Internal Auditors Association
- 1. Internal Investigations Institute of Internal Auditors Palm Beach County Chapter June 15, 2012
- 3. History of the Company October, 2001Great Southern Detective Agency Criminal Defense State/ Federal court Family Law Surveillance
- 4. September 2003 Wendy joins the firm Civil/personal injury October 2005 Consultant, policies and procedures May 2006 New name, new focus, new staff June 2009 Certifications (CLI, FRP)
- 5. Who We Are Certified Paralegal (CP速) Certified Fraud Examiners (CFE速) Certified Criminal Defense Investigator (CCDI) Certified Legal Investigator (CLI) Bi-lingual Federal, State and Former LEO Forensic accountants Certified technical forensic experts
- 6. What We Do Since 2001 Located over 1000 people Conducted over 5000 interviews Uncovered millions of dollars in assets Verified credentials for executives, managers and experts Performed detailed due diligence for corporations and financial institutions
- 7. What We Do Harassment/Discrimination claims Fraud and theft/embezzlement cases Background investigations Due diligence investigations Drug cases Net worth determinations
- 8. The (Workplace) Commandments You shall not lie (on your application) You shall not steal (from the jobsite) You shall not kill (or assault a co-worker) You shall not covet (your employers goods) You shall not blaspheme (or make inappropriate comments to an employee)
- 9. Some Common Schemes Skimming and theft of cash Billing (shell companies, vendor refunds) Payroll (falsified hours, ghost employees, commission schemes) Misuse of company assets* (vehicles, supplies, computers) Theft of inventory
- 10. Some Common Problems Drinking or using drugs (driving, operating equipment) Improper relationships* Jokes, comments, e-mails Disparate policy enforcement (inadvertent discrimination) Ignoring danger signals (threats, aggression, escalation)
- 11. How We Can Help Internal investigations team Interviews, forensic analysis Locate stolen property or money Verify use of company assets Identify dealers and abusers Protect the workplace Policy review and development
- 12. Attorneys and Investigators Attorneys performing investigative interviews? Costs, qualifications Potential conflicts Gathering information versus conducting depositions Confidential vs. privileged (work product) Oversight and coordination Subsequent litigation; preparing for the lawsuit Finally, whats in a name?
- 13. Managing Employee Investigations Reginald Reggie Montgomery, CLI, CPP, CFE, CP
- 14. Backgrounds All new employees If not all, then Sales, Purchasing, Transportation, Financial & all Upper Management positions Criminal (Statewide if available and previous residential locations) Motor Vehicle (on all employees who operate vehicles, SEMI-ANNUAL). Credit (obtain signed release authorization during application process) Employment Education
- 15. Backgrounds - Optional Civil Litigation Database References (neighbors, friends)
- 16. Computer Theft Electronic data and hardware
- 17. Espionage Counter Espionage Sweeps (electronic counter- surveillance, de-bugging) To do it right is expensive Board Meetings R & D Meetings Sales Meetings Planning Meetings
- 18. Case Study #1: Hewlett Packard CEO orders an investigation into information leaks from the BOD to the press Private investigators utilize pretexting to obtain personal identifiers and call information Telephone records identify board member as source of information provided to journalist HP prosecuted by state and federal authorities for use of pretexting; data brokers and investigators criminally charged
- 19. Hewlett Packard Issue: How an outside investigator can screw up your case The investigation became the focus of attention The original wrongdoing (violation of ethical and fiduciary obligations) overlooked by the media and authorities Legislation introduced to criminalize pretexting
- 20. Fraud White Collar Embezzlement Phony vendor schemes Skimming and theft of cash Billing (shell companies, vendor refunds) Payroll (falsified hours, ghost employees, commission schemes)
- 21. Fraud Blue Collar Misuse of company assets* (vehicles, supplies, computers) Theft of inventory Other fraud indicators Issues with harassment, inappropriate behavior, viewing pornography may indicate disregard for company policies,possible inclination for fraud schemes
- 22. Harassment Get everything in writing Put in personnel files Competent Investigator to conduct interviews or polygraphs (voluntary) Employment backgrounds (previous history of harassment?)
