Fraud Examination, 4E

Chapter 9: Conversion
Investigation Methods

Albrecht, Albrecht, Albrecht, Zimbelman

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Learning Objectives

 Explain why it is important to find out how

perpetrators convert and spend their stolen funds.
 Understand how federal, state, and local public
records can assist in following the financial
“tracks” of suspected perpetrators.
 Access information via the Internet to assist in the
investigation of a suspected fraud perpetrator.

Albrecht, Albrecht, Albrecht, Zimbelman

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Learning Objectives

 Perform net worth calculations on suspected fraud

perpetrators and understand how net worth
calculations are effective in court and in obtaining
confessions.

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Conversion Searches

Performed for two reasons:

(1)to determine the extent of embezzlement
(2)to gather evidence that can be used in
interrogations to obtain a confession
 The most common technique used to investigate
and resolve fraud is by interviewing.

Albrecht, Albrecht, Albrecht, Zimbelman

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Conversion Searches

Information can be gleaned from:

(1)federal, state, and local agencies and other
organizations
(2)private sources of information
(3)online sources of information
(4)using the net worth method of analyzing
spending information

Albrecht, Albrecht, Albrecht, Zimbelman

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Conversion Searches

Albrecht, Albrecht, Albrecht, Zimbelman

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Government Sources of
Information
 Federal Sources
 Department of Defense
 maintains records on all military personnel, both active
and inactive

 Department of Justice
 maintains records related to the detection, prosecution,
and rehabilitation of offenders

 Federal Bureau of Prisons

 maintains records on those who have been detained in
various facilities.
Albrecht, Albrecht, Albrecht, Zimbelman

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Government Sources of
Information
Internal Revenue Service
 IRS records are not available to the public, so access to its
databases normally requires the involvement of law enforcement
officials.
Secret Service
 In addition to protecting the president of the United States and
other federal dignitaries, they also investigate counterfeiting , theft
of government checks, interstate credit card violations, and some
computer crimes.
U.S. Postal Service
Postal inspectors can be very helpful in investigations of employee
fraud, investment scams, or management frauds.

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Government Sources of
Information
Central Intelligence Agency
 Provides useful information
when cases involve
international issues

Social Security
Administration
 has information about
individuals’ Social Security
numbers

Albrecht, Albrecht, Albrecht, Zimbelman

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Government Sources of
Information
State Sources of Information
State Attorney General
 Generally have investigative arms such as the State
Bureau of Investigation; contains records relating to
individuals who have been convicted of a breach of state
civil and criminal laws.

State Prisons
 maintains records on all individuals who have been
incarcerated in state prison systems, as well as on
individuals who are on probation or parole.
Albrecht, Albrecht, Albrecht, Zimbelman

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Government Sources of
Information
Secretary of State
 maintains all types of records relating to businesses
and Uniform Commercial Code (UCC) filings

Department of Motor Vehicles

 maintains driver’s license records

Department of Vital Statistics

 maintains birth records

Albrecht, Albrecht, Albrecht, Zimbelman

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Government Sources of
Information
Department of Business
Regulation
 maintains licensing
information about various
professionals

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Government Sources of
Information
County and Local Sources
County Clerk
 maintains numerous records on local citizens, including
voter registration records and marriage licenses

County Land Office and Tax Assessor’s Office

 contain real estate records for land located in the
county

County Sheriff and Other Officers

 contains information about criminal charges, indictment
statements, pretrial information reports, etc.
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Government Sources of
Information
Local Services
Local Courts
 maintain records on past law violators, including pretrial
information like personal history, employment history,
personal and physical information, prior charges,
divorces and property settlement agreements, personal
injury lawsuits, financial claims and litigation, fraud
claims and co-conspirators, bankruptcies, wills, and
probates

Albrecht, Albrecht, Albrecht, Zimbelman

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Government Sources of
Information
 Permit Departments
 supply information on fire permits (hazardous chemicals), health
permits (pollutants), elevator permits, and building permits

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Private Sources of
Information
 Utility records (gas, electric, water, garbage, and
sewer)
 Previous Acquaintances
 “Trashing”
 Shredded documents
 Original files on computers

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Private Sources of
Information
Credit reporting companies maintain:
 Consumer information, such as addresses, ages,
family members, and incomes
 Account information, such as payment schedules,
items purchased, and buying habits
 Marketing information, such as customer
breakdowns by age, sex, and income levels
 Information on current and former employees

Albrecht, Albrecht, Albrecht, Zimbelman

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Online Databases
 Accurint
 AutoTrackXP
 Black Book Online
 ChoicePoint
 EBSCO Publishing
 PublicData
 Public Record Finder
 SEC’s EDGAR Database
 Web Detective

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Internet Search

 The publicly available Internet is an increasingly

valuable source of information.
 Google
 AltaVista
 Yahoo!

 These engines index a significant amount of the public

Web.

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Internet Search

Searching Methods:
 Search by phrase

 Minus search terms

 Domain restrictions

Albrecht, Albrecht, Albrecht, Zimbelman

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Internet Search

Google Search Tools:

 Google groups
 Cached results
 Google News
 Google Images
 Google Earth

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Net Worth Method

Assets – Liabilities = Net Worth

Net Worth – Prior Year’s Net Worth

= Net Worth Increase

Net Worth Increase + Living Expenses

= Income

Income – Funds from Known Sources

= Funds from Unknown Sources
Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Net Worth Method

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Net Worth Method

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
The Net Worth Method

Albrecht, Albrecht, Albrecht, Zimbelman

© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license