Justice for Fraud Victims Project

Justice for Fraud Victims Project Dr. Sara Melendy melendy@jepson.gonzaga.edu

Justice for Fraud Victims Project • Overview of JFVP • Overcoming Challenges • Case Selection • Fraud Examples • Future of the project AAA meeting - San Francisco - July 31, 2010

Overview of the JFVP • idea (AUSA K.Jill Bolton) • people • Law enforcement • Department of Justice • Spokane Chapter of ACFE • Gonzaga University • timetable • challenges AAA meeting - San Francisco - July 31, 2010 THE PILOT PROGRAM... The project will begin with a forensic accounting lab course at Gonzaga University where a select group of students will be assigned to teams that are supervised by Gonzaga’s Masters of Accounting program faculty and by mentors from the Spokane Chapter of the Association of Certified Fraud Examiners as they investigate the allegations from cases referred by law enforcement. THE LONG-TERM PLAN... Even more exciting, Gonzaga would like to develop the program into a full Center for Forensic Accounting. Money could be raised for the Center from a variety of sources, including community groups, various governmental and foundation grants, and private donors. It is also possible that the courts in which JFVP cases are prosecuted may direct restitution be paid to the program (much like victims obtain restitution for the cost of a CFE examination as part of their loss from the crime). Ideally, a full-time staff member would supervise student investigations, creating a permanent touchstone as the program progresses year-to-year to provide continuity. Such a Center would not only house the JFVP, but create a venue for a forensic accounting research specialization. FOR VICTIMS... The cost of obtaining a fraud examination by a Certified Fraud Examiner (CFE) is often prohibitive for victims. JFVP can help them obtain justice where fraud occurred and they suffered financial harm. Without this project, the large volume of financial fraud cases confronting scarce law enforcement resources might leave the victims of financial fraud without the resources and assistance needed to pursue the perpetrators of the fraud through forensic accounting. FOR STUDENTS… JFVP will provide invaluable real-world experience in forensic accounting, allowing students to develop a unique skill set while completing their undergraduate or graduate accounting degrees. Opportunities to allow students to work in “real world” environments do not come along often. JFVP allows faculty to take students out of a sterile classroom environment to perform as forensic accountants. Through this experience, students will not just talk about how forensic accounting is done, but they will confront real world complications in investigating white collar crime. This experience simply cannot be replicated anywhere. Whether or not a student is interested in forensic accounting as a career, the techniques and the mindset necessary to perform a successful investigation will serve them well throughout their career. The JFVP is consistent with the very ideals embodied in a Jesuit education. For law enforcement agencies... This program will provide a much-needed resource for law enforcement. Currently, large numbers of cases cannot even be investigated to determine if a fraud occurred, much less to establish a loss amount for prosecution. This leads to large numbers of cases languishing due to a lack of resources. JFVP will allow law enforcement to expand the number of cases under investigation, without requiring an expansion of resources. Increasing the number of cases being investigated, and ultimately prosecuted, means a greater opportunity for justice for a greater number of victims. THE PILOT PROGRAM... The project will begin with a forensic accounting lab course at Gonzaga University where a select group of students will be assigned to teams that are supervised by Gonzaga’s Masters of Accounting program faculty and by mentors from the Spokane Chapter of the Association of Certified Fraud Examiners as they investigate the allegations from cases referred by law enforcement. THE LONG-TERM PLAN... Even more exciting, Gonzaga would like to develop the program into a full Center for Forensic Accounting. Money could be raised for the Center from a variety of sources, including community groups, various governmental and foundation grants, and private donors. It is also possible that the courts in which JFVP cases are prosecuted may direct restitution be paid to the program (much like victims obtain restitution for the cost of a CFE examination as part of their loss from the crime). Ideally, a full-time staff member would supervise student investigations, creating a permanent touchstone as the program progresses year-to-year to provide continuity. Such a Center would not only house the JFVP, but create a venue for a forensic accounting research specialization. FOR VICTIMS... The cost of obtaining a fraud examination by a Certified Fraud Examiner (CFE) is often prohibitive for victims. JFVP can help them obtain justice where fraud occurred and they suffered financial harm. Without this project, the large volume of financial fraud cases confronting scarce law enforcement resources might leave the victims of financial fraud without the resources and assistance needed to pursue the perpetrators of the fraud through forensic accounting. FOR STUDENTS… JFVP will provide invaluable real-world experience in forensic accounting, allowing students to develop a unique skill set while completing their undergraduate or graduate accounting degrees. Opportunities to allow students to work in “real world” environments do not come along often. JFVP allows faculty to take students out of a sterile classroom environment to perform as forensic accountants. Through this experience, students will not just talk about how forensic accounting is done, but they will confront real world complications in investigating white collar crime. This experience simply cannot be replicated anywhere. Whether or not a student is interested in forensic accounting as a career, the techniques and the mindset necessary to perform a successful investigation will serve them well throughout their career. The JFVP is consistent with the very ideals embodied in a Jesuit education. For law enforcement agencies... This program will provide a much-needed resource for law enforcement. Currently, large numbers of cases cannot even be investigated to determine