presents a risk that the guilty suspect may detect the investigator’s bluff, resulting in a significant loss of credibility and sincerity. For this reason, we recommend that this tactic be used as a last resort effort.

This tactic should not be used for the suspect who acknowledges that he may have committed the crime even though he has no specific recollections of doing so. Under this circumstance, the introduction of such evidence may lead to claims that the investigator was attempting to convince the suspect that he, in fact, did commit the crime.

This technique should be avoided when interrogating a youthful suspect with low social maturity or a suspect with diminished mental capacity. These suspects may not have the fortitude or confidence to challenge such evidence and, depending on the nature of the crime, may become confused as to their own possible involvement if the police tell them evidence clearly indicates they committed the crime.

We never teach to fabricate evidence.

• “Interrogators and interviewers are generally no better at detecting lies than pure chance; they’re correct about 50% of the time. Academic studies have also demonstrated that the Behavioral Analysis Interview method, a mainstay of the Reid Technique — in which investigators determine that subjects are lying and thus guilty — isn’t scientifically valid.”

Most of the detection of deception research studies that are referenced involved studies that were conducted in the laboratory using students to commit mock crimes. There are a number of reasons that laboratory studies are generally not applicable to real-life situations:

When researchers attempt to design studies that more closely approximate the setting of real-life field interviews, they show a marked increase in the ability of researchers to detect deception. Consider the following:

A study published in Human Communication Research by researchers at Korea University, Michigan State University and Texas State University -- San Marcos found that using active questioning of individuals yielded near-perfect results, 97.8%, in detecting deception. [Timothy Levine, David Clare, J. Pete Blair, Steve McCornack, Kelly Morrison and Hee Sun Park, “Expertise in Deception Detection Involves Actively Prompting Diagnostic Information Rather Than Passive Behavioral Observation,” Human Communication Research (40) 2014.]

An expert using the Reid Technique interrogated participants in the first study – this expert was 100% accurate (33 of 33) in determining who had cheated and who had not. The second group of participants were then interviewed by five U.S. federal agents with substantial polygraph and interrogation expertise. Using a more flexible and free approach (interviews lasted from three minutes to 17 minutes), these experts were able to accurately detect whether or not a participant cheated in 87 of 89 interviews (97.8%). In the third study, non-experts were shown taped interrogations of the experts from the previous two experiments. These non-experts were able to determine deception at a greater-than-chance rate -- 79.1% (experiment 1), and 93.6% (experiment 2).

“This research suggests that effective questioning is critical to deception detection,” Levine said. “Asking bad questions can actually make people worse than chance at lie detection, and you can make honest people appear guilty. But fairly minor changes in the questions can really improve accuracy, even in brief interviews. This has huge implications for intelligence and law enforcement.”

• “To be clear, the Reid Technique, and similar high-pressure police interrogation techniques are extremely effective at generating confessions. However, the courts might rule that investigators coerced confessions and therefore rule them inadmissible.”

Here is what the courts say about the Reid Technique:

In People v. Elias (2015 WL 3561620) the Appeals Court pointed out several prescribed Reid procedures that were not followed by the investigator, resulting in a confession that was found to be involuntary:

In US v. Preston [F.3d ----, 2014 WL 1876269 (C.A.9 (Ariz.)] the U.S. Court of Appeals reviewed the confession of an eighteen-year-old with an IQ of 65. The court pointed out that the investigators did not follow the cautions Reid suggests when interviewing individuals with mental limitations.

From U.S. v. Jacques [United States v. Jacques, 784 F. Supp. 2d 48 (2011)]:

“In his declaration and at the hearing, Professor Hirsch explained that the primary cause of ‘coerced compliant’ confessions are certain interrogation methods employed by law enforcement, including a widely used method known as the Reid technique….Beyond his own intuition, however, Professor Hirsch offered no basis for concluding that these tactics had any tendency necessarily to cause false, rather than true, confessions.

“In sum, the proffered expert testimony to the effect that the Reid technique enhanced the risk of an unreliable confession lacked any objective basis for support…. Although Professor Hirsch insisted that ‘there is a wealth of information about the risks of the Reid technique,’ he could point to none.”

In State v. Belaunde (December 2019) the Superior Court of New Jersey, stated in their opinion that, “No case supports the contention that using the Reid technique renders an adult’s confession inadmissible.”

In July 2014, at the National Association of Criminal Defense Attorneys conference, the attorneys were encouraged to use the information on our website and our book, “Criminal Interrogation and Confessions,” as a reference for proper police practices. During the presentation, Attorney Nirider told the audience that, “There’s a lot of gold in the Reid interrogation manual and on reid.com and we really....encourage you guys to go there and cite that material.”

Social psychologists oftentimes try to suggest that the Reid Technique causes false confessions, but such statements are clearly not supported by the evidence. False confessions are not caused by the application of the Reid Technique; they are usually caused by interrogators engaging in behavior that the courts have ruled to be objectionable, such as threatening inevitable consequences, making a promise of leniency in return for the confession, denying a subject their rights, conducting an excessively long interrogation, denying the suspect an opportunity to satisfy their physical needs, etc.

In one study the author examined the first 110 DNA exoneration cases reported by the Innocence Project. The author reported that, “This study failed to find a single false confession of a cognitively normal individual that did not include the use of coercive tactics by the interrogator…” The author identified coercive interrogation tactics as “the use of physical force; denial of food, sleep or bathroom; explicit threats of punishment; explicit promises of leniency; and extremely lengthy interrogations.” [J. Pete Blair, “A Test of the Unusual False Confession Perspective: Using Cases of Proven False Confessions,” Criminal Law Bulletin (Vol 41, Number 2).]

• “In 2017, Wicklander-Zulawski and Associates, which calls itself the leading training company in the world on interrogation techniques, stated that it would no longer teach the Reid Technique because of the risk of false confessions.”

NOT EXACTLY! See the article, “Don’t Be Fooled - They use the core elements of the Reid Technique” we published in 2019 on our website.

In conclusion, when authors write about the Reid Technique, they oftentimes “rehash” inaccurate information that they picked up from other publications, and never conduct any independent research. On our YouTube channel, we have over 30 video presentations on various aspects of our interview and interrogation procedures, and on our website under the resource heading, Investigator Tips, we have numerous articles that clearly detail and address many of the issues outlined above. If our Best Practices and Core Principles are followed, the Reid Technique is the most effective and impartial process for conducting investigative interviews, and when appropriate, interrogations.

Joseph P. Buckley is president of John E. Reid and Associates, Inc. Contact him at jbuckley@reid.com.