Native Texan Pioneers Fight Against Dental Fraud & Embezzlement

MEMBER PROFILE

Bryant Truitt, CFE 
Founder and CEO 
Brytan & Associates, Inc.  
San Antonio, Texas 

Bryant Truitt, CFE, Founder and CEO of Brytan & Associates, Inc. found his calling in preventing health care fraud, specifically for dentists and oral surgeons, over a casual conversation with his dentist more than 15 years ago. “I was in my dentist’s office when he admitted that he’d been ripped off for $54,000. I said I’d like to look into it for him. Within a week, an oral surgeon friend told me he’d been ripped off for $120,000,” Truitt said. “I was seeing a terrible pattern — people who worked long, hard hours to help others were losing their futures. I wanted to help.” Truitt started his own firm shortly after that visit to his dentist, and now has clients all over the U.S. and Canada. He and his team have helped more than 400 practices fight back against the fraudsters who stole from them.

How did you become passionate about fighting fraud?  
I have such a high regard for the health care providers who work hard and don’t deserve to have people they trust steal from them or abuse their jobs. I am passionate because I have such a wonderful team to help me who also want to make a difference. Together, we have more than 100 years of dental and health care experience. We put a lot of effort into staying current on health care best practices, as well as the fraud research and information from the ACFE. We get a chance to work with top CPA firms, defense attorneys and practice management companies in the U.S. and Canada. And, finally, it’s easy to be passionate when I see people learn how not to be victims of fraud or embezzlement because of what I’ve said or taught them.

What do you wish someone had told you about your career when you were just starting out?  
Most of our clients come to us after the crime has been committed. I wish someone had told me when I was starting out that although people are concerned, they think that these crimes only happen to others. I also wish someone had helped me see that even those who want to make corrections in their business practices literally have no time, let alone energy. When you work straight through 32 hours a week, this only leaves eight hours to manage a practice. The fraudster or embezzler has all 40 hours to come up with and put schemes in place, set up gangs, etc. while their boss thinks they are only doing the work assigned to them. I don’t believe we will ever totally prevent fraud. But if you take action, you can slow it down or lower the losses. Unfortunately, it’s difficult to communicate to clients the real value of taking those actions and doing the investigation. To someone new to fraud, this can be hard to understand or take.

What advice do you have for those looking to open their own business or consulting practice?  

To make any business idea successful there has to be an underserved market. My best advice is to find that market using strong research practices and a realistic business plan. Then, make sure you can add true value to these customers. You must also be willing to struggle and deal with selling an intangible that, if you do it right, they won’t ever see because there will be no losses. Be available, be a great listener, and be well-organized, flexible and passionate.

Read Bryan's full profile in the ACFE's online Career Center.

My First Time in Prison

GUEST BLOGGER

John D. Gill, J.D., CFE
ACFE VP of Education

The stories are true. When a three-inch thick steel door (operated by a correctional officer behind bullet-proof glass) closes behind you with a deafening metal “thud,” you realize you are in a different world. You are not free to do as you like. Where you go, where you sit and what you can carry on your person are tightly controlled. And although this seems eerily similar to flying on a commercial airliner, this environment was completely new to me, because, as I will explain, this was my first stint in prison.

Fortunately for me, my time “in the joint” only lasted a couple of hours. I traveled to Livingston, Texas, to visit a prisoner, Steven Jay Russell. Russell stole about $800,000 from his employer, and now he is serving a life-sentence in a Texas maximum-security prison. Now Texas does have a reputation for stiff sentences, but the life sentence was not for the fraud he originally committed. You see, Steven escaped from prison four times. And as he found out, the state of Texas does not take kindly to its prisoners walking out the door without permission.

Russell’s case has obtained some notoriety. He has been the subject of several articles and a book: I Love You Phillip Morris: A True Story of Life, Love, and Prison Breaks by Steve McVicker. The book was adapted into a movie in 2009 starring Jim Carrey and Ewan McGregor.

I wrote to Russell earlier this year to see if he would be interested in talking to me. It might surprise you to learn that I write to convicted fraudsters quite often. Before the ACFE was founded in 1988, Dr. Joseph T. Wells, CFE, CPA, discovered that a great deal can be learned about fraud by talking to the people who commit it. He and Jim Ratley, CFE, have interviewed dozens of offenders, and they were fortunate enough to have videotaped most of these. These clips have been used in our training courses for more than 25 years.

I have also enjoyed interviewing fraudsters. You can learn a great deal about what motivates these individuals. In Russell’s case, it was simple greed — he wanted money.

Originally, he had a good job working for a food service business, but he was fired (he alleges) for being homosexual. To earn money, he began a series of insurance frauds – mainly “slip and fall” cases in retail stores. He soon got caught and received a three-year sentence. While in prison, he met Phillip Morris, and they fell in love. Later, Russell and Morris were released on parole and started a life together. But Russell did not want to settle for second-best.

Needing a generous income, Russell falsified his résumé to get hired as a chief financial officer for a medical management company. This company typically made payments to physicians on behalf of insurance companies. If a payment was returned by a doctor because it couldn’t be verified, Russell would simply deposit the check in a separate company bank account he opened. He withdrew money from this account to fund his increasingly lavish lifestyle. Over the course of just a few months, he stole around $800,000.