if a fraud occurred, much less to establish a loss amount for prosecution. This leads to large numbers of cases languishing due to a lack of resources. JFVP will allow law enforcement to expand the number of cases under investigation, without requiring an expansion of resources. Increasing the number of cases being investigated, and ultimately prosecuted, means a greater opportunity for justice for a greater number of victims. THE PILOT PROGRAM... The project will begin with a forensic accounting lab course at Gonzaga University where a select group of students will be assigned to teams that are supervised by Gonzaga’s Masters of Accounting program faculty and by mentors from the Spokane Chapter of the Association of Certified Fraud Examiners as they investigate the allegations from cases referred by law enforcement. THE LONG-TERM PLAN... Even more exciting, Gonzaga would like to develop the program into a full Center for Forensic Accounting. Money could be raised for the Center from a variety of sources, including community groups, various governmental and foundation grants, and private donors. It is also possible that the courts in which JFVP cases are prosecuted may direct restitution be paid to the program (much like victims obtain restitution for the cost of a CFE examination as part of their loss from the crime). Ideally, a full-time staff member would supervise student investigations, creating a permanent touchstone as the program progresses year-to-year to provide continuity. Such a Center would not only house the JFVP, but create a venue for a forensic accounting research specialization. FOR VICTIMS... The cost of obtaining a fraud examination by a Certified Fraud Examiner (CFE) is often prohibitive for victims. JFVP can help them obtain justice where fraud occurred and they suffered financial harm. Without this project, the large volume of financial fraud cases confronting scarce law enforcement resources might leave the victims of financial fraud without the resources and assistance needed to pursue the perpetrators of the fraud through forensic accounting. FOR STUDENTS… JFVP will provide invaluable real-world experience in forensic accounting, allowing students to develop a unique skill set while completing their undergraduate or graduate accounting degrees. Opportunities to allow students to work in “real world” environments do not come along often. JFVP allows faculty to take students out of a sterile classroom environment to perform as forensic accountants. Through this experience, students will not just talk about how forensic accounting is done, but they will confront real world complications in investigating white collar crime. This experience simply cannot be replicated anywhere. Whether or not a student is interested in forensic accounting as a career, the techniques and the mindset necessary to perform a successful investigation will serve them well throughout their career. The JFVP is consistent with the very ideals embodied in a Jesuit education. For law enforcement agencies... This program will provide a much-needed resource for law enforcement. Currently, large numbers of cases cannot even be investigated to determine if a fraud occurred, much less to establish a loss amount for prosecution. This leads to large numbers of cases languishing due to a lack of resources. JFVP will allow law enforcement to expand the number of cases under investigation, without requiring an expansion of resources. Increasing the number of cases being investigated, and ultimately prosecuted, means a greater opportunity for justice for a greater number of victims. JUSTICE FOR FRAUD VICTIMS PROJECT (JFVP) JUSTICE FOR FRAUD VICTIMS PROJECT (JFVP) The Justice for Fraud Victims Project (JFVP) is a joint partnership of state, local and federal law enforcement officials, local Certified Fraud Examiners (CFEs), and Gonzaga University students and faculty formed to assist victims of fraud in the Inland Northwest. JFVP’s goal is to assist victims of suspected financial fraud in cases where forensic investigative services are limited or too costly. With the assistance and oversight of CFEs and state and federal law enforcement, the students will become a force multiplier for victims in establishing the method by which a fraud was perpetrated and in quantifying the damages so the case can be prosecuted. At the same time, accounting students will obtain real world experience in the field of forensic accounting. Eventually, JFVP hopes to develop and establish a full Center for Forensic Accounting at Gonzaga University to perpetuate this mission. JUSTICE FOR FRAUD VICTIMS PROJECT (JFVP) The Justice for Fraud Victims Project (JFVP) is a joint partnership of state, local and federal law enforcement officials, local Certified Fraud Examiners (CFEs), and Gonzaga University students and faculty formed to assist victims of fraud in the Inland Northwest. JFVP’s goal is to assist victims of suspected financial fraud in cases where forensic investigative services are limited or too costly. With the assistance and oversight of CFEs and state and federal law enforcement, the students will become a force multiplier for victims in establishing the method by which a fraud was perpetrated and in quantifying the damages so the case can be prosecuted. At the same time, accounting students will obtain real world experience in the field of forensic accounting. Eventually, JFVP hopes to develop and establish a full Center for Forensic Accounting at Gonzaga University to perpetuate this mission. The Justice for Fraud Victims Project (JFVP) is a joint partnership of state, local and federal law enforcement officials, local Certified Fraud Examiners (CFEs), and Gonzaga University students and faculty formed to assist victims of fraud in the Inland Northwest. JFVP’s goal is to assist victims of suspected financial fraud in cases where forensic investigative services are limited or too costly. With the assistance and oversight of CFEs and state and federal law enforcement, the students will become a force multiplier for victims in establishing the method by which a fraud was perpetrated and in quantifying the damages so the case can be prosecuted. At the same time, accounting students will obtain real world experience in the field of forensic accounting. Eventually, JFVP hopes to develop and establish a full Center for Forensic Accounting at Gonzaga University to perpetuate this mission.

