2:00

walk in their shoes. Today

2:02

we're chatting with a forensic accountant,

2:04

Chris Ekimov. We'll hear

2:06

about a headmaster who stole from his

2:08

own students. We'll learn about

2:10

what sorts of clues you look for when

2:13

you're scouring someone's records for evidence of fraud.

2:16

And we'll hear how this wary

2:18

outlook, always being on the lookout

2:20

for people lying or cheating, affects

2:22

your perspective in everyday life. I'm

2:25

Dan Heath. Stay with us. So

2:30

what is a forensic accountant exactly? So

2:33

I use the shorthand. In audit or

2:35

general accounting services are a

2:37

mile wide and an inch deep. You're not looking

2:39

at every single transaction, but

2:41

you're getting a general sense of how

2:44

appropriate these transactions are. Forensic accounting is

2:46

the inverse. It is a

2:48

mile deep, but only an inch

2:50

wide. And that's because you're

2:52

specifically looking at how are payments

2:55

being processed in Uganda. Are

2:57

the right people receiving the appropriate amounts

2:59

of money? Are we interacting with government

3:02

officials in compliance with our policy and

3:04

with international law? So to

3:06

circle back to that CFO, the

3:08

one who'd been caught embezzling millions of dollars,

3:11

how did he get away with it? Well,

3:13

for years he'd been charging personal

3:15

expenses to the company as travel

3:18

expenses. But beginning several

3:20

years ago, Chris told me that was no

3:22

longer possible. The kicker, Dan,

3:24

was 2020. The

3:26

global pandemic happened and travel ended.

3:30

And in that year, he could no longer

3:32

code those expenses to travel because as all

3:34

of us did in that day, you knew

3:37

if travel expenses were the same as 2019,

3:39

you're probably skirting a lot

3:41

of the local laws and issues around COVID.

3:44

So he actually stopped stealing in 2020.

3:47

And then in 2021, went back to start stealing again,

3:49

but knew that the business was still not traveling to

3:51

the degree they were in 19 and

3:54

prior. So we tracked that

3:56

activity through and he started coding it

3:58

as an additional payroll expense. Which

4:00

was partly truthful in his defense. It

4:02

was an extra payroll expense. We could

4:04

spend the next hour talking about the

4:06

tax implications of that issue, right? Because

4:08

he was not reporting that income and

4:10

the business was not recording that as

4:12

payroll because it hadn't been done that

4:14

way for the 10 years prior. So

4:17

when you're brought in in a case like that,

4:19

there's an anomaly, there's a suspicion of some kind,

4:21

you're hired to come in. What's

4:24

the first move? Like where do you

4:26

start? Getting as robust

4:28

a understanding of the circumstance is really

4:30

where we can be most effective. And

4:32

are you on site interviewing people or

4:35

do they send you a pile of

4:37

documents or like how do you first

4:39

get your head around the situation? I

4:41

think really to kind of break it

4:43

down, day one CEO calls and says

4:45

they're embezzling. What does the company

4:47

do? What is the normal course of business,

4:49

right? What industry are they in? What kind

4:51

of contextual things can I learn through my

4:53

own research before I ever approach

4:56

the target of an investigation or start

4:58

reviewing documents? The second is

5:00

really working internally with our team at RSM. We'll usually

5:02

staff these projects with a team of folks and most

5:04

forensic accountants will follow the same to

5:07

brainstorm what types of insights

5:09

are we trying to glean? What is

5:11

our objective? What hypothesis are we either

5:13

confirming or refuting? And what

5:16

financial information or other information do we need

5:18

for that? And some of that too comes

5:20

from a professional responsibility perspective. Most forensic

5:22

accountants are certified public accountants or certified fraud

5:24

examiners and we hold ourselves out to have

5:27

a certain professional standard about the work

5:29

that we do, right? I'm not just going to take

5:31

Johnny's answer to be like, no, I'm not embezzling. And

5:34

then write a report that said, Johnny said, no, we're

5:36

done. We're going to kick the tires a little

5:38

bit, right? We're going to do some due diligence into the

5:40

appropriateness of his conduct and what his response might have been to

5:42

be able to answer that. Then to

5:44

your question about being on site, sometimes

5:47

you'll sit across the table from somebody you've known

5:49

has stolen millions of dollars and

5:51

you'll do what's called an admission seeking interview,

5:53

right? You gather all your information, the classic

5:55

cases you interview the suspect last that you

5:57

think did it so you can have as much as you can. information

6:00

as possible and sit them down and kind of

6:02

say, all right, explain this to me. I

6:04

see a check with your name on it. I see your

6:06

signature on that check. I see it for $5,000 and

6:09

I see no business reason for that to happen. Why

6:11

was this check written and why did you sign it?

