Hooked on Fraud Fighting: How I Found My Passion and How I Give Back Now

GUEST BLOGGER

Alexis C. Bell, MS, CFE, PI, ACFE Regent
International Antifraud Consultant
CEO, Fraud Doctor LLC

I am often asked, “How did you get into fraud?” Though it’s more accurate to say I’m in “anti-fraud” rather than fraud, I understand the question. What made me decide to go down this path?

I am reminded of the time in my life when I was the controller for an international textile firm. By then, I had 13 years of experience in management and nowhere to advance. This was a new company for me. As I settled in, I heard staff complain that what was in the “system” never matched what was out in the warehouse. Being a bean counter where accuracy was paramount, I asked when they last performed a physical inventory. After being met with the deer-in-the-headlights look and realizing they had never done a physical inventory, I announced everyone was coming in that weekend and we were going to straighten out the inventory situation.

alexis-bell-acfe-board-of-regents.jpg

Now that I have the privilege of serving on the Board of Regents for the ACFE, I have the honor of making a difference at the international level.

Alexis Bell, MS, CFE, PI, ACFE Regent

As the least popular person in the building that Saturday morning, it was only a matter of hours before I grasped the full situation. There was a reason things were not lining up. We launched an internal investigation and identified a fraud scheme where the warehouse manager was selling directly to clients and pocketing the cash. We even found completely full hotel rooms floor-to-ceiling with products stolen from our warehouse. In that moment, I realized two things. One, how colossally bored I had been doing “regular” accounting where nothing ever changed but the volume of paperwork. And two, how much fun I had using my accounting skills to help with the investigation. That was it. I was hooked. I made the decision to transition to forensic accounting and never looked back.

After making the jump, I found my new home at the ACFE. It was here that I learned what I needed to about how to investigate fraud. Back then, there were no degree programs. You had to learn on the job. It was my self-study with ACFE training, books and materials that gave me the foundation to quickly understand what I was seeing in the field. I created structure for an environment that at that time had none. I was a sponge for knowledge, learning everything I could get my hands on. What I learned from those materials and mentors often made the difference between being successful during the investigation and not.

Fast forward many years, and I had the honor to give back to the beloved organization that helped me so much in the early years. I served on the local chapter board as the board secretary and then later as the board president. Together, we created outreach programs for our community and shaped the courses that were beginning to arrive in academia. We helped members locate related job openings and brought in truly outstanding speakers for thought leadership in training efforts.

After the ACFE Board of Regents election last year, I attended my first board meeting at the international headquarters in Austin, Texas. I had the opportunity to finally meet the ACFE staff who I had only spoken to on the phone or emailed in the past. I am grateful for the chance to individually meet and speak with every single employee. What struck me was how happy everyone was and how much they loved their job. It was a remarkable experience to meet the people who developed, published, disseminated and advocated the very same material that helped make me successful as an investigator over the course of my career. I was amazed at how much each person understood and appreciated their contribution to making the world a safer place from fraud. It endeared me to the ACFE all the more.

Now that I have the privilege of serving on the Board of Regents for the ACFE, I have the honor of making a difference at the international level. I find that having experience in different regions in the world means I bring a unique perspective to the role of the Regent. Other members bring perspectives from industries, government, academia and insight into what the future landscape holds. The two-year term is short in consideration for all of the ideas the board has for working with the staff and moving the ACFE into the next era. We can’t possibly get it all done within that timeframe. Some of it will have to be completed by the new Board of Regents members. They will bring a fresh perspective and even more possibilities with them. Time is running out to make your selection for the incoming board members. Cash in on your right to vote and make your voice heard.

Make a difference in an incredible organization that is changing how we protect companies from fraud. Vote now!

Forensic Accountant Relies on Skills Learned Outside of the Classroom

MEMBER PROFILE

Ryan Collins, CFE
Manager, Fraud and Investigation Dispute Services
EY 

According to Ryan Collins, CFE, Manager of Fraud and Investigation Dispute Services at EY, the most valuable career lessons he has learned were not taught in school. “Today’s market requires a forensic accountant to possess a different skillset from the traditional accountant, which means most of what you learn in your career isn’t taught inside of a classroom,” Collins said. “Analytical thinking, problem solving, and the ability to think outside the box are some of the most important skills I’ve learned over my career, and continue to employ on a daily basis.”

How did you become passionate about fighting fraud? 
I attended Bentley University where I earned my undergraduate degree in accounting and my MBA. I always figured when I graduated I would take a job in tax or audit. At Bentley, I took a forensic accounting course where I learned about the Enrons, WorldComs and Madoffs of the world. I was immediately hooked. I’m lucky enough to have a career where I can focus on doing well and doing a lot of good.

What is one thing you wish someone would have told you before you began your professional career? 
The one thing I wish someone would have told me before I began my career was that I was going to make mistakes and that that was okay. The first thing I tell our new staff each year is that they are going to make mistakes, probably a lot of them. The important thing when you make a mistake is that you don’t get frustrated or down on yourself. Mistakes are the most powerful learning tools there are.

What value do you see in mentorship, and what advice do you have for someone looking for a mentor? 
For me, mentorship is one of the single most important aspects of career development. I think it’s essential to find a mentor as early in your career as possible. For me, that meant finding someone who was doing the job I wanted to be doing in five years, and understanding the steps they took and the process they followed to be successful. And when I get there, it is just as important to become a mentor, and help guide others along in their careers.

What is a memorable case or project that you have worked on – one that made you feel especially proud? 
A few years ago I was able to perform a pro-bono engagement working with a charity in the Boston area. Early in my career, it was inspiring to see that EY wasn’t only focusing on their financial bottom line, but also the social impact they were having on the community.

What activities or hobbies do you like to do outside of work?  
When I am not fighting fraud, I’m fighting a hook and a slice on the golf course. I love to play the game as much as possible, even when I can’t find a course. And, as a bonus, it’s a great way to develop business relationships.

Ready Ryan's full interview in the Career Center on ACFE.com.

Investigating Words: Forensic Stylometry and its Role for CFEs

GUEST BLOGGER

Christopher Ekimoff, CFE, CPA
Manager, Investigative Accounting & Financial Litigation, Duff & Phelps
Washington, D.C.

Authors throughout history have used pen names for a variety of reasons. In the 19th century, women employed masculine names to remove any bias from publishers (see Mary Ann Evans as George Eliot, and the Bronte Sisters Charlotte, Emily and Ann as Currer, Ellis and Acton Bell).

More recently, certain authors have used noms de plume for notoriety reasons:

  • Stephen King didn’t feel the public would buy more than one book from the same author in a year, so he wrote four novels as Richard Bachman until similarities in the works caught the attention of critics.
  • J.K. Rowling of Harry Potter fame secretly penned a crime novel, The Cuckoo’s Calling, as Robert Galbraith. In an interview with The Telegraph, Rowling admitted “it has been wonderful to publish without hype or expectation and pure pleasure to get feedback under a different name.”

As a forensic accountant, it is hard to communicate to others what exactly I do. With projects and cases varying widely in industry, scope and deliverables, it’s always a stretch to accurately describe the profession in a 30-second elevator speech.

That being said, I jump at the chance when the media covers a story that relates to the work of a forensic accountant. Rowling’s recent admission to the public wasn’t brought about by conscience or advice from her agent, but by a team of linguists and computer programs in forensic stylometry.

One of the members of that investigative team, Patrick Juola of Duquesne University, gives a brief description of forensic stylometry on Language Log:

The basic theory is pretty simple: language is a set of choices, and speakers and writers tend to fall into habitual, or at least common, choices. Some choices come from dialect (the reason an Englishman drives a lorry but an American a truck), some from social pressure (if I need to impress someone with my vocabulary, I can utilize a polysyllabic lexicon instead of just using big words), and some just seem to come. An example of the latter category is in the use of many function words. If you ask yourself where the salad fork is relative to the plate, you quickly realize that it's usually to the left of the plate. Or is it? It's just as likely to be "on" the left of the plate, "at" the left of the plate, or perhaps "to" the left SIDE of the plate. Same fork, same position, and at least four different choices for how to describe it, none of which correspond to any sociolinguistic or cognitive variable with which I'm familiar.

Juola goes on to say that by quantifying and comparing those choices in writing, he and Peter Millican of Oxford University were able to draw conclusions about The Cuckoo’s Calling that led them to believe Rowling was most likely the author. (Read Juola’s complete post here.)

In forensic accounting investigations, we receive information in many forms: transaction data, financial statements, policy documents and emails – as well as prepared media statements, deposition testimony and legal briefs. It is in these latter three that forensic stylometry can help support (or refute) a forensic accountant’s conclusions about the facts of a case.

  • Was this statement written by the speaker, or by the company’s public relations team?
  • Do the answers to deposition questions appear to be genuine or coached and rehearsed by the legal counsel advising the witness?
  • Does the expert’s report match up to his or her previous reports, or do sections appear to be written by others who are undisclosed?

Like most forensic undertakings, forensic stylometry is not a “smoking gun” solution to questions of veracity and authorship; it can still, however, provide insight into the development of the written information received.

Most forensic accountants already have at least one tool in forensic stylometry. Next time you finish writing a document in Microsoft Word, go to the Proofing section of the options menu, and click “Show Readability Statistics.” After a spelling and grammar review, Word will populate a table with statistics on your work. The picture below shows the statistics for this very blog post:

As you can see, I average 2.1 sentences per paragraph, over 23 words per sentence and wrote this piece at approximately a 12th-grade level.[1]

Compare some of your writings over time to see if you can identify consistencies. And the next time your intuition about a document’s author or authenticity is off, think about reviewing it through the lens of forensic stylometry. If Juola and Millican could outwit a fantasy writer turned crime novelist, what might you discover?

 


[1] More information on these statistics and their implications can be found in Financial Forensics: Body of Knowledge by Darrell Dorrell & Greg Gadawski, Wiley, 2012.

Working Smart with New Clients: Recognizing economic and emotional tolls

SPECIAL TO THE WEB

Robert Tie, CFE, CFP
Contributing Writer, Fraud Magazine

"Sadly, it’s always the employee that the company owner loves the best,” says Tiffany Couch, CFE, CPA, an ACFE faculty member and the founder and principal of Acuity Group, a forensic accounting firm in Vancouver, Wash.

Couch, of course, is referring to a trusted staff member who commits major fraud.  
 

The economic consequences of such betrayal can hit business owners hard but its emotional toll also can be potent. That explosive combination can confuse and nearly immobilize some victims, who aren’t sure what to do about an apparent — and, for them, a previously unthinkable — insider fraud.

“That’s why they should get the help they need,” Couch says. “The sooner a forensic specialist is involved, the better, because average business owners understandably don’t even know what not to do. Their layman missteps might jeopardize an investigation, hinder asset recovery or create legal liability for them, the victims.”

Couch’s own experience — working with federal, state and local law enforcement officials on embezzlement investigations — has taught her how important it is for CFEs to understand and attend to clients’ volatile feelings as well as their losses, especially in the first days after signs of a potential or confirmed fraud emerge.

STABBED IN THE BACK… AND IN THE HEART

“I grew up in a small agricultural community,” Couch says. “And you can take my word on this: Farmers are not known for shedding tears.”

But there are exceptions. One arose, and with good reason, when a potential client sought Couch’s help in a crisis.

A farmer who owned a large fruit-growing company had just learned that his controller — a 20-year employee and personal friend — had misappropriated a mountain of company cash.
 

This embezzlement surfaced after the client had formed a partnership with another company, and he wanted the controller to train his counterpart at the new firm. During the joint review of the financials, the controller had failed to satisfactorily explain certain huge losses on the books. They were, in fact, the result of an ill-fated risky investment he had made — outside of established guidelines and without authorization — on the company’s behalf.

Prudently, the owner looked closer at the financials and asked the controller to provide the bank statement reconciliations. The controller complied and promptly went on vacation. The owner and his accountant examined the reconciliations and found the controller had made a suspicious $300,000 adjustment to the cash account.

The owner felt he had no choice, so he reluctantly notified the controller that he was immediately putting him on administrative leave pending an inquiry into the unauthorized investment and the questionable cash adjustment.

Nevertheless, after his vacation, the controller returned to work — accompanied by his attorney — who stunned the owner by saying, “My client has ‘borrowed’ $750,000 from your company’s accounts over the past several years. If you agree not to press charges, he’ll repay that ‘loan’ and cooperate with your investigation of this matter.”

A business associate of the owner recommended Couch’s firm; the owner phoned her and requested a forensic investigation as soon as possible.

“I took that call on Friday,” Couch recalls. “I could see this case required immediate attention to, among other things, secure potential evidence, so I went to the farmer’s office on Monday. By Wednesday, I had uncovered proof the losses were much worse than the controller had acknowledged: At least $1.2 million was missing — $500,000 more than he had admitted taking. Of course, this was the last thing any business owner would want to hear. So in addition to communicating the bad news, I had to counsel the farmer on how best to deal with the situation.”

That day Couch sat down with her new client and spelled out exactly how and why the controller’s story didn’t add up. To make matters worse, the controller’s concealment of his unauthorized transactions was suspicious, she told the farmer. Couch had expected him to be distressed by the additional bad news, but his intense reaction took her by surprise.

“That big, strapping man just broke down and wept,” Couch says. “His controller’s breach of faith devastated him. ‘How could it be?’ he asked. 'If I can’t trust him, I can’t trust anyone!’ I remember thinking, ‘This isn’t just about the money … it’s also about the relationship. He’s lost a lot more than $1.2 million.’ ”

Read the full article at Fraud-Magazine.com.

Using CFE Expertise in the Courtroom

MEMBER PROFILE

Peter Davis, CFE, CPA, ABV, CIRA
Managing Director at Simon Consulting

Davis' projects include receiverships over Ponzi schemes, alter ego analyses, fraud investigations, commercial damages, hidden asset searches and other matters. His knowledge of fraud detection and deterrence, interpretation of financial data, and determination of business and personal damages has served him well as an expert witness. Davis has also taught on the subject of forensic accounting and receiverships at Arizona State University and has provided training on fraud and forensic accounting to numerous organizations.  

What types of cases do you find the most interesting/challenging? 

I enjoy Ponzi analyses, alter ego matters and forensic accounting in general. It is the process of solving complex problems that is enjoyable.

You are conversant in German and have consulted for companies in the United States, Germany and Japan. What types of unique challenges do you face when working with clients overseas?

In particular, Japan is very different, and it takes good preparation to excel in their business environment. It is particularly important to understand the culture of the people before visiting a foreign country.

Your background is in accounting -- what led you into the realm of fraud detection and prevention?

I enjoyed the changing environment and the challenges of litigation.

How did you find out about the ACFE, and what compelled you to join in 1998?

I have a passion for investigating frauds, so the ACFE was a natural fit… There has been a massive growth in the profession -- in particular, after Enron and other large frauds. It is amazing to see all the people at (the ACFE Annual) Fraud Conferences.

You also earned your CFE credential in 1998. How has being a CFE helped you in your career and in your work?

I believe judges like the credential when they are dealing with a fraud case.

When you teach at Arizona State University and provide fraud and forensic accounting training to organizations, are there any words of wisdom you like to impart on your students?

“Stay humble -- it is when we get arrogant that we fail.”

Read more profiles in the Career Center on ACFE.com.