Dave Sutherland 2014-07-03 00:30:11
Defending Allegations of Financial Crimes Forensic accountants have a long and significant history in law enforcement. When the FBI was formed in 1908, the original 34 investigators included a dozen bank examiners. After 9/11, the FBI created a professional investigative support position known as a forensic accountant. These specialized accountants are involved in the investigation, analysis and testimony in criminal cases involving financial matters. They are provided training in all elements of financial forensics including how to provide expert testimony in court. Contrary to the sophistication of the accountants employed by the FBI, local law enforcement agencies usually do not have trained forensic accountants on staff. In most cases, the detective investigating the case must develop the financial analysis in support of the alleged financial crimes and then support his or her analysis at trial. The reality is that many of these detectives, though well intentioned and serious about their profession, are simply not trained to perform financial forensics. For criminal defense attorneys, the lack of training which is endemic to local law enforcement agencies almost always requires the retention of a forensic accountant. In one recent case, we were asked to review the conclusions presented by the detective in a pending criminal case. The allegations included money laundering. The detective was very assertive in setting forth the charges and his conclusions. Those conclusions formed the basis for a significant portion of the criminal charges against the defendant. The starting point in this case was to first understand the issue or question which must be investigated. That question is usually not the same for the forensic accountant retained by the defense attorney as for the detective. For the detective, the question was (or should have been) whether there was sufficient evidence to prove that the defendant had committed money laundering. The question we were asked to answer by the criminal defense attorney was whether or not the detective had properly developed supporting evidence for his conclusion that the defendant was guilty of money laundering. Once the question was provided, the next step in the financial forensics process was to perform scoping. Scoping is the process of determining what documents and information are relevant to answering the question. The starting point for the scoping phase of our work was to review the documentation and analysis on which the conclusions of the detective were based and to perform full and false inclusion testing. Full and false inclusion testing refers to the process of making sure that everything that should be considered, was considered and that nothing that should not be considered was included. One of the first observations made from review of the documentation relied on by the detective was that it was incomplete (i.e., there was a lack of full inclusion). The detective had obtained bank statements for bank accounts on which the defendant was an authorized signer. The detective then looked for large deposits which were, in his opinion, evidence of money laundering. However, the detective did not obtain documentation of all income sources for the defendant. Full inclusion testing would indicate that the detective must identify normal or legal sources of deposits. Our tests also indicated that the detective had relied on false inclusion by including bank documents on which other parties were also signatories without ruling out the potential for the other parties to have made the deposits in question. Therefore, his conclusions were based on documentation not specific to the defendant (i.e., false inclusion). Ultimately, our opinion was that the conclusions of the detective were fatally flawed and that the evidence did not support his conclusions. The lesson to be learned by criminal defense attorneys and prosecutors is that it usually requires a forensic accountant to determine if the evidence against the defendant in a financial crimes case actually proves the charges. Our firm assists law enforcement in developing financial analysis skills by presenting the course Financial Forensics in Law Enforcement. This course has been presented to hundreds of law enforcement officers from various agencies. This interaction with law enforcement professionals allows us to assist both law enforcement and criminal defense attorneys in the investigation of financial crimes. Dave Sutherland is a certified public accountant/certified in financial forensics, certified fraud examiner, and a certified law enforcement auditor. He has been involved in criminal and civil investigations since 2002 and has been in practice since 2009. He is a manager at Epps Forensic Consulting PLLC specializing in financial investigations, forensic accounting, litigation support, fraud examination and law enforcement consulting services. Dave co-teaches with Joe Epps on the topic of white-collar crime investigations through Rio Salado Community College. He periodically teaches for the Association of Certified Fraud Examiners on fraud-related topics. He also teaches Financial Forensics in Law Enforcement a two-day training program for law enforcement officers. For more information, please call (480) 595-0943 or visit www.eppsforensics.com.
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