6:13

And that can be a tough answer. And

6:15

do most people cave in that situation when

6:17

they realize you've got the evidence or a

6:20

lot of people still in deny, deny, deny mode?

6:23

Yeah, it depends on the level of sophistication.

6:26

I've sat across from people who will

6:29

never admit it, even though we've got

6:31

an email that they sent that said, I'm

6:33

committing a fraud, ha ha, this company is so dumb. Like,

6:36

dude, you wrote this 18 months ago and

6:39

now you're telling me it didn't happen. So there's

6:41

always gonna be that 5% or 10% that are denying

6:43

or think they can get out of it or think

6:45

they're smarter than you. But most

6:48

of these people that admit or

6:50

were in an investigation, sometimes

6:52

even show a sign of relief. They say, I've

6:54

been living under this terrible

6:56

cloud of stress and deception and

6:58

lies. And I feel so terrible, I'm

7:01

glad I got caught. That's

7:03

not to minimize the punishment. They may go to

7:05

jail, they may lose their license or their ability

7:07

to practice or their job, but they

7:09

just wanna get out from under this huge albatross that's been

7:11

over their lives. So in those interviews, and we don't have

7:13

to get into the techniques of it, but it's really to

7:16

give them an out, to say,

7:18

listen, this happens a lot. We understand, was

7:20

this a mistake? Did you think

7:22

that this was appropriate? It's okay. Talk to me

7:24

about what your thinking was. And that often leads

7:26

to a better resolution for the company too, to

7:28

know where they may have missed on a policy

7:31

or on a signature or on an authorization request

7:34

beyond just someone denying to the nth degree and not wanting to

7:36

talk to you. What is

7:38

the interface between what you do and

7:42

civil or criminal law? When

7:44

someone does confess in a moment like that,

7:47

do you refer them to the authorities or is

7:49

that outside the scope for what you do or

7:51

how does it work? It goes

7:53

hand in hand. It's not 100% in

7:55

one direction or another. Like I talked about that

7:57

embezzlement investigation, over a 10 year period for $7

7:59

million. million dollars. We were hired by

8:01

the legal counsel for the business. So

8:04

their attorneys are considering, are we

8:06

going to be able to recover any of this money? Short

8:08

answer is really no, because they spent most of

8:10

it on travel, right? You're not going to get

8:12

a flight back or a private jet expense back

8:14

from the private jet company. But

8:16

they consider and advise the company on what

8:18

a recovery might be in terms

8:20

of theft or embezzlement. They talk about the message

8:22

they want to send to other employees or other

8:24

businesses out there that they're not going to put

8:27

up with fraud, whether it's $5 or $500,000, as

8:30

well as listen, the cost of litigation and

8:32

bringing things to court is not zero. So

8:35

if you're not going to get a big recovery

8:37

from someone and you're going to have to pay

8:39

attorneys a lot of money to try the case,

8:41

it might not be a good idea to

8:44

file criminal or civil charges because it's really

8:46

a zero sum or a cost benefit analysis.

8:48

It's not in the company's favor. And is

8:50

there a tendency of companies, like

8:52

with hacks, for instance, a lot of companies won't

8:54

disclose hacks because they're afraid it's going to surface

8:57

their lack of good IT policy. Like, do you

8:59

sometimes encounter companies that want to sweep fraud under

9:01

the rug because they don't want people to know

9:03

how bad their controls were? Yeah. And I'll say

9:06

that too. One of the areas we see that

9:08

a lot is a non-for-profit area because their business,

9:11

for lack of a better phrase, is

9:13

based on reputation. You know, we're doing good

9:15

work to meet our mission, whether that's to

9:18

serve underprivileged communities or provide food

9:20

for those in situational issues or

9:23

house survivors of domestic violence. Being

9:26

an organization that can't keep their

9:28

own shop in order can really

9:30

hurt grants, donations, things like

9:32

that. And again, we're not saying that these companies

9:35

are purposefully lying to people about what happened, but

9:37

they're less likely to report that to the

9:40

news or maybe bring a criminal or civil

9:42

action because some of the reputational harm might

9:44

weigh into there as well. Looking

9:47

back, what's the engagement that

9:49

you've felt most emotionally

9:52

engaged with? Hmm.

