On the defense: The view from the other side of the courtroom

Fraud examiners are recognized for their work on the prosecution’s side, but many CFEs lend their expertise and litigation support to the defense as well. The author talks to CFEs with experience working on defense teams about their processes, challenges they face and ways their careers have benefited from defense work.

When Tiffany R. Couch, CFE, CPA/CFF, was hired to represent defendants in a money laundering case, the charges against her clients appeared straightforward. In a 16-count indictment, the U.S. government alleged the owners of multiple tobacco shops on the Puyallup Indian Reservation in Washington state conspired with tobacco wholesaler and retailer company TK Mac to commit multiple counts of wire fraud, money laundering and trafficking in contraband smokeless tobacco. The government estimated $12.5 million in criminal losses. 

However, as the Vancouver, Washington-based CEO of Acuity Forensics and her team examined the claims, they noticed mistakes. The government alleged the owners didn’t accurately record their purchases and sales, but in their forensic investigation, the team learned that the owners had used a separate point-of-sale system to track their inventory and sales. Couch also examined the allegations of a “check for cash scheme” and discovered legitimate invoices that prosecutors had incorrectly labeled “bogus.” The government significantly over-calculated the tax loss.

Because of what Couch’s team found, the defense was able to get the number of charges decreased and a shorter prison sentence for the clients. As she explained during her session at the 34th Annual ACFE Global Fraud Conference, what began as a $12.5 million indictment actually turned out to be a $3 million loss, with one count of conspiracy to commit money laundering. Her thorough examination of the data revealed a 78.07% overstatement of criminal losses in the original indictment.

Fraud examinations don’t end at detection; the work of anti-fraud professionals often extends to litigation. And while many might think they primarily provide analysis and expertise for the prosecution, fraud examiners also lend their skills to the defense. Fraud Magazine talks with Certified Fraud Examiners (CFEs) with decades of experience working with defense teams. They offer insights on the roles defense experts play, unique challenges that come with working with defense teams and benefits for fraud examiners who embrace working for “the other side.”  

Countering prosecution arguments

Both parties in adversarial legal systems are responsible for gathering and interpreting evidence in financial crime cases. However, the processes are different when you’re working with the defense team compared to the prosecution. 

Prosecution experts intend to create a narrative of a case based on the evidence at hand to explain the defendant’s role in a crime. Pending charges are based on that narrative. 

In contrast, defense experts are expected to fact-check or verify the prosecution’s claims. Their role is to counter the prosecution, rather than come up with their own explanation based on the evidence. Some are even asked to provide opinions specifically to counter prosecution arguments to create reasonable doubt of the defendant’s role in the alleged crime. 

“When you come in hired by the defense counsel, the scheme is already fully alleged. Then the question is, do the contemporaneous records really support [the claims], or could there be some exculpatory reason that these transactions happened this way?” Janet M. McHard, CFE, CPA/CFF, tells Fraud Magazine. She’s the founding partner of The McHard Firm, a forensic accounting firm in Albuquerque, New Mexico. 

Rather than investigating whether an alleged fraud occurred, a fraud examiner working on the defense already has the alleged scheme laid out for them. “So even though the process is very similar, essentially you get handed the scheme on a platter because it’s included in the indictment, and then you already know what to test,” explains McHard.

Defense experts might offer an alternative interpretation of evidence, conduct different analyses or demonstrate flaws in the prosecution’s methods. They’ll also advise defense attorneys about missing or misinterpreted evidence, such as bank statements, deposit records and canceled checks. 

“A big part of my job is asking defense attorneys to get me specific documents,” says Couch. “And if the government didn’t rely on those documents in the first place, there could be a problem with its case.” She explains that the government must provide case documents to the defense as legally required so that the defendant and his or her legal team can mount a defense (which includes verifying the charges against the defendant). According to Couch, if the government built its case and advanced charges without proper evidence, it’s possible to find errors or misjudgments in the charging documents (the indictment). 

Demystifying fraud for the defense

Fraud examiners advise the defense by suggesting additional areas of analysis and weighing in on the strength of evidence in a case. They may clarify complex financial matters for the defense by explaining the flow of money, falsified records, tax laws, interpretations of digital evidence and financial reports. Their expertise can help the defense provide better guidance to their clients going through the criminal justice system. Depending on the jurisdiction, CFEs serving as defense experts may advise counsel on existing evidence and charges and recommend strategies for defense attorneys, such as questions for witnesses or defendants.  

Couch recalls the first time she was called on a defense case. At the time she only had her practice for a couple of years. 

“This high-powered defense attorney calls me and says, ‘I’ve got a case where my client’s been accused of stealing $8 million from Freightliner,’” she tells Fraud Magazine. She explains she felt unsure about working for the defense and held the impression that criminal defense lawyers mainly aim to ensure a guilty person is found not guilty. 

“And so I had another call with the defense attorney, and he says, ‘I have this report from these forensic accountants that I don’t understand, and I just want you to help me understand it. And if she did it, I need you to let me know that she did, and then I need you to let me know how much the loss is.’”

Couch examined the data, found evidence that the client had stolen $8 million and explained the scheme to the defense attorney in a way that was clearer to understand than the initial forensic accounting report. She tells Fraud Magazine that in many of the defense-side cases she’s worked on, the defense needs a better understanding of the alleged scheme. 

“In my experience, defense attorneys don’t rely upon fraud examiners often enough,” says Jeff Grant, founder of GrantLaw, PLLC, a law firm that provides counsel to people accused of white-collar offenses, including during government investigations, sentencing and after release from prison. “CFEs and other experts should be brought in at the very beginning of a case, that way the attorneys are armed with all the information needed to advocate effectively at various stages of a case, including plea negotiations, presentence investigation, sentencing, post-sentencing relief, and now even pardons.”

Derek Ellington, CFE, PI, DFI, a digital forensics expert based in North Carolina, tells Fraud Magazine that fraud examiners work to demystify convoluted processes or technology for counsel. “What’ll happen is somebody gets arrested. A police report is made. The lawyer, who isn’t a technical person, doesn’t understand the technology involved in the alleged crime. And then they’ll have a client who’s trying to provide explanations. ‘My Wi-Fi was hacked. This happened. That happened.’ 

“I’ll work with the attorney to make sure they understand the charges against the client,” says Ellington. “And so, it’s not necessarily about poking holes [in the prosecution’s case]; it’s about making sure the attorney understands the nature of it so they can help the client understand.”

Fraud examiners may provide analyses of the evidence for defense attorneys that might indicate their clients’ culpability in a financial crime case. Defense attorneys may use these analyses to help determine whether a defendant accepts a plea agreement or goes to trial. “If I can provide factual information based on contemporaneous evidence, particularly evidence that’s held by a third party like a bank, frequently the case will settle because suddenly everyone knows what really happened,” McHard tells Fraud Magazine. 

“My goal is to get quality information to people about what actually happened so they have good information from which to make decisions about whether [a case] should be prosecuted, whether this should be pled out and whether their client needs to take the deal that’s on the table if there’s a plea offer.”

Experts who work in accounting also often help determine how much money was lost. “A person who has stolen money is going to be sentenced on two things,” says Couch. “One is the nature of the crime. Was it identity theft? Was it theft? Was it fraud by deception? The second thing they’re going to be sentenced on is the amount of the loss.”

As Couch explains to Fraud Magazine, in the U.S., the higher the monetary losses, the longer the sentence. “It’s really important for a forensic accountant or a fraud examiner to make sure that loss number is correct,” explains Couch. “Because if it’s too high, they’re going to go to prison for a lot longer than they need to.”

Some attorneys aren’t familiar with financial crime cases, so experts for the defense may help them understand the charges a defendant is facing. “My job as a digital forensics expert and fraud examiner is to understand the laws that govern my profession better than the attorneys I’m working for. That’s why they hire me,” Ellington tells Fraud Magazine. 

When attorneys lack experience defending people accused of financial crimes, it’s difficult to provide a solid defense for their clients. A criminal defense attorney with considerable experience in forensic science, blood evidence and ballistics analysis for a murder trial may not know as much about deciphering a paper trail for a fraud case, according to McHard.  

“People who work as public defenders may be unwilling to take paper cases if they’ve never worked on them before,” says McHard. “They might feel they don’t know where to start.”  