He wasn’t caught by management, internal audits or external audits. He was tripped up when he used funds from the company account to refinance his home mortgage. The bank thought it suspicious that funds for the down payment were coming from a business account. They called the company to verify, and the jig was up.

Russell received 45 years for his embezzlement, but not to be deterred, he escaped soon after by using highlighters to dye his prison uniform green and walk out of the prison infirmary posing as a doctor. But this ingenious escape did not stop him from getting caught and going back to prison. His escapes and frauds are chronicled in the book and the movie. He faked an AIDS diagnoses and symptoms to escape from a treatment center, and he posed as an attorney, a judge and an FBI agent to get either himself or Morris transferred or released from various confinements.

Ultimately, he was sentenced to more than 150 years in prison for both the frauds and the escapes. His release date is July 12, 2140. Presently, he is in solitary confinement, and has been for the last 18 years. He is released one hour a day to shower and exercise. He has no physical human contact whatsoever. When I spoke to him, Russell was sitting in a small booth with bullet-proof glass in the front and steel bars in the back. We spoke using telephone receivers beside the glass.

Amazingly, he is not bitter. In fact, I found him quite likable. He says solitary has given him a lot of time to think (no argument there), and he is certain that he will not repeat his mistakes. He says that despite his long sentence, he is hopeful that he may get paroled in the next five years. I would love for him to speak at an event to illustrate that sometimes trust can be misplaced. Russell was a master at gaining trust, and then using that trust for his own purposes. Listening to his story is a reminder to stay on guard, and that even the most likable person can have an ulterior motive.

I am asking the prison officials for permission to conduct a video interview to record more about his story and share it with ACFE members.

If you know of a fraudster who might be willing to be interviewed, please contact me at JGill@ACFE.com. I am looking for anyone who is willing to talk. I am willing to interview them almost anywhere, but I’ll have to confess, I would rather interview them in a hotel meeting room, and not behind barbed wire and steel doors. My few hours in a maximum security prison were enough for me to give up all my criminal plans.

Investigating Residency Fraud

SPECIAL TO THE WEB

Philip A. Becnel IV, CFE

On a chilly spring morning, Zainab Al-Shammary sits in the passenger seat of her car — almost a football field's length from a townhome in Prince George's County, Maryland. Anyone who glanced at her would assume she's waiting for a friend. But Zainab has carefully parked her car facing away from the townhome, and she keeps an eye on the house through her rearview mirror. A woman and her preschool-aged son emerge from the townhome, and Zainab swivels into action. She steadies her camera with its 300mm lens on the car seat and holds down the automatic shutter to take a series of photos of the child and her mother as they get into their car and drive off to school.

Zainab is a private investigator, but she's not investigating a child custody matter. As team lead for residency fraud investigations at my firm, she's working under a contract we have with the District of Columbia Office of the State Superintendent of Education (OSSE). 

EXPLOITING THE SYSTEM

Residency fraud occurs when parents who reside outside of a school jurisdiction lie about their residency on enrollment forms so their children may attend public charter schools in jurisdictions where they don't reside.

"Residents are denied access to tuition-free education and services because non-residents are illegally attending schools in their place for free," says Zainab. "It's not only unlawful, but it's unfair that residents are placed on waiting lists due to others cheating and exploiting the system."

One parent of a D.C. preschooler who testified via email at a 2011 D.C. council hearing complained that her daughter's spots on the waiting lists for three of their preferred schools ranged from 200 to 400. (See Council of the District of Columbia Committee of the Whole, Committee Report, December 20, 2011.) This makes some of the District's public charter schools about as competitive as an Ivy League university.

Although this problem exists in many school jurisdictions throughout the U.S., it's a particularly serious problem in the District, which encompasses less than 70 square miles sandwiched between Virginia and Maryland. Parents who commute from these states into the city will sometimes use the D.C. addresses of relatives or friends to falsely claim residency. This enables them to take advantage of the District's highly desirable public charter school programs — including free, full-day preschool and pre-kindergarten programs — all while not paying D.C. taxes. In other words, these parents are getting a free, high-quality education for their children at the expense of D.C. taxpayers.

Read the full article on Fraud-Magazine.com.

District Attorney Looks Ahead to New Career in Private Sector

MEMBER PROFILE

Douglas Lowe, CFE
Palestine, Texas

Douglas Lowe, CFE, has served as Anderson County Criminal District Attorney (D.A.) for 16 years. He is based in Palestine, Texas, where he worked in private practice as a certified personal injury trial lawyer prior to becoming a D.A. Recently, Lowe decided to become a Certified Fraud Examiner (CFE), and he earned the credential this spring after attending the Phoenix, Arizona CFE Exam Review Course.

Becoming a CFE was a natural choice for Lowe after his work as a D.A. stirred a passion for fighting fraud. 

“Through my work as District Attorney I have seen the cost of fraud to our community,” Lowe said. “There may not be a ‘fraud tax,’ but the losses to consumers, businesses and taxpayers are unreasonable and drain resources.”