9:56

So I've done some work for attorneys

9:59

who represent higher

10:01

education institutions. And

10:03

must have been four or five years ago now. One

10:06

of the attorneys down in the Southeast part of the

10:09

US was representing a day school, a

10:11

private school for kids in elementary and high school, at

10:14

which the headmaster stole,

10:17

gotta put a number on it, somewhere in the low

10:19

seven figures. This is a school where tuition's about 15,

10:21

$20,000 a year for

10:23

these kids, ended up walking away

10:25

with more than a million dollars and denied

10:27

all aspects of the fraud. And

10:29

that to me really rung true because it

10:31

was taking a legitimate

10:33

service for people of means, attempting

10:35

to better themselves, to learn

10:38

and grow, and walking away

10:40

from it, right? This was not taken from a

10:42

multi-billion dollar corporation, it's a rounding

10:44

error. This closed the school. Oh wow.

10:47

And so our work was really to understand what they

10:49

could reclaim from the individual, what they

10:51

could recover from an insurance policy against a

10:53

fraud loss, and really try

10:55

to be as efficient and effective because the school does

10:58

not have the wherewithal to have a multi-year investigation, right?

11:00

They're not gonna be able to pay attorneys and accountants

11:03

forever. So how do we do this quickly? How

11:05

do we do it meaningfully? And how do

11:07

we get to a result that's gonna help these kids

11:09

recover some of the money they paid for this school

11:11

that no longer exists to get them back on their

11:14

feet and maybe to another school or to another situation?

11:16

So there's times that you can get

11:19

emotionally attached isn't the right way to say it,

11:21

but I feel more

11:23

connected to the work when I can see the obvious

11:25

good it may do if we get to a good

11:27

answer. And in a

11:29

situation like that, is there any way to claw

11:31

back some of that money from the person who

11:34

absconded with it? There is, right? That's why the

11:36

civil and criminal court system exists in those examples.

11:38

I think that he had funded

11:40

a lifestyle probably with about 50% of it that he

11:43

took, but also improved a home that he lived in.

11:45

And so that home, it could be sold at

11:47

auction or he could give that up, then

11:50

those monies could be distributed to some of the

11:52

victims there and back to the school administration. So

11:55

that's one of those cases too

11:57

where the investigation as a fact

11:59

witness. is really important. John

12:01

took a $1,000 check from the school. He

12:05

wrote it to himself from the checking account. That

12:07

same day, he paid $1,000 to a contractor who

12:11

was building his new kitchen. One

12:13

of the things we did in the embezzlement case

12:15

was look at the payments made to the college

12:17

funds of the embezzler of

12:20

his children. And it was

12:22

very clear that his payroll check donated

12:24

$50 or

12:26

$100, whatever the number was, to each of his kids'

12:28

college funds. But then his embezzlement

12:30

led to thousands more being put in there.

12:33

And so we got into a pretty aggressive

12:36

discussion with the opposing attorney representing him,

12:38

saying this money was not just kind of

12:40

his regular salary funding his kids' college, this

12:43

was stolen funds. And we had to

12:45

make a decision about whether to go after innocent

12:47

kids' college funds to see if we could help

12:50

reclaim some of the debt that amounted from the

12:52

embezzlement. Dumb question, but why

12:54

do you have to establish where

12:57

people spent the ill-gotten gains?

13:00

Isn't it enough that they just took more than

13:02

they were supposed to take from the company? Even if

13:04

they gave it to charity, it would still be

13:06

a criminal or civil violation, wouldn't it? Yeah,

13:09

I mean, I'll give you the worst answer

13:11

ever. It all depends, facts and circumstances-based. But

13:14

in certain cases, and I had the benefit, I

13:16

guess, and it's a little bit of my Cobb

13:19

benefit of working on the Madoff matter. And

13:22

so Bernie Madoff, famous Ponzi scheme.

