Just getting started at 25

25th Annual ACFE Global Fraud Conference looks to the future

By Dick Carozza, CFE; Photos by Victor Goodpasture

How do nearly 3,000 anti-fraud professionals recharge their batteries? By attending the largest-ever global fraud conference.

When the ACFE began more than a quarter century ago, fraud was the word that "should not be spoken." But speak it this group did. In fact, it shouted it until the accounting world heard it. Then corporations. Then the government. And finally, the people — the defenseless victims who needed an army of fraud fighters.

The Association of Certified Fraud Examiners began modestly at its first annual conference with 150 fraud examiners. This organization — mostly comprised of accountants and investigators trying to learn from each other — was finding its way as it formulated the best methods to tackle a multi-headed beast.

But flash forward 25 years, and the ACFE has clearly defined fraud schemes and succinctly formulated practical methods that practitioners can use to deter, detect and investigate fraud in all of its shades.

This conference was not just a commemoration of the ACFE's creation of a profession but the declaration of a living manifesto of thousands of focused fraud examiners who are vigorously using all available means to tackle fraud around the globe.



At the Welcome Reception, the ACFE celebrated 25-year members who had faith in the vision of founder and Chairman Dr. Joseph T. Wells, CFE, CPA. Board of Regent emeriti (and present members) also gathered to remember the rapid changes of the dynamic anti-fraud movement. A first-time concurrent International Attendee Reception highlighted the ACFE's tremendous global growth.

And Dr. Wells said farewell during the Opening General Session of his last annual conference. "Most of you are not there yet, but you'll know when it is time to hang it up," he told attendees. "For me, this is the time and this is the place. I will be 70 years old later this month. It is a mistake not knowing when to gracefully exit.  … The time to leave is when you're on top.

"For sure, the ACFE is on top. It has never been stronger," Dr. Wells said. "And your association is in great hands. [ACFE President and CEO] Jim Ratley, [Vice President and Program Director] Bruce Dorris, and a dedicated staff of nearly 100 people in Austin will assure that the ACFE remains on top, here to serve you and future generations of fraud examiners.

"Many of you have asked what I'm going to do now," Dr. Wells said. "Well, it has nothing to do with fraud. I'm donating my time to causes that mean something to me personally. And I'm going to spend a lot of effort training my new canine to win the Westminster Dog Show. As a person, my goal is to be the kind of man my dog already thinks I am.

"It is hard for me to put into words what this organization has meant to me. But I didn't make the ACFE what it is; you did," Dr. Wells said. "What I didn't think about in 1988 when this idea was born is what impact you would have on me personally. The friends I've met along the way will last a lifetime. Being involved with the ACFE is the greatest honor I've ever had, and I will be eternally grateful to you. From the bottom of my heart, thank you for this privilege."

Dr. Wells shared some of the basic anti-fraud principles he's learned in his life. (See 10 pointers for fighting fraud: Dr. Wells' departing advice.)


Attendees had their pick of diverse anti-fraud content and topics from the Pre- and Post-Conference and the in-between Main Conference.

Three excellent speakers led Pre-Conference sessions. Cynthia Hetherington, CFE, president of the Hetherington Group, spoke on "Incorporating the New Social Media in Fraud Examinations."

Mark Nigrini, Ph.D., professor in the College of Business and Economics at West Virginia University, spoke on "Benford's Law and Other Analytical Fraud Detection Techniques."

Bruce Dubinsky, CFE, CPA, CVA, CFF, managing director, Duff and Phelps, LLC, led "Preparing for Civil Litigation in a Fraud Examination."

During the Main Conference, attendees learned practical concepts at more than 70 educational sessions in 13 parallel tracks. Tracks ranged from "Implementing Approaches to Fraud Awareness and Prevention" and "Data Analysis: Working Smarter and Harder with Big Data" to "Technology: Alternative Currencies, Deep Web, Forensics and Devices" and "Professional Development: Making the Most of Your Career."

Four excellent speakers taught the three Post-Conference sessions. Allen F. Brown, CFE, CPA, owner of AFB Consulting, and Leah Lane, CFE, global investigations manager at Texas Instruments Inc., team-taught the "Auditing/Investigating Fraud Seminar." Jonathan Turner, CFE, CII, senior director, global compliance investigations, Wright Medical Technology, taught "Building a Culture of Fraud Prevention and Detection." Don Rabon, CFE, president, Successful Interviewing Techniques, taught "Professional Interviewing Skills."


During the Monday opening general session, Prof. Dr. Peter Eigen, the founder of Transparency International (TI), said that world governments have failed in their governance, which has resulted in corruption that has led to environmental degradation and poverty with "1 billion living below the poverty line." However, "civil society organizations," such as TI — working with governments and business — can fight corruption effectively.

"Nation states have lost their capacity to govern the global economy," said Eigen. He said they're limited by self-interest, the inability to work across borders, politics and leaders' short terms in office.

And multinational businesses have the capacity to circumvent border issues and create global governance, but many have been corrupted by competition with other companies and countries' coercion. "Who gives the board rooms of General Electric or Siemens … the mandate to deal with what could be considered global public goods for the long-term fate of humanity or our planet?

" … Large companies need good governance in a globalized economy in order to behave socially responsible. Because if they're faced with competitors that do not live up to the same standards of responsibility then they may very well come into a short-term competitive disadvantage," Eigen said.

