Fraud Investigation Report

Fraud Investigation The Interview Process

Q1. Using private industry as a potential background for developing your fraud prevention and detection strategy, what type of external resource(s) would you recommend be established as soon as possible and included in the company’s marketing brochures as a value-added differentiating service with regards to reporting potential fraud that may be occurring in the asset disposition process? Keep in mind, this is not a SEC or a Securities Act situation.

One important source of value differentiation from other fraud investigative organizations can be the approach used by the emerging company. One such an approach is the SPEC (scope, plan, execute, close) model (Parulkar, 2010). The beginning of this method involves first determining the scope, or ascertaining the resources needed to complete actual job. This is followed by planning the investigation, executing the fact-finding exploration, and finally closing the investigation (Parulkar, 2010). While the sequential process may seem a simple one, marketing this method as a systematic approach may be useful. It is also useful to have a highly diversified fraud investigation team. Members of the team may include legal staff to determine what compliance measures are needed; forensic accountants; IT experts; and field investigators (Parulkar, 2010).
Particularly in today’s online-dominated world, where more and more legal documents and procedures are now performed online, having personnel who can evaluate online evidence to be credible or dubious in value is key. Having a diversified team is also useful as a way of connecting the organization to diverse external contacts outside the organization which may be helpful in researching various types of fraudulent practices. Given the rise of online technology, methods of fraud are continually changing and, sadly, growing more difficult to detect. It is very important for a private organization to stay one step ahead of the most common techniques being used. While this is challenging for a small investigative organization, having external contacts in the industry and engaging in regular environmental scanning is one way to do so.
Providing customers with assurance that evidence will be secured and stored in a secure and credible fashion is also a critical component of fraud investigation. “Depending on the case, investigators must ensure that they obtain copies of credit statements, emails, bank accounts, phone records, social media posts, etc. The crime scene is often virtual” (Giacalone, 2015, par.10). For example, conducting research online is one way to check the fair market value of assets in an objective fashion .Clients of the investigating firm should be assured of the competence of all personnel in researching fraud using online tools. Members of the firm should also be in contact with clients, keeping them abreast of developments, through the use of online technology.
Q2. Assume after implementing the external resource described in #1 above, it comes to your attention that Bob, a member of the Jones’ family, may be improperly benefitting from the disposition of his late Dad’s assets by selling certain assets for significantly less than fair market value before the formal auction of tangible assets. Per other family members, Bob has been acting very strange since his Dad’s passing. Large bags have appeared under his eyes, Bob has been very short and flown off the handle in just about every discussion or phone call with the other family members, and Bob is suddenly driving a brand-new Porsche after driving an old used Toyota for the last 15 years.
The interview process should begin not with Bob, but with his family members who might have insight into his financial situation, his ethics, and other pertinent information. Ideally, they should be family members who are not personally close to Bob and will not reveal in any way that he is the subject of any kind of an investigation. When an individual such as Bob is aware that his actions may be under surveillance, the most obvious and immediate response is to destroy all evidence linking him to the fraud. Yet it is also important to evaluate evidence in context, since family members may have a vested interest in portraying Bob as more mentally unstable than he is; they are the primary source of the allegations that he may be stealing from the estate and misusing his power. Even before interviewing either Bob or any family members, a good investigator will be prepared with research about the financial situation of the family as a whole and relationships between such members, to be able to evaluate the information dispassionately (including negative and positive things said about Bob) as well what emerges during the eventual interview with Bob.
When the interview with Bob takes place, the same general principles of conduct during all forensic interview should apply. A good interviewer will have strong, level eye contact with the subject, avoid excessive notetaking, and minimize distraction such as external noises (“Investigation,” 2016). Regardless of Bob’s guilt or innocence, he is likely to be highly defensive and breaking down those defenses is the ultimate goal of the interview. To encourage honesty, the interviewer might appeal to Bob’s sense of morals and ethics in regards to this family, particularly in light of the recent death. The interviewer might also appeal to Bob’s sense of ethics and morals, including the obligation to do the right thing, not simply to family members (from whom Bob may be estranged) but also Bob’s personal sense of ethics and morals. This may have a greater hold upon Bob’s moral compass if his relationships and sense of grievance with his family is strong.
One problem with investigating inheritance-related issues is that family emotions can often influence respondent’s logic and ethics. Individuals who might otherwise act ethically may use inheritance-related matters as a way to lash out at family members they resent and whom they feel have done them harm. To reduce emotions getting in the way of facts, the investigator should focus as much as possible on questions with concrete answers, to avoid Bob getting diverted by his emotions and anger at other family members he may wish to vent by acting in an in appropriate manner (“Investigation,” 2016). Asking outright where Bob got the money for his new vehicle might not be wise, however, given the fact that Bob may see this as a challenge to his ability to provide for his family or as a reference to his perceived poverty and cause even more defensiveness. The investigator must strike a balance between bluntness and the need for Bob to feel as though he still has some sort of control over the interview process, which is ultimately likely to encourage greater honesty in the end. This would also interfere with the establishment of rapport between the interviewer and the interviewee, which is perhaps the most important aspect of any interview. If Bob feels he can trust the interviewer, he is more likely to be candid, even confessional, about the true source of his wealth and his actions regarding the estate.


References
Giacalone, J. (2015). Four basic steps in a fraud investigation. LexisNexis. Retrieved from:
http://blogs.lexisnexis.com/public-safety/2015/06/fraud-investigation-basic-steps/
Investigation. (2016). Association of Certified Fraud Examiners, Inc. Retrieved from:
http://www.acfe.com/uploadedfiles/acfe_website/content/review/examreview/02-inv- interview-theory.pdf
Parulkar, N (2010). Investigate fraud with these best practices. Computer Weekly. Retrieved
from: https://www.computerweekly.com/tip/Investigate-fraud-with-these-best-practices