13:24

That's gotta be like the Everest of forensic

13:26

accounting, no? I say that,

13:28

but also, I mean, this is a multi-billion dollar

13:31

case, it's very hard to find a forensic accountant

13:33

who didn't work in some facet of

13:35

the Madoff case, whether it was for the trustee

13:37

or some of the individuals who lost money or

13:39

some of the feeder funds or hedge funds that

13:41

were involved, so thousands and thousands of people have

13:43

worked on the matter, generally. And

13:46

it was one of those interesting issues. I

13:48

worked for a firm where an individual was

13:50

picked as the expert witness over the bankruptcy.

13:53

And so his job was to talk about the way money

13:55

was spent. And they had to

13:57

prove in court that it was a Ponzi

13:59

scheme. They had to literally write

14:01

a 125-page report that said, these are all

14:03

the reasons it's a Ponzi scheme, even though

14:06

Bernie had already admitted to it. And

14:08

the reason was the legal mechanics around

14:10

it being claimed a Ponzi

14:12

scheme had to be accepted in court. And you couldn't

14:14

just take the, you know, admission

14:17

of a known liar and thief. So

14:20

has this work changed the way

14:22

that you see people or see

14:24

organizations? It's

14:26

hard to say, right? I am so jaded, right?

14:29

I think about it the same way you think

14:31

about like an emergency room doctor, right? An emergency

14:33

room doctor might look at someone who comes in

14:35

with, you know, severe shoulder injury

14:38

and not even blinks. I

14:40

think that I've learned a lot about people

14:43

and about trust in that,

14:45

you know, there's a lot of statistics out

14:47

there from the Association of Certified Fraud Examiners

14:49

and other organizations that study these things to

14:51

say that, you know, the most trusted individuals

14:53

are often the ones who are found to

14:56

be, you know, taking money in situations where

14:58

frauds identified. Oh, God, really? Is that true?

15:01

Well, it's a debate between controls and oversight, right?

15:03

If you've got a person that you trust implicitly,

15:05

you know, you don't check every little

15:07

thing they do until something major happens,

15:09

right? Like that CFO. The CEO trusted

15:11

him for a dozen years before he was in

15:13

a position to steal from the company.

15:15

And then after he started wanting to get out over

15:17

his skis and live a more lavish lifestyle, you

15:20

know, that trust trumped oversight in

15:22

terms of how travel and entertainment

15:24

expenses being utilized. So those

15:26

things happen. That's got to mess with your mind.

15:28

I mean, do you have like this loop in

15:30

your brain now when like when you start to

15:32

really trust someone, you're like, wait a minute, is

15:35

this the highest risk person in my life? Yeah, for

15:37

me, right? It's a personal choice to like, you know,

15:40

my wife and I manage a checkbook like

15:42

any married couple do and there's sometimes a

15:44

raised eyebrow right about a specific expense or

15:46

something like that. But to me,

15:48

it's much more about educating that individual when they call

15:50

and they go, no, no, no, no way Sharon could

15:52

have done this. You go, well, you know,

15:54

I've met 11 Sharon's in the past

15:56

10 years and they've all done it. with

16:00

open eyes and think about this

16:02

from an objective perspective. And

16:04

let's check Sharon's work and make sure she's signing

16:07

off and getting appropriate approval and letting you know

16:09

when something's out of whack or out of budget.

16:12

Is there any way to scope like

16:14

the incidence of fraud? Like

16:16

based on your experience, what's the likelihood

16:18

that any company out there is experiencing

16:21

something that you could interpret as

16:24

fraud right now? What would

16:26

you guess? The answer is yes.