- 23. Loss Prevention NEGLIGENCE SUITS Surveys Recommendations FORESEEABILITY
- 24. Misconduct Company policy violations Written Reviewed by outside counsel Employee separations Security concerns IT coordination HR documentation
- 25. Labor Disputes Coordinate Physical Security Coordinate transportation of employees on and off site Protect employees and facility Get qualified expert in field that knows how to cooperate with both parties (if possible) in non- confrontational manner! Video/film (confer with qualified labor counsel)
- 26. Polygraph Know when to and when not to Employee notification Qualified expert to conduct polygraph
- 27. Surveillance Workers Compensation Fraud Theft Harassment Violence Absenteeism Justification for termination needs proof! Manned and unmanned video
- 28. Undercover Operation Very dangerous, must be handled properly Usually requested to resolve theft, drug usage White or Blue Collar, operative must be smart and report only to Investigator. Findings to be reported confidentially and daily. Provides collateral information re: policy violations, management issues, undisclosed liabilities Coordination with law enforcement in cases involving contraband
- 29. Violence (see Harassment) Get everything in writing Put documents in personnel files Competent Investigator to conduct interviews or polygraphs (voluntary) Employment backgrounds (previous history of harassment or violence)
- 30. Workers Compensation Review reports (accident and medical) Conduct surveillance
- 31. Employee Theft Verify initial report Attempt to quantify losses Initiate appropriate techniques for apprehension Report findings Make recommendations and initiate corrective controls
- 32. Case Study #2: Asset Misappropriation Employee utilizes company vehicle for personal business Surveillance to establish daily and after hours activities Research to identify business entities at various locations Covert contacts to confirm personal business enterprise Documenting for submission to corporate counsel
- 33. Resources for Employee Investigations Voice Print Identification Statement Content Analysis Law Enforcement Countermeasures Covert Cameras Net Worth Analysis
- 34. Resources for Employee Investigations Profiling Polygraph and Interview Forensic Accountants Computer Forensics Due Diligence
- 35. Resources for Employee Investigations Surveillance Undercover Operatives Civil Litigation (plaintiff and defense) Contingency Planning Facility security cameras and access control News and media reports Confidential informants
- 36. Resources for Employee Investigations The List of Resources for Employee Investigations is only limited to the Investigators imagination, corporate policy, local, state, and federal laws
- 37. Endless waiting, increasing anxiety Facts of surveillance: Patience, patience, and more patience Minimal intake of fluids Staying focused and in alert mode Blending in Physical discomfort (heat/cold, cramped quarters, thirst, hunger) Sense of humor required
- 38. Case Study #4: The Investment Viatical settlements passed as an investment opportunity Terminally ill patients have life insurance policies with significant death benefits Patients sell the policy and assign the benefits to a third party broker in exchange for a portion of the death benefit Tens of millions invested by pension funds
- 39. Patients receive immediate cash to pay for quality of life support, medications, or travel Broker then sells shares of the policy to investors/groups Investors collect a share of death benefits when the patient/policyholder dies Monies collected from investors used to purchase insurance policies from terminally ill patients Policies reviewed by medical personnel to confirm diagnoses and life expectancy Returns of 40% guaranteed
- 40. Issues to discuss You are on the audit committee of a state pension fund tasked with performing due diligence What are the elements that should be reviewed and verified before making a significant institutional investment? What items would you ask to see from the broker? What processes would you utilize to verify information provided?
- 41. Behind the Curtain in Oz $110M taken in by FinFed/ABS Only $6M in policies actually purchased Only one nurse to review medical policies Two lawyers certified that procedures were established and followed, and that they personally reviewed the files Shares were determined to be securities; brokers not registered/licensed to sell securities Patients were living beyond initial life expectancies
- 42. Behind the Curtain in Oz Fraudulent insurance policies uncovered No institutional investor conducted more than cursory examination before investing millions Millions spent on lavish lifestyles: homes, cars, jets, travel Initial investors paid returns from proceeds from new investors (Ponzi) Hey, its the 90s!
- 43. Behind the Curtain in Oz Outcome: Federal prosecution of all participants Sentences of 5 to 50 years Lawyers disbarred Investors large and small lost millions Pension funds threatened with insolvency The largest Ponzi scheme in Southern District of Florida at that time All for want of a quality audit and appropriate due diligence
- 44. And, finallyThank You! Mark J. Murnan, CLI, CFE mark@completelegalinv.com 561-687-8381 Like us on Facebook: Complete-Legal- Investigations-Inc Sign up for our newsletter Make it a great weekend!