CFE Works With Technology, Not Around It

MEMBER PROFILE

Jeffrey Meyer, CFE
Vice President, Internal Audit, CBS Corporation
New York, N.Y.

Mining data doesn’t just mean going through boxes of paperwork anymore. Much of an investigation’s evidence is collected online via data that could be hidden away on a hard drive or in plain sight on Excel spreadsheets. Jeffrey Meyer, CFE and VP of Internal Audit at CBS, knows the value of making technology work for him. “One of the challenges I see is embracing technology so that we are working through and with it, rather than around it,” Meyer said. “I spend a lot of time with data mining software so that I’m working with the full population, looking for anomalies that might lead me to answers, as well as more questions to be answered.”

What made you decide to become a Certified Fraud Examiner (CFE)?

In 2009, I attended the ACFE Global Fraud Conference in Las Vegas at the last minute after the only CFE was transferred out of our department. While I was initially skeptical of a fraud conference in Las Vegas, I was impressed by the seminars I attended and the people with whom I networked, so I decided to get my CFE credential and fill the gap in our department.

What ACFE training has benefited you most in your role?

While the benefits have been many, I have specifically benefited from interviewing skills training, which has broader implications beyond just fraud investigations. When I’m wearing my “auditor hat,” I spend a lot of time talking to others and gathering information. If I’m better at interviewing, I can spend less time and get better results.

What were some of the more challenging tasks you’ve personally faced as a CFE?

I’ve had several investigations where local finance and management has tried to do some investigating, including interviewing the suspected fraudster. These cases are challenging in that the “first bite of the apple” has already been taken and therefore removed any element of surprise we might have had. We’re working with our divisions to get us involved at the first signs of suspicion, and that’s reaping benefits for us.

What are some of the benefits/advantages to a company or government agency employing CFEs on its staff?

CFEs bring a different skill set and mindset to an internal investigation that can be critical to a successful outcome. You wouldn’t go to a tax accountant for your annual audit or to a dermatologist if you needed anesthesia for a surgery. These fields, while tangentially related, are not the experts in your true need, so why wouldn’t a company or agency choose the expert in the investigation field?

Please describe your most memorable case and its resolution (to-date if it’s a fresh case). Feel free to use pseudonyms for suspects if the case is ongoing and no judgment has yet been made.

My most memorable case wasn’t glamorous or high profile, but to me it was memorable because the business process worked as it should in identifying a potential fraud. While we prepared for a normal audit of one of our local markets, we got a call from the market’s credit manager, whom I’ll name “Bonnie.” As part of her normal controls, Bonnie was reviewing the accounts receivable aging and making telephone calls to follow up on delinquent accounts. With one small, local business account, the owner told Bonnie that he had paid the invoice, and he even had his cancelled check. Bonnie apologized for the mistake and asked if the owner wouldn’t mind faxing a copy of both sides of the cancelled check so she could correct the error. When she looked at the check, she called for our assistance. The sales person on this account, Henry, had added his name to the payee line of the check, had endorsed it and deposited in his bank account.

Working with our Security Department, I began investigating Henry’s accounts to see if any evidence existed for similar activity, but none did. Henry had started with this market less than two years ago, his first position out of college, so his activity was finite and readily available. When we confronted Henry with our evidence, he broke down and admitted he had taken the check. Through tears as he wrote out his confession, he realized that he might have jeopardized the rest of his career for about $800 of short-term cash, which he had already begun to repay before we questioned him.

Read the full profile in the Career Center on ACFE.com.

The Drug Dealer's Accountant

SPECIAL TO THE WEB

By Kevin Berry, Ph.D., CFE and H. Charles Sparks, Ph.D., CPA

The home of former U.S. vice presidential candidate Sarah Palin now has another claim to fame. In spring 2012, the U.S. Internal Revenue Service (IRS) charged a Wasilla, Alaska, tax preparer with six counts of preparing false tax returns. Two factors make this scheme particularly interesting: 1) the tax preparer laundered illegal drug profits by setting up a fake company to mask the true source of income and profits and 2) even though the preparer had little professional and technical training and limited experience, the deception was innovative and complex.

Normally, authorities charge tax evaders when the criminals either underreport illegal activities or don’t report them at all. Interestingly, in this case, the tax preparer went one step further: The false business she created for her client allowed him to obtain credit through local financial institutions.

This fraud scheme will be relevant especially to small- and medium-size banks and credit unions, auto finance companies and even mortgage companies because they often don’t have expert in-house fraud groups that can detect questionable clients or customers. These financial institutions, when vetting self-employed individuals and small businesses for creditworthiness, normally rely heavily — if not exclusively — on federal income tax returns. (A coauthor of this article serves on the board of a local credit union with assets of $125 million. Its loan policy explicitly requires the most recent two years of federal tax returns for small business and self-employed borrowers.) Firms that examine potential borrowers seldom investigate tax return information beyond obtaining and comparing IRS copies. This is poor procedure as we show in this case.

Beginning in the spring of 2007, Jamie Powell (not her real name) began preparing false tax returns for a local drug dealer we’ll call BJ, and his wife. The returns reported a portion of BJ’s illegal income as legitimate construction company profits. Powell, who also apparently bought drugs from BJ, worked hard to make his income look legitimate even though she lacked accounting education or extensive professional experience. (Powell billed DJ and his wife tax preparation fees that were 20 times greater than those she charged her legitimate clients.)

The elaborate scheme included fake sales receipts, purchase invoices and bills of sale and other supporting source documents just in case the IRS audited BJ. The reported income omitted enough of BJ and his wife’s true income so they could also qualify, and receive, the earned income credit. Eventually, Powell prepared and filed prior year false income tax returns back to 2003 for BJ and his wife. They used these false returns to apply for and obtain loans to purchase vehicles and obtain credit cards.

Read the full article on FraudMagazine.com.

The Art of Persuasion: Mastering the Investigation Interviewing Process

AUTHOR’S POST

Mandy Moody, CFE
ACFE Social Media Specialist

Aesop, the great storyteller, said, “Persuasion is often more effectual than force.” I have a feeling Don Rabon would agree. Don is one of the ACFE’s most highly-rated faculty members, a past winner of the ACFE's Baker Award for speaking, a CFE and president of Successful Interviewing Techniques. He will lead a Pre-Conference session, “Persuasive Interviewing Techniques” at this year’s 24^th Annual ACFE Global Fraud Conference in Las Vegas this June.

In the clip below, Don gives a sneak peek into what he will discuss in his session and why persuasion remains one of the most challenging parts in the interviewing process.

Don’t forget about these other Pre- and Post-Conference sessions:

• Intellectual Property and Personal Information: Investigating Loss, Leaks and Theft
• Taking Data Analytics to the Next Level
• Persuasive Interviewing Techniques
• Auditing/Investigating Fraud Seminar
• Tracing and Recovering Fraud Losses
• Uncovering Fraud with Financial and Ratio Analysis

Find more details and the full Conference Agenda at FraudConference.com.