My Take

A CFE reflects on his approaching 25th anniversary



As I walked up to the podium to make a presentation at a fraud seminar at the Rutgers University Business School, I looked out into the audience. I saw students, law enforcement veterans, New Jersey ACFE Chapter members, auditors and accountants. And I wondered how many sitting there were going to be our future CFEs.

I soon realized that I was a part of their future by presenting information that will help them in the “war on fraud.” I can remember that I once was sitting in a similar seminar many years ago — eager to learn as much as I could about fraud. I hoped that the audience at my presentation felt the same way.

I frankly admit that, of course, I don’t know everything about fraud. I’m still learning, day in and day out. But collectively, our team can win the war.

On my way home from the seminar, I started to think about what it really means to be a CFE. Now, I am fast approaching my silver anniversary as a CFE (2017). That’s right, a quarter of a century. So, I’ve decided to reflect on my life as a fraud fighter.

During my entire career — whether in law enforcement or in the corporate sector — I’ve been dealing with bad guys and the harsh and sometimes unsettling realities associated with their behavior. I then asked myself: Wouldn’t it have been nicer to have had a career where my contact was only with decent and law-abiding people? It didn’t take me long to answer myself with a big fat no!

When I was young, my father taught me the difference between right and wrong. As I matured, I soon realized that there were a lot of people in society that didn’t know the difference and were wreaking havoc on decent human beings, so I joined law enforcement.

I worked as a police officer during the day and attended college at night. My research for a term paper on white-collar crime opened my eyes wide to the huge fraud problem. I then knew that fighting fraud was my calling. After more than a decade in law enforcement, I joined corporate America as a fraud examiner. In 1992, I jumped at the opportunity to become a CFE.

I was involved in thousands of fraud cases with losses ranging from a few hundred dollars to multimillions. The fraudsters were from every walk of life — from janitors to executive vice presidents. As times changed and the complexity of frauds increased, I had to improve my skills in investigation, prevention, detection and deterrence. The fraudsters were evolving, improving their abilities to deceive and trying to stay one step ahead of me. So I turned to the ACFE and learned how to conduct better fraud examinations. (See Planning and conducting a fraud examination.)

Before the inception of the ACFE in 1988, no organizations offered quality training for conducting highly sophisticated fraud examinations. Just like our founder and Chairman, Dr. Joseph T. Wells, CFE, CPA, and our President, James D. Ratley, CFE, I had to learn what I could about fraud examination from my law enforcement training and experiences; my college education; and from research in criminology, psychology, sociology, accounting and studies by leading authorities on crime — especially fraud.

This provided me with a baseline. But ACFE training and the CFE credential has provided me with the latest information on fraud schemes and how to solve those complicated acts of fraud. My depth of knowledge increased significantly. The scope and means of fraud is forever changing so I have to change with the times.

The knowledge I gained from ACFE training and the CFE credential made it possible for me to climb the corporate ladder and become a senior vice president and director of corporate security and fraud investigations for several financial institutions. The CFE credential is a pathway to career success (and it’s not so good for fraudsters).

I know I’ve done my small part to help rid society of many fraudsters even when we’re faced with staggering crimes. The ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse estimates that a typical organization loses 5 percent of its annual revenues to fraud. The total loss caused by the cases in the study exceeded $6.3 billion, with an average loss per case of $2.7 million.

CFEs shouldn’t question themselves as to whether they’ve been effective foot soldiers in the war on fraud. A little here and a little there adds up. Without CFEs, the ACFE’s shocking data probably would be significantly, if not astronomically, higher. We can’t stop fighting our battles, and we must work to maintain good moral principles both in and out of the office.

So many educators, mentors and colleagues helped me along the way in my professional life. They shared their knowledge and experiences with me so that I could carry the torch. I’ll continue to write fraud-related articles and give anti-fraud presentations at conferences, but now it’s my turn to pass the torch to the new and budding CFEs.

All CFEs should be proud of the credential. It’s documented evidence of expertise and experience and signifies a high level of competence and professionalism. As a family member of the ACFE, you have more than 75,000 new brothers and sisters who pledge themselves to act with integrity and to perform their work in a professional manner.

As I once wore my law enforcement badge with honor, I now wear my CFE lapel pin and display the ACFE seal. You, also, should be proud because fighting fraud is still the right thing to do.

Edward R. Smith, CFE, LPD, is the owner of an anti-fraud consultation, fraud training and investigation firm. His email address is: edwardrsmith@optonline.net.





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