Overcoming Challenges • Resources • Faculty time and expertise • CFE mentors • Time limit of students (one semester) • Location to secure evidence • Materials (binders, copies, laptops, etc.) • Case Selection • Expert witness testimony AAA meeting - San Francisco - July 31, 2010

Overcoming Challenges • Confidentiality • Location to secure evidence, meeting space • Students, CFE mentors • Media questions • Victim presentations • Written forensic examination reports • For audit trail • For law enforcement or prosecutors • For victims AAA meeting - San Francisco - July 31, 2010

Overcoming Challenges • Outcomes assessment • Academic – what will students learn? • Victims – are they helped? • Continuity of project • Funding • Staffing (internal, external) AAA meeting - San Francisco - July 31, 2010

Case Selection • Wording on Police intake reports • Willing Victim • Multiple layers of fraud • Evidence • Benefit to local community • Statute of limitations AAA meeting - San Francisco - July 31, 2010

Police Intake Reports • Vary by jurisdiction • May include other crimes • Embezzlement • Theft and Larceny • Includes traditional “burglary” • Forgery • Identity Theft and/or Mail Fraud • Longer statute of limitations (in Washington) AAA meeting - San Francisco - July 31, 2010

Willing Victim • Willing to come forward • Risk embarrassment from publicity of a trial • Provide documents and information • Bank and credit card statements • Accounting records • Vendor invoices • Bank reconciliations • Datebooks, calendars • Copies of checks • Take time to identify forgeries AAA meeting - San Francisco - July 31, 2010

Multiple layers of fraud • Check forgery • Credit card fraud • Use company cards for personal expenses • Pay personal credit cards with company funds • Skimming • Misuse of company assets (theft) • Petty cash theft • Pay personal expenses with company funds (larceny) AAA meeting - San Francisco - July 31, 2010

Evidence • Must have documentation • Impossible to trace cash • No cash register  no audit trail • Can be difficult to obtain information on suspect’s bank accounts or credit cards • May need subpoenas or search warrants AAA meeting - San Francisco - July 31, 2010

Case Selection • Benefit to local community • Non-profit organizations • Small business owners • Victim cannot otherwise afford examination • Potential improvements in internal control • Possible deterrent effect in community AAA meeting - San Francisco - July 31, 2010

Future of the JFVP • Gonzaga University • Center for Forensic Accounting • Funding (grants, restitution, donations?) • Potential Expansion • Other jurisdictions • Other cities • Other schools • “Best Practices” for success AAA meeting - San Francisco - July 31, 2010

“Best Practices” for success • Assemble a project team • Law enforcement • University • ACFE chapter • Additional resources (FBI, IRS, DOJ, etc.) • Recognize the time commitment • Volunteers • Faculty and students • Law enforcement • victims AAA meeting - San Francisco - July 31, 2010

“Best Practices” for success • Have reasonable expectations • Caseload • Volume of documents • Potential for restitution • Dollar level of fraud • Benefit to community • Expect the unexpected AAA meeting - San Francisco - July 31, 2010

Video clip • http://www.krem.com/home/College-crimefighters-90301467.html AAA meeting - San Francisco - July 31, 2010

Justice for Fraud Victims Project