16:30

So the Association of Certified Fraud Examiners I

16:32

mentioned a minute ago, they

16:34

are an international body of anti-fraud

16:36

professionals that both certify folks

16:38

like me as certified fraud examiners through a test

16:41

and through training and things like that, as

16:43

well as conduct studies and solicit

16:45

responses from certified fraud examiners and

16:48

people in the market. And their running statistic is

16:50

that top line revenue of a

16:52

business, 5% of

16:54

that can be attributed to fraud loss. You're

16:57

kidding. 5% yet. So

17:00

if your business makes $10 million, 5% of

17:02

that you can somewhere

17:04

in those expenses, somewhere in the operations of

17:06

the business or you're missing out on 5%

17:08

of revenue is being

17:11

siphoned off by fraudulent things. And that's

17:13

everything from people inappropriately recording

17:15

their time and saying they worked more than

17:17

they did to adding

17:19

an extra travel meal to their expense

17:22

report even though they weren't technically traveling

17:24

that day. So it's not the

17:26

Bernie Madoff's or the Enron's scandals or 5% of the

17:28

world. It's really those kind of cases

17:30

that 5% of revenue is really

17:32

kind of the benchmark that you can measure

17:34

yourself against. Now, I work with clients all

17:37

day that are very adamant that there is

17:39

no fraud going on and they're probably right

17:41

to a material degree, especially if it's a

17:43

mom and pop business with six people. It's

17:45

a lot harder to create an avenue

17:47

for fraud there, not that

17:50

it doesn't happen. But compared to some

17:52

of the large multinational organizations, there's people

17:54

trimming on the edges and coloring outside

17:56

the lines pretty regularly, not

17:58

to a material extent, but that is happening

18:00

out there. As we speak right

18:02

now, someone is being fraudulent out

18:05

in the world. I was

18:07

curious, how many layers of suspicion

18:10

do you need in a typical

18:12

situation? If someone hands you customer

18:15

invoices or receipts, or do

18:18

you take that at face value or is there

18:20

immediately a loop in your head that's

18:22

like, I wonder if this is a real invoice

18:24

or a real receipt? How much verification do you

18:26

typically have to do? It

18:29

depends on the circumstance, of course, but I like

18:31

to say it's an iterative process. If

18:33

you give me 11 random invoices

18:35

from 2022, and

18:37

they all follow a standard format

18:39

from a specific business, they all

18:41

have very detailed amounts and descriptions

18:43

on them, and the numbers and

18:45

dates of them do not lend

18:48

themselves to any type of

18:50

manipulation. We talk about sequential numbering. If I

18:52

pick 11 random invoices from business A, and

18:55

they're numbered 101 to 112, and

18:57

they happen throughout the year, my question is,

18:59

how is this business still open if you're the only

19:01

one that they're sending invoices to? If

19:03

you don't pick up on anything like that, you're going

19:06

to feel differently about that invoice in that business than

19:08

you are if you see something that looks

19:10

like a logo that Dan, I don't know how you are

19:12

at Arts, but maybe you or I could draw on Microsoft

19:14

Paint. That's going to lead me

19:16

to make a different conclusion about the value of that

19:18

information, or if they're following

19:20

a non-standard format, if the description lines go

19:22

from being very detailed to very general, or

19:25

they shift on the page, can I explain

19:27

that or can I not? I

19:29

love this. These are such great little

19:31

screens that you've picked up over the

19:33

years. I'll talk about a

19:35

little case we had a couple of years ago

19:37

where an individual who's an IT professional at

19:40

a business was using

19:42

the IT budget to buy himself things,

19:44

all kinds of stuff, convenience stores, and

19:47

Target, and Walmart, and all those things.

19:49

But he would go online and what he would do

19:51

is he would screenshot the

19:54

line item from an invoice from a

19:56

computer part supplier, Best Buy

19:58

Whomever, that's at HDMI cable. You know

20:00

one unit and he would paste that over the

20:02

real Line item that he

20:04

purchased the problem was he did that and he

20:07

didn't change anything else about that invoice So we

20:09

would get an invoice from Walmart that listed all

20:11

of these HDMI cords

20:13

that he had bought but of the six

20:15

lines on him They all had insanely different

20:17

prices like he bought one HDMI cord from

20:19

Walmart on that day for six hundred and

20:21

forty dollars He bought another one for six

20:23

dollars. He bought a third one for fourteen

20:26

hundred dollars It's just like being able to

20:28

obviously that's an extreme example But you

20:30

know he was trying to get it approved through the

20:32

expense system and all the expenses did was look at

20:34

you know Is this dollar within our budget which the

20:37

answer was unfortunately? Yes, and do the

20:39

descriptions on a spot check match what we think they

20:41

did of course and so that's a computerized system It

20:43

did not go through and evaluate the appropriate

20:45

pricing of every HDMI cable purchase You

20:48

know we ended up finding out that he was buying himself

20:50

a lot of clothing and shoes and electronics and all these

20:52

things But saying they were all

20:54

HDMI. He had acquired over 780

20:57

HDMI cables For eight and

20:59

a half million dollars or whatever the number was over the period

21:02

He's got a whole closet full of very expensive

21:04

HDMI cables So your question was how

21:06

many layers do you have to go down it definitely does

21:08

depend? There's times where we

21:10

will specifically disclaim in our reports. We

21:12

did not validate the veracity

21:14

of this information I got a report from

21:16

the bank that said that they paid eleven

21:18

dollars on Thursday I did not

21:21

drive to the bank and ask them where the

21:23

eleven dollars was right I assumed that

21:25

the bank provided me with legitimate information. They're a third party.