Eigen began a global movement with one vision: "A world in which government, business, civil society and the daily lives of people are free of corruption."

Eigen retired as chair of TI in 2005 but is now chair of the organization's advisory council.


"What's critical about your organization and reputation," said former FBI Director Louis Freeh during the Monday working lunch, "is the interaction and interconnectivity that you bring between the government and the private anti-fraud community and establishment. That did not exist for many years for the most of the history of the FBI."

Freeh said during his FBI tenure he often had ACFE members accompany him and become heavily involved in investigations. Now as chair of Freeh Group International Solutions, LLC, a Pepper Hamilton LLP group, he continues to closely work with CFEs.

Freeh, during his keynote, shared some of the lessons he learned during his FBI tenure and extolled the virtues of ACFE members.

"The most important ‘value add' that [ACFE members] bring to the anti-fraud community and the law enforcement community is … incredible experience and depth.

"It's not a coincidence that two of your largest government communities [with ACFE members] are the IRS and the FBI. Because the synergies and the ability to share information there is unprecedented in our history," he said. "You bring, I know from my own investigations, and sitting on boards, tremendous credibility because of your education, your certification. Your reputation is just a sterling contribution to the anti-fraud community and the efforts that you bring on behalf of private clients and corporations," Freeh said.

He said that after 9/11, counter-terrorism has become the necessary, but totally, consuming preoccupation of resources and programs and statutory authority. "Now, finally after the recession, the programs and the focus on serious global economic crime and cybercrime have been resuscitated," Freeh said.


Susan Schmidt, who won a Pulitzer Prize for her Washington Post reporting on lobbyist Jack Abramoff, said if U.S. congressmen had looked a bit harder at him, "they would have seen an incredible fabulist. I always say that he's a Walter Mitty on steroids."

The ACFE, during the Monday working lunch, presented Schmidt with its Guardian Award for a journalist whose determination, perseverance and commitment to the truth has contributed significantly to the fight against fraud.

"Abramoff managed to take Washington by storm [during the George W. Bush administration] after the Republicans won Congress," Schmidt said. "He set out to be the highest-earning lobbyist in Washington. … And he was wildly successful in a very short time."

Abramoff pleaded guilty in January 2006 to charges related to an Indian lobbying scandal and his dealings with SunCruz Casinos. He was sentenced to six years in federal prison for mail fraud, conspiracy to bribe public officials and tax evasion. He served 43 months.

"Like many fraudsters, Abramoff kept his interlocking schemes complicated," Schmidt said. "Each of his closest confidants only knew part of what he was up to. No one outside team Abramoff could guess because it was all so fantastic and frankly plain crazy."


"I bear witness to how many human beings I cannot count — I have seen their confidence taken from them, their sense of being, their sense of self demolished by deceit, trickery and the most unethical forms of human conduct imaginable," said Martin S. Kenney, CFE, a fraud recovery specialist, in his impassioned keynote address during the Tuesday morning General Session.

Kenney's outrage against what he calls "grand corruption" or "kleptocracy" has motivated him for decades to use creative ways to uproot bank secrets, freeze hidden assets around the world and return hard-earned money to ordinary victims. For a lifetime of achievement in detection and deterrence, the ACFE presented Kenney with its highest honor, the Dr. Donald Cressey Award.

As an asset recovery lawyer in the British Virgin Islands, Kenney has worked on such diverse cases as Barings Bank's rogue trader Nick Leeson and a Brazilian-based bankruptcy fraud with losses totaling $8 billion. He's leading asset recovery for creditors defrauded by Allen Stanford in the second-largest Ponzi scheme in financial history. As co-general counsel to the joint liquidators of Stanford International Bank, his firm is working in the interest of approximately 22,000 creditors from 140 countries who have lost a net capital sum of $4.4 billion. Kenney is managing partner of Martin Kenney & Co., Solicitors, in Tortola, British Virgin Islands.

"What do we do when we meet a victim?" Kenny asked. "We must show leadership. We must, as anti-fraud professionals, be sensitive to their emotional, psychological, financial needs. And the best way to help restore their sense of self-worth and confidence, I have found, is to help them find a way to search for justice."


Marc Goodman, a global security advisor, believes the anti-cybercrime community should mount a campaign against online criminals similar to President John F. Kennedy's challenge to land a man on the moon.

Global security advisor proposes "He made a bold declaration. … We don't have anything like that for cybersecurity; yet we're handing over every aspect of our lives over to these machines with no concept of protection. … We're all going to have to do that," he said. "And you folks from the ACFE have the right skill sets, the right knowledge, the right network to make that happen. I invite you to join me in that fight."

Over the last 20 years, Goodman built his expertise in cybercrime, cyberterrorism and information warfare. He's worked with Interpol, the United Nations, NATO, the Los Angeles Police Department and the U.S. federal government.

He founded the Future Crimes Institute to inspire and educate on the security and risk implications of newly emerging technologies.

"All the technology change is leading to a paradigm shift in crime and in fraud. Crime used to be an easy affair; it was a good start-up business. You could go out and get a knife or a gun, hide in a dark alley and say ‘stick 'em up.' … But eventually criminals could only rob so many people in a day. New technology helps criminals rob more people," Goodman said.

"Technology runs the world," Goodman said. " … When it fails, what's our backup plan? We don't have one." He said we owe it to our children's children to not leave them a scary cyberworld.


Dinesh Thakur, the whistleