16th Annual ACFE Fraud Conference & Exhibition

The watchword was 'deterrence'

By Dick Carozza

Their heads were spinning. The 1,500 plus fraud examiners from 50 countries left the 16th Annual ACFE Fraud Conference & Exhibition in Washington, D.C. in July with the beneficial effects of information overload. With just about every possible fraud examination topic covered, the attendees would take weeks - months - to digest it all. But one theme was repeated by speakers throughout the general sessions, 11 tracks, and 88 breakouts: deterrence. 

From the warnings of federal ID theft fighter Betsy Broder and ChoicePoint compliance and privacy officer Carol DiBattiste, to the reports of the President's Corporate Fraud Task Force's acting assistant attorney general John C. Richter; from the exhortations of the chief of the FBI's Financial Crimes Section Brian Lamkin to the admonitions of the former president and CEO of the disgraced Rite-Aid Corporation came the mantra: deter, deter, deter.

"We've (in the U.S. Department of Justice) taken up what we like to call a 'real-time enforcement' philosophy to our work," said John Richter. "Because as we all know speed in criminal enforcement and speed in anti-fraud work creates deterrence and ... deterrence is what we're all about. To stop it before the crime occurs. To stop it before there's criminal enforcement action necessary."

Richter said that the USDOJ's real-time enforcement approach has quickly discouraged the further theft of ill-gotten gains from guilty parties. "It's meant that we've been able to quickly remove the wrongdoers from the top of these corporate entities and stop the fraud before it continued any further," he said. "Investigations that used to take years and years before any action was ever heard of are now moving very rapidly. ... We believe that the quick criminal enforcement serves to reinforce the day-to-day work that you do."

He said since the inception of the Task Force, the federal government has obtained more than 600 corporate fraud-related convictions, has indicted more than 990 defendants, and charged more than 77 corporate CEOs and presidents. In Enron, alone, he said, the government has charged 33 defendants and seized more than $161 million.

Brian Lamkin, chief of the FBI's Financial Crimes Section, stressed that if an entity has the funds, it should establish a fraud examination analytical group. "It's vitally important that you be able to look over the horizon and not always be in a reactive mode," Lamkin said. "Our focus (at the FBI) is on criminal enterprises and dismantling organizations. ... To the extent that you can ... give us good solid information on the structure of the fraud scheme, do so. And that can be best done by putting together subject matter expert teams as well as analytical groups."

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