“There are a lot of ways of looking at things, and attorneys don’t have the same skills and experiences as fraud examiners,” says Grant. “The best fraud examiners understand that they’re part of a team trying to solve complicated problems. Everyone on the team will have their own expertise and point of view.”  

The ‘wrong side’ of the courtroom

A challenge for defense teams generally stems from common misconceptions of the role of defense counsel and experts. Popular media, including television series such as “Law & Order” and “CSI: Crime Scene Investigation,” make it appear that the goal of defense counsel is to help the guilty avoid punishment — to help “get them off.” The fact that many countries’ judicial systems purposely set up the prosecution and defense as adversaries contributes to the belief in a “right” side versus a “wrong” side or viewing one party as “good” and the other party as “evil.” The adversarial system is intended for the defense to present a story that counters the prosecution by creating reasonable doubt, but sometimes the defense is perceived as untrustworthy.

“Prosecutors will often take advantage of having the credibility of the state behind them,” Ellington tells Fraud Magazine. “Police officers, detectives and defense attorneys are seen as sincere public servants, which many of them are. They’ll contrast that with defense experts, who must be paid, and are paid by the defendant or state if it’s an indigent situation.

“The prosecution will try to build off the impression that the police officer is just there doing their job while the defense expert is there because they’re getting paid to say anything. They create a perception of defense experts as ‘hired guns’ who will say whatever, do whatever, misrepresent — to free people.”

Ellington advises fraud examiners who do get a case that goes to trial and are called to the witness stand not to be flustered or embarrassed if prosecutors attempt to undermine their credibility by asking how much they’re being paid. He says experts shouldn’t be ashamed of charging a fair rate for what they do and should answer confidently and in a straightforward manner.

CFEs who serve as defense experts argue that the defense teams that hire them are just as focused on understanding the facts in a case as the experts are. “The media falsely portrays defense claims,” says Couch. She tells Fraud Magazine that the perception that defense attorneys only work to get the defendant out of being punished has been the opposite of her experience. “I’ve never to this day had a defense attorney say those words. Defense attorneys really just want to know what happened so that they can then figure out how to help their client.”
 
McHard reiterates, “Criminal defense attorneys are some of the best and brightest people I’ve ever met, and they’re really impassioned about the work they do to appropriately defend their clients.”

And what if you do find an attorney who believes their job is to set the defendant free regardless of guilt? Couch says, “If you get that unscrupulous attorney, you just walk away. You don’t need them as a client.” 

Always the away team

In criminal cases, especially in the U.S., the prosecution has a lot more control over the progression of cases than the defense. “The prosecution has a huge advantage in criminal cases, in so many ways it’s hard to even quantify,” Ellington tells Fraud Magazine. “The best way to look at it is if you’re playing for the prosecution, it’s always a home game. And if you’re with defense, you’re always the away team.” 

Among other tasks, the prosecution is responsible for charging an accused party, including specifying the time and charges. They control the calendar and scheduling and set the pace leading up to and through a trial, leaving the defense at a distinct disadvantage. Ellington explains, “If you’re working for the defense, you’re probably going to be working on a case that the prosecution has been working on for a while. So, you’ve got to hit the ground running. The clock is ticking.”

Prosecutors also control the use of witnesses on both sides. “If the defense wants to use a witness, the prosecution has a lot of ability to impact whether that witness can testify for the defense and can exclude the defense’s evidence,” says Ellington. “They have much more power than the defense has, and the defense doesn’t have as much power to push back against the prosecution.”

Defense teams obtain evidence in a case from the prosecution, but doing so isn’t always a straightforward process. Couch explains to Fraud Magazine that defense experts might not always get all the evidence that law enforcement has obtained. According to Couch, particularly in federal cases, the government might seize all of the computers, banking information and paperwork. It’s difficult to defend a client who’s been charged and arrested when the government hasn’t yet provided all the documents it seized. 

Couch says that defense experts must ask for the information, and even then, they might not receive everything they need. “I might be dealing with a bunch of PDF documents and not Excel spreadsheets or QuickBooks files or electronic data,” she says. “So, I do think there are challenges because sometimes you’re limited by the documents they have.” 