Lowe added that part of the draw to this type of work is the challenge posed by fraudsters, and the satisfaction that comes from foiling their schemes.

“White-collar criminals can be very ingenious and creative in finding the weak spots in financial systems,” Lowe said. “I enjoy the challenge in identifying the scheme and then bringing them to justice.”

These days, change is in the air for Lowe, and he looks ahead to returning to his own practice.

“After being District Attorney for 16 years, I am excited about moving [back] to the private sector,” Lowe said. “I want to continue fighting fraud and being involved with companies, governments and individuals who want to minimize their losses due to white-collar crime.”

Lowe said that being a CFE will help him immensely in his future fraud fighting.

“I have tried numerous white-collar crime cases, but the CFE certification will enhance my credibility and strengthen my skills,” Lowe said. “I feel confident the CFE certification will help expand my client base and open doors to opportunities that otherwise would not be accessible.”

When he’s not bringing bad guys to justice, Lowe stays busy coaching his daughter’s YMCA all-girls soccer team: “We don’t win that many games, but we have fun and look snappy in our uniforms.”

“I also like remodeling, home improvement projects and physical fitness, especially weight training,” Lowe said.

Read more ACFE member profiles in the ACFE's online Career Center.

'Buy Low, Sell High': Rory the foreclosure fraud lizard king

SPECIAL TO THE WEB

Rory Sykes was about a foot shorter than Bam-Bam Baker but just as clever. He briefly operated as a traditional real estate agent before opening his own business, Sykes Real Estate Services, in 1999, which focused on the acquisition of residential properties in the late stage of foreclosure and quick-turnaround sales. "Buy low, sell high" was Rory's secular mantra.

Rory had a deep understanding of the complex minutiae of the foreclosure process and an equally deep understanding of the lack of scrutiny exercised on the contents of documents filed in the county recorder's office. Rory wanted to gain an advantage over his numerous competitors in acquiring specific properties after a sheriff's foreclosure sale, and to enhance the likelihood of owning these properties at the end of the redemption periods at the least possible expense. So he filed documents — affidavits, lien notices, documents of conveyance — containing one or more false statements designed either to discourage redemption by others or to minimize the cost of his acquisition of the properties. He also timed the filings of these fraudulent documents so that no others could have a good chance at redeeming.

FALSE FILINGS GALORE

The Hennepin County Attorney's Office detailed Rory's acquisitions of seven properties in its case against him. In three of these acquisitions, Rory filed Notices of Lien for Payment of Property Taxes, Notices of Intent to Redeem Under Property Tax Lien, an Affidavit of Amounts Owed and a subsequent Corrected Affidavit of Additional Amounts, all falsely stating he or Sykes Real Estate Services had paid property taxes on the parcels.

In five of these acquisitions, Rory filed other Affidavits of Amounts Owed on Redemption or on the Sheriff's Certificate, which falsely claimed expenses that were never incurred, that were misstated as to type of expense (certain expenses incurred in the acquisition of a foreclosed property are allowed, others are disallowed) and/or that were grossly inflated.

In two of these acquisitions, Rory filed quitclaim deeds (QCD) conveying the properties from the owners to him after he had directly paid each of these owners $2,500 and $6,250 respectively. (A quitclaim deed transfers the owner's interest in a parcel of real estate to another with no warranties of the status of the property title.) A false statement was printed on each of these QCDs — "total consideration is less than $500" — which resulted in the minimum deed tax assessment of $1.70 rather than an accurate deed tax calculated on the actual consideration paid to the owners.

In one acquisition, Rory filed an Assignment of Sheriff's Certificate for the benefit of and on behalf of Sykes Real Estate Services, falsely stating "[t]he total consideration for this transfer of property is $500 or less," for which a deed tax of $1.70 was again assessed. This property was being foreclosed based on a default of townhome association dues of a fairly minimal amount.

In one acquisition, Rory filed a mortgage that falsely stated that it had been issued "in consideration of the sum of $5,000 to Mortgagor in hand paid by Mortgagee" rather than the accurate figure of $6,250, and filed a Notice of Intention to Redeem upon the mortgage containing the false statement. In another acquisition, Rory filed a mortgage from himself to his corporate alter ego, Sykes Real Estate Services, and a subsequent Mortgage and a Notice of Intent to Redeem from the Mortgage, signed by Rory, resulting in an issuance of a Sheriff's Certificate of Redemption to Sykes Real Estate Services.

BUY LOW, SELL HIGH

While the false statements in these documents may seem picayune to the outside observer, they had their desired effect. Rory acquired certain properties at amounts significantly beneath their true market value and cost — after he'd discouraged others from redeeming or buying them — and shortly afterward resold the properties at substantial profits. Owners or estate heirs redeemed back other properties or competitors acquired them after they paid inflated amounts back to Rory. One of the property owners was in prison, another was suffering from profound lung problems that required him to use an oxygen tank, another was dead, two were elderly and one was being foreclosed upon for default on a $15,000 second mortgage that would have been forgiven had she been able to remain in the property for a few more years. Buy low, sell high.

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