Fraud Examiner: 'Interviewing is Not a Simple Yes or No Answer'

MEMBER PROFILE

Kenneth Springer, CFE, Founder and President
Corporate Resolutions Inc. 

Author Kenneth Springer, CFE, is the founder and president of Corporate Resolutions Inc., a specialized firm that gathers intelligence and offers a variety of investigative services that helps its clients make informed business decisions. When conducting an investigation, “use your investigative skills to follow the evidence,” Springer said. “Interviewing is not a simple yes or no conversation; there are skills required to make sure the person feels comfortable in order to elicit the most honest and complete information.”

How did you become passionate about fighting fraud? 
While in college, I spoke with a family friend who was in the FBI. I became very interested and pursued it.

What steps led you from the FBI to starting your own company?
Although I enjoyed the FBI and the people I worked with, I had an opportunity to leave and get involved in managing a small investigations firm that conducted background checks and investigations for private firms. Four years later, I was running the company and decided I wanted to start my own business. I put together a business plan, got a Small Business Administration (SBA) loan and started Corporate Resolutions Inc. in August 1991.

What is one of the biggest lessons you have learned since becoming a CFE?
When investigating a fraud, you cannot necessarily rely on all of the facts as initially presented by the client since they may have their own agenda. You need to be open-minded and not have a preconceived notion as to how the fraud may have happened and by whom. Use your investigative skills to follow the evidence.

I know this because a long time ago a client led me to believe that a certain employee had committed the fraud we were investigating. It turned out that the client was actually responsible. The client was eventually arrested by the FBI.

What is a memorable case or project that you have worked on — one that made you feel especially proud?
In one instance, investors backed a company that sold hardware (desktops) and during a surprise audit, found $5 million dollars missing. After two months of having forensic accountants try to figure out the fraud, we were brought in to conduct interviews and gathering facts. We quickly learned that while the auditors were there, the CFO abruptly resigned and left town (in our business we call that a clue).

We immediately began fact gathering on the previous CFO and learned he had formed a similar-sounding entity within the company, yet the CEO was unaware of it or why it was formed. He also changed company procedure so that he was the one who opened all of the company mail.

To perpetrate his scheme, he would buy 100 computers, pay for them and then return 50. When the computer company sent a refund check, he was able to take the check and deposit it into the account he had fraudulently formed — which was located at the same branch where the company did their banking. Thus, it did not raise any red flags within the company. The FBI is still looking for him.

While putting together the fidelity bond claim for the insurance company, we did a background check on the previous CFO. He was not a CPA as he had claimed and the three references he provided did not check out.

What activities or hobbies do you like to do outside of work?
Spending time with family and golfing.

Read Kenneth's full member profile in the Career Center on ACFE.com.