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.

Read the rest of the article and find more exclusive content on Fraud-Magazine.com.

 

5 Background Check Red Flags You’re Probably Missing

GUEST BLOGGER

Dennis Lawrence, CFE

Lawrence is a former U.S. Army Counterintelligence Special Agent and Investigations Manager at a publicly traded software company. He is a graduate of The Johns Hopkins University.

Whether vetting a new employee or an expert witness, we’re all familiar with the basic components of a background check. The industry standard includes a comprehensive criminal records search along with verification of educational credentials, employment history and professional licenses. Perhaps civil litigation searches and a credit report are thrown in as well. But are your background checks exploring the issues below that aren’t as easy to discover and could do the most damage?

  1. Secret companies and conflicts of interest
    Side businesses are becoming increasingly common as it is simpler today than it has ever been to set up your own website and LLC. However, these entrepreneurial projects aimed at earning extra income can potentially lead to conflicts of interest or outright fraud. How valuable would it be to learn that the new head of your IT department is purchasing marked up equipment and services from a company he quietly owns but is managed by a seemingly unrelated party? If you’re serious about boosting your capabilities in this arena, try testing out an investigative database offered by one of the big name legal research providers.
  2. Shell companies used to backstop employment history
    Individuals who have been let go from an employer may sometimes conceal a subsequent period of unemployment by representing on their résumé that they started their own business. Curiously, however, the business was only in operation until they found a new job six months later. I once observed a particularly clever Wall Street professional who had recently been released from prison create an LLC to backstop his employment history during his one-year jail sentence and used a co-conspirator as a professional reference. The bottom line is that all self-employment should be verified using state business records to prove the company’s legitimacy (when available), and copies of 1099s should be collected to verify that the company was actually earning money.
  3. Unverified military career with extraordinary claims
    As a federal employee who served in Afghanistan, I have a healthy respect for our veterans. Since joining Corporate America, however, I have been astounded at the number of background checks I have run on people falsely claiming to be decorated war heroes. In all cases, the purported military experience on their résumés fell outside the seven year scope which they knew was automatically subject to verification. It seemed as if they were hoping no one would bother to go further back and check their military service record. When in doubt about a particularly spectacular representation, request a copy of the individual’s DD-214 (Certificate of Release or Discharge from Active Duty) and follow up with an employment verification. You could learn a lot about someone’s credibility and state of mind.
  4. Recently issued social security number
    Social security number (SSN) validations tend to be overlooked even when they are included in a background check report. But what if your senior consultant purportedly born and raised in Ohio was only issued an SSN five years ago? A change in SSN, which is often accompanied by a name change, is a great way to start over in life, especially if your intent is to evade public records searches. A licensed attorney once vetted by our team went to extraordinary lengths to cover up his former life by using precisely this formula, albeit without success. The Social Security Administration offers a free SSN validator for registered users, so there is no excuse to refrain from conducting this basic due diligence and taking a moment to review the results.
  5. Inappropriate behavior on internet message boards and social media sites
    With the amount of time and resources spent verifying an individual’s résumé and searching online databases, it is ironic how often we forego using free sources of intelligence online. Facebook and LinkedIn searches are common sense, but what about slightly less obvious internet footprints? Reverse tracing a phone number on Google can lead to a scandalous internet message board posting, and searching for an email address can reveal a blog with loyalties to causes that may be of value in a litigation or investigative context. 

Use your creativity when examining someone else’s life – you never know when they could be using their creativity to undermine your job as an investigator.

Author’s Note: This article is for informational purposes only. It is the reader’s responsibility to ensure compliance with all applicable laws when conducting investigative activities.