However, the biggest advantage that the prosecution has over the defense is greater credibility with the judge and jury. According to Ellington, the negative perception of the defense team can extend from the public to the judge, jury and other courtroom actors, potentially biasing case results against defendants. 

Sometimes judges visibly appear to favor the prosecutors, which juries may notice. Ellington tells Fraud Magazine, “I worked a case in which the judge would interrupt the defense attorneys. They [the defense] would ask for things; she would refuse. And that can affect the jury’s perception of the defense if the judge is treating them as, again, the away team.” 

Ellington served as a defense expert during the Karen Read murder trials. He’ll cover the case at the upcoming 37th Annual ACFE Global Fraud Conference in Boston, Massachusetts, and virtually. He says the judge seemed courteous towards the prosecutors and was curt towards the defense, and she granted motions to the prosecution that she denied the defense. Read’s defense attorney, Alan Jackson, recounts in an interview the challenges the defense faced and the perceived lack of impartiality from the judge.    

Disadvantages of a smaller budget

Defense teams are also often at a disadvantage when it comes to budget. Ellington tells Fraud Magazine that compared to the prosecution, defense teams may have much more limited budgets, which can blunt experts’ effectiveness. 

While the public perception is that financial crime defendants are wealthy, the reality is that most can’t afford to hire seasoned criminal attorneys to represent them. Many have spent the disputed funds, and the money they do have may be locked in inaccessible bank accounts or reserved for restitution. “In a lot of white-collar crime cases, people are pretty much bankrupt the moment they’re indicted,” Ellington tells Fraud Magazine. 

“Most white-collar defendants are not wealthy, and never were,” Grant confirms. “And if they made good livings, by the time of their points of entry into the criminal justice system, they’ve lost their livelihoods and are dedicating their resources to their criminal defense.” 

When defense experts work with indigent clients, the judge in the case determines both whether the witness can testify and how much they’ll be paid. Ellington notes, “If we’re doing indigent defense services work, it’s for a rate that’s usually less than half of what our normal rate is, and again it’s regulated by the judge, who must approve it.”

“Figuring out how to target my work so I can get answers to the really specific questions is one of the big challenges,” McHard tells Fraud Magazine. “After I’ve gotten the story out of the defense attorney, I narrow it down to fit the budget they can get for me.”

A mindset shift

A common perception for many people is to view the defense as the enemy and the defendant as guilty. For fraud examiners considering working with defense, Couch advises, “The mindset shift is the No. 1 thing you’ve got to overcome. You must look at every case with a healthy dose of professional skepticism, no matter if you’re working to put the case together for the victim or if you’re being asked to look at it on behalf of the defendant.”

To encourage this mindset shift, it might be helpful to consider how much people’s lives change once they’ve been investigated for a criminal offense. According to McHard, when someone is accused of a financial crime, their life may be completely upended. Their bank accounts are often frozen, and their relationships may suffer, including divorce and estrangement from friends and family. They may also lose their jobs and financial livelihood, even before allegations have been substantiated and before a jury has rendered a verdict. 

The consequences of an accusation become even more harmful when the claims are unsubstantiated. McHard explains that if there’s a breach of professional standards in the expert’s report that leads to an unwarranted indictment, the loss from that, including financial wherewithal, is usually something that can’t be undone. 

Not all those who are charged are guilty. McHard notes, “My philosophy is that I don’t mind if someone goes to jail for what they did, but no one should ever go to jail for what they didn’t do.”

Couch echoes McHard’s sentiment. “We can be equally helpful and amazing working on the defense.”

Ellington tells Fraud Magazine, “I’ve helped put a lot of people in jail that deserve to be in jail and needed to be in jail. But the most rewarding work that I’ve done is when I’ve helped people who I know are demonstrably innocent.”

 

Grant emphasizes the importance of the work that fraud examiners can do to help those who are convicted to reenter society. “Prison is not the worst thing that can happen. Not having a comeback story is the worst thing that can happen,” he tells Fraud Magazine. “So, defendants and professionals who keep their eye on the long game, in my experience, come out way ahead. 

“A good fraud examiner can help dissect things from the very beginning. What went wrong and what went well. What would and should someone do differently when they’re eventually given a second chance (and almost all get a second chance).”