21:27

They have no reason to lie to me We're

21:29

gonna explain that at our report Would

21:31

you recommend this field to a young

21:33

person? I would I've

21:37

learned over the years that there are people

21:39

who are Naturally good at

21:41

a variety of different things one of

21:43

my best friends is a health care

21:45

auditor in Pittsburgh And he

21:47

loves seeing the same client every year

21:49

doing very similar work every year same

21:52

type of audit work Not

21:54

that that's boring or repetitive in any means but kind

21:56

of having those long-standing relationships with clients I have friends

21:58

who work as a counselor in-house and they

22:00

write the same report every month,

22:02

every year for a dozen years. That's

22:05

not something that... I'm sensing

22:07

a need for variety in your personal life. That's where I'm

22:09

at, right? I'm one of those people who, you know, I

22:11

like to tell the story. I was on a huge

22:14

litigation matter between creator

22:17

of telecommunication services, right, satellites

22:19

and a federal agency. And

22:22

I learned more about satellites than probably

22:24

anybody but Dave Matthews knows about. Pause

22:26

for laughter. I love it. Dad jokes

22:29

are always welcome on the show. You

22:31

got it. And I have not worked on a satellite case

22:33

since, right? So I can watch

22:35

a report of what Elon Musk has put into

22:37

the sky and know a little bit more about

22:39

it than I did, you know, 10 years ago.

22:41

But I'm not going from satellite case to satellite

22:43

case. I like getting that

22:45

view of different industries, different services,

22:48

different types of circumstance and learning

22:50

from them and maybe, you know, filing that away

22:52

as a memory or as a lesson to learn

22:54

on a future case. But if I

22:56

were to be always looking at just one type of

22:58

issue, I think that I would kind of lose it

23:00

a little bit. And that's just my natural preference. So

23:03

if you're asking about recommendations, I would ask people

23:05

to look inside themselves and say, are you okay

23:07

with getting yelled at by a different

23:10

client every week, 52 weeks a

23:12

year? Sure variety. If the answer is close to yes,

23:14

yeah, maybe think about it. Where if you'd rather be

23:16

yelled at by one client every year, maybe you look

23:18

a little bit more towards my friend. This is not

23:21

for you. Yeah. So Chris,

23:23

on the show, we always end with a lightning

23:25

round of questions for our guests. So

23:27

let me fire away here. What is

23:29

a word or phrase that only someone from

23:31

your profession will be likely to know? And

23:34

what does it mean? Well, I'm

23:36

going to broaden the definition of profession. So

23:38

I'm going to say those who work in

23:40

the litigation or fraud investigation space. So attorneys,

23:42

you're welcoming as well. The word is see

23:44

enter, Dan, do you know what see enter

23:47

is? See enter? No. See

23:49

enter is the legal term

23:52

for a fraudulent intent. So

23:55

see enter is often what you have to prove in

23:57

a court of law so that a judge

23:59

or a judge. jury can determine if this was

24:01

fraud or not, right? So writing yourself a $5,000

24:03

check by accident, again,

24:06

we can make that argument as one does. It

24:10

has happened, I'm sure somewhere, right? Nothing in the world

24:12

is new. Versus purposefully writing

24:14

yourself a $5,000 check to

24:16

steal from the company, to enrich yourself, to

24:19

make the down payment on your yacht, right?

24:22

Proving that to enter, that knowledge of

24:24

that fraudulent intent has a legal element

24:26

to it. Versus negligence, right, is

24:29

another legal concept of maybe not

24:31

overtly performing an act or omitting

24:33

an act that creates an issue,

24:35

but just comes by happenstance or

24:37

by you neglecting something. So

24:39

our HDMI cable friend, Boo Koo

24:41

C. Enter. Yes,

24:44

it was quite clear from the documents

24:46

that he was maybe a little lazy

24:48

in copying the same HDMI screenshot over and

24:50

over again, but did not have much to

24:53

say about his fraudulent intent after he was

24:55

approached. All right, question

24:57

two, who is the most famous

24:59

forensic accountant, whether real or fictional?

25:02

So the answer is both real and fictional,

25:05

and the gentleman who got me involved

25:07

or interested in forensic accounting is a

25:09

gentleman named Frank Wilson. Dan, do you

25:11

know who Frank Wilson is? No, no,

25:13

tell me about Frank. Frank Wilson is

25:15

one of the folks on Elliott Ness's

25:17

team who helped capture the famous Al

25:19

Capone on Tax Rod. So

25:21

if you remember the movie from the

25:24

late 80s, The Untouchables starring Gwen Young,

25:26

Kevin Costner. I saw that

25:28

movie early in my career, and just the

25:31

idea that there was this type of law

25:33

enforcement service or law enforcement adjacent activity related

25:35

to accounting really got me excited. So

25:37

I'm sure folks will say Ben Affleck. I love that

25:39

you were fixated on the accountant in that movie. Exactly,

25:41

yeah. There's a lot of other stuff going on, and

25:43

Sean Connery is great. Most people

25:46

will probably say Ben Affleck's character in The

25:48

Accountant is probably more famous now after

25:50

that action movie came out a few years ago, but

25:52

I always go back to Frank Wilson as a driving

25:54

force in my career. Oh, that's true. The

25:57

Ben Affleck character was a forensic accountant, wasn't

25:59

he? Yeah. And that movie is

26:01

100% accurate if you only

26:03

focus on the scene where he's in the

26:05

conference room checking the numbers. All

26:08

the other stuff I have not seen

26:10

in my career in terms of gun ranges and

26:12

flying vehicles and

26:15

everything else going on. Yeah, you all are

26:17

basically Navy SEALs with calculators, right? Sure, yes.

26:19

Yeah, that's right. And sometimes I get

26:21

tired standing up, but that's a different story. Okay,

26:24

question three. What phrase or sentence

26:26

strikes fear in the heart of

26:29

forensic accountants? Oh,

26:32

here's something I should have given you at

26:34

the beginning of the investigation. Has

26:39

someone said that to you before? When

26:41

I hear that from a client, I just know I'm in

26:43

for a world of hurt, right? There's some assumption that we

26:45

missed or some documented that we didn't know about that maybe

26:47

we went down path A and we should have gone down

26:49

path C. Had we known that, right, we would

26:51

have done a lot of things differently. So that's something where, you

26:53

know, all things being equal, we'll get to the right answer. But

26:56

that's one of those where, all right, we got to

26:58

start all over again and then kind of reframe what

27:00

we're doing. Chris

27:07

Ekimov is a director in

27:09

the financial investigations and dispute

27:12

services at RSMUS. He's

27:14

also the co-host of the Insecurities

27:16

podcast, which explores the

27:19

wild world of securities regulation and

27:21

enforcement. We'll put a link to it

27:23

in the show notes and I'm a subscriber myself, by the way.

27:26

I could have talked to Chris for

27:28

three hours. I'm totally fascinated by what

27:30

he does. And what I

27:33

kept thinking about after we talked

27:35

was the point he made about

27:37

how it's usually the most trusted

27:39

individuals who are the ones most

27:41

responsible for fraudulent activity, not

27:44

because trusted people are more likely to be

27:46

criminals, which would be insane, but because

27:49

trusted people are the only people with

27:51

the access and the wherewithal to pull

27:53

off the crimes. And

27:56

then because that one trusted person

27:58

in a hundred or a thousand

28:01

abuses their trust and commits fraud,

28:03

the rest of us stop

28:05

getting trusted preemptively, right?

28:08

So, all of this compliance activity springs

28:10

up around us, the controls and the

28:12

oversight and the red tape, and

28:15

it makes everybody's life a little bit

28:17

more frustrating. It's

28:19

sort of like how drug stores started

28:21

locking up the razor blades because they

28:23

were expensive and easy to steal. And

28:26

then because one bad apple and a

28:28

thousand might have tried to steal the razor blades, the

28:30

other 999 of us have

28:33

a guaranteed more annoying shopping

28:35

experience. And I think the

28:37

same thing is true with financial controls. It's

28:40

like a tax we all have to pay

28:42

because of people like our friend, the HDMI

28:44

cable bandit. But at

28:47

least we've got people like Chris out there tracking

28:49

them down one by one. You

28:51

got to love a profession where you can use

28:53

your math skills to fight crime. And

28:56

folks, that's what it's like to

28:58

be a forensic accountant.