4 Things Textbooks Can’t Teach You about Investigation

GUEST BLOGGER

Brian Willingham, CFE
President, Diligentia Group Inc.
Brewster, N.Y.

I am a private investigator — not the “snooping” type who sits in a car, drinking black coffee, smoking cigarettes and chasing unfaithful spouses. Gone are the trench coats, “secret sources” and back-alley handshakes. I am a 21st-century PI who gathers information, analyzes it and then turns that information into something useful. My job is to find information legally and ethically. Keeping up with ever-changing technology is just as much a part of my everyday life as understanding how to get audited financial statements from a broker-dealer. (In case you are wondering, in the U.S. you can send an FOIA request to the SEC for the X-17A.)

There are no textbooks for what I do. I make it up as I go along, and I have learned mostly by doing. While books and research have taught me many things, I just could not learn everything from them. Here are a few things I didn’t learn from textbooks (your experience may vary):

Frame of Mind

When I first started in this business, I quickly realized that investigators thought differently. Most people trust their senses and believe what they hear or see; investigators don’t. They are skeptical and do not believe much of anything without proof. But, they aren’t just skeptical. They also have a different frame of mind when approaching investigations. Strong investigators know there is something out there for them to find — they just need to find it.

Instinct

After more than 10 years doing this work, I can spot the characteristics of an embellisher, a fraudster or people who I would simply avoid from a mile away. I have been asked to share my thoughts on boyfriends or girlfriends (I have about a 98.2 percent success rate in relationship advice). You develop an instinct for these things. At first, I was so involved in the mechanics of what I was doing that I couldn’t see the forest through the trees. Now I can see the forest and the trees.

Experience

“I’ve been in this business for 35 years!” Sound familiar? People like to pull the “experience card” as a compelling reason why they are good investigators. You will never hear me say that. While experience is helpful in any business, it will not get you anywhere unless you can use the wisdom and knowledge learned through that experience to be better at what you do. Experience will teach you when to go down a certain path or change the direction of an investigation, and it will tell you where to look and the right questions to ask.

Confidence

People in their 20s think they know everything. I certainly did. I see it often in new investigators, too. Confidence is not only believing in yourself; it’s also being able to admit that you don’t know everything. Be humble. If you think you know it all, you are going to be out of this business as quickly as you came in. I don’t know everything... and neither do you. So go ahead and read some more textbooks.

Brian Willingham is a New York private investigator and president of Diligentia Group.

What Can Baseball Teach You About a Background Check?

GUEST BLOGGER

Brian Willingham, CFE
President, Diligentia Group
Brewster, N.Y.

Bill James revolutionized the way that people look at baseball players. Sabermatricians, as his followers would later be known, felt that there was a direct correlation between a player’s past and future performance. Instead of relying on the subjective judgments of baseball scouts, James compiled objective statistics and analysis to measure a player’s performance, thus helping to predict future performance.

“Brady Ball”

A great example of Bill James’ method happened in 1996, when Baltimore Orioles slugger Brady Anderson hit 50 home runs in 687 plate appearances (equivalent to one home run for every 13.7 plate appearances), while in his previous three seasons, he hit a total of 41 home runs in 1,846 plate appearances (one home run for every 45 plate appearances).  

It’s clear that Anderson’s past performance did not correlate with his breakout 1996 season, and sure enough, he regressed back to one home run every 40 plate appearances for the remainder of his career.

Anderson was long suspected of using steroids for the 1996 season, but those reports have never been confirmed. Without analyzing historical statistics, it would be difficult to see the uniqueness of that 1996 season.

Making a connection

Collecting and analyzing information based on a baseball player’s past performance is similar to what a private investigator does when conducting a background check. Objective information is collected about a person’s past through open sources and public records to help clients make more accurate predictions about the future. Historical bankruptcies, financial difficulties, criminal acts, a litigious past, misrepresentations and regulatory sanctions are all indicators of potential problems down the road.  

Past performance issues in a background check

There were many “past performance” issues that should have been major red flags in Bernard Madoff’s Ponzi scheme, including a two-person accounting staff overseeing a $50 billion firm, a highly secretive investment strategy and investment gains that neither Wall Street professionals nor Harry Markopolos, the Madoff whistleblower, could recreate.  

Other examples of “past performance” as an indicator of the future can be found in my recent post about 11 convicted Ponzi schemers who had already served jail time for other frauds or in the ACFE’s recent post about Barry Minkow's recent criminal charges.

Final thought

Just like in baseball, there is no one piece of information or statistic in a background check that can help predict the future. In fact, there are multiple layers of information over a period of time that must be analyzed to fully understand someone’s past behavior.  

When trying to learn more about a person’s background, if you think that a few reference checks, Google searches, a referral from respected members of the community or a couple of face-to-face meetings are the most reliable predictor of future performance, you need to take a page from the great Bill James and evaluate past performance.

Thanks to Seth Godin’s “Bill James and you” for the brilliant idea. Brian Willingham is a New York private investigator and president of Diligentia Group.

Inside Look: The CFE Exam Review Course and CFE Exam

AN INTERVIEW WITH

Brian Willingham, CFE
President, Diligentia Group Inc.
Brewster, NY

What led you to get your CFE credential?

I have always respected the ACFE, as well as the CFE credential, because it truly represents a fraud examiner who takes continued education and professionalism seriously. I have been an associate member of the ACFE since 2001, and after attending the ACFE’s annual conference, which was a great educational experience and a good opportunity to meet other people from different fields of fraud, I felt like it was time. Like most people, I was pressed for time to devote towards taking the CFE Exam and decided that the Review Course was the way to go. 

Why did you choose to attend the four-day CFE Exam Review Course in Las Vegas, Nev. rather than study and/or take the exam on your own?

Regardless of how disciplined you believe you are, there are always things that come up between work and your personal life that make it a constant challenge to maintain self studies. I had considered taking the Review Course for some time since it really does force you to devote a few days to intensively prepare for the exam. 

What did you most enjoy about the course?

Bruce Dorris, J.D., CFE, CPA, CVA, John Gill, J.D., CFE and Ryan Hubbs, CFE, CIA, CCSA, PHR, CFS, did an incredible job of focusing us on the key concepts and providing a step-by-step approach to prepare for the exam. It was a great environment where I could ask questions and have one-on-one time with the instructors. With the sample exams available on my laptop, I was able to go to back to my hotel room each night and go over prep exam questions to reinforce what I learned earlier that day. Having the opportunity to take the exam upon completion of the course, as well as learning my results immediately following, were added bonuses. 

Did you feel like you were prepared to take and pass the exam at the end of the course?

Absolutely. It is still natural to have anxiousness or doubt that I did not prepare enough, but after scoring well on my practice exams, I felt confident going in at the end of the course. Given the volume of information covered in the exam, I would highly recommend the course to anyone seeking an advantage to be more focused and prepared.

How do you think having your CFE will impact your practice, Diligentia Group Inc., and your fraud detection efforts?

Understanding fraud is an evolving practice that takes consistent further education. As Gill put it so eloquently during the Review Course, fraud doesn't go away, it just changes. In order to be ahead of the game in this business you have to continue to be aware of current trends, and open to new ideas and theories. The ACFE offers an endless amount of resources for people in the business of fraud. Between the educational opportunities and the network of contacts I have developed through the ACFE, I believe that being a CFE will pay back dividends in many ways for years to come. 

To view a schedule of upcoming CFE Exam Review Courses and other events, go here.