Play for both sides

The defense experts featured in this article encourage fraud examiners to work engagements for both the defense and prosecution. “Working on the defense has helped me be better on the prosecution side,” Couch says. “I can put better cases together because I understand what questions and information the defense is going to want to know.”

In a trial setting, experts must demonstrate that they’re qualified to offer opinions. The prosecution will ask defense witnesses to state how many times they’ve worked with defense counsel as part of qualifying them as experts. Judges, attorneys and juries consider those who have experience working with both prosecution and defense counsel to be more qualified, versatile and less biased compared to those whose experience is primarily with prosecutors.

Ellington tells Fraud Magazine, “One of the things that fraud examiners can do to avoid the perception of being merely a ‘hired gun’ is to balance your workload between working for the prosecution and working for the defense. Because when I go into court and lawyers start accusing me of just being a hired gun, I can point to the work that I do for both sides. The data is the data.”

McHard says she first started working on defense-sided cases when she was referred by Bruce Dorris, J.D., CFE, CPA, the former president and CEO of the ACFE. “Bruce got a call from a federal public defender, and then Bruce called me and said I was the only CFE he knew that he thought might be willing to work on the criminal defense side of cases,” she says. “I was happy to and the rest is now history because my name ended up on a bunch of criminal defense attorney list-servs from which I continue to get work.”

Grant tells Fraud Magazine that more CFEs should consider marketing their expertise to defense lawyers. “I just attended the American Bar Association White Collar Crime Institute conference in San Diego, California, and there were a lot of accounting firms and consultants with booths and hosting events. But of all the attendees there, I didn’t meet anyone who introduced themself as a CFE. This is an opportunity for entrepreneurial CFEs.”

McHard suggests that fraud examiners interested in working for the defense attend and speak at local criminal defense attorney groups. “Many jurisdictions have their own criminal defense bar associations,” says McHard. “Many are local chapters of the National Association of Criminal Defense Lawyers, which maintains a chapter list on their website. Once you get yourself good referrals on list-servs, you’ll start getting calls.”

Challenge misconceptions by remaining impartial

Experts working with both defense and prosecution must remember the golden rule of fraud examination: The job isn’t about determining guilt or innocence in a case but gathering and examining evidence to establish facts. Experts must maintain neutrality regarding an individual’s guilt or innocence and conduct the same fraud examination and analysis regardless of individual beliefs. 

McHard encourages all experts to remember the directive in Section IV of the CFE Code of Professional Standards: “CFEs shall consider both exculpatory and inculpatory evidence.” That means fraud examiners should consider evidence that both points away from (exculpatory) and toward (inculpatory) the accused.

Experts on either side who only seek inculpatory evidence are harming both the accused and the greater legal process. Part of a defense expert’s job is to determine the validity and strength of the prosecution’s case. Sometimes they find that the prosecution has taken shortcuts, whether knowingly or unknowingly.

At the upcoming 37th Annual ACFE Global Fraud Conference, McHard will lead a breakout session about the types of failures she saw when she was hired by a criminal defense attorney. In one case study she plans to cover during the session, a forensic accountant didn’t look at any exculpatory information. McHard tells Fraud Magazine that she could see their bias against the defendant in their report. If the forensic accountant was a CFE, this type of failure could be a violation of the CFE Code of Professional Standards. Even if the forensic accountant is not a CFE, it points to a potential violation of personal ethics.

“I think it’s really important that CFEs, regardless of who’s paying them, understand that they must look at both sides,” says McHard. “Our standards essentially say that if the information is left out, would it cause your report to be distorted? I think that unfortunately, with the pressures on a CFE who’s hired by the prosecution, they don’t understand that even though that’s who’s paying them, those standards still apply to them.”

Similarly, experts working with defense counsel must remember that the job is to find facts, not work to benefit the defendant.

Ellington tells Fraud Magazine, “It’s important for fraud examiners to remember, whether they’re working for prosecution or defense, to remain independent and objective. CFEs don’t make a statement about guilt or innocence. Be prepared, impartial and able to explain the evidence as an objective professional.”

Emily Homer, Ph.D., CFE, is a research specialist for the ACFE. Contact her at EHomer@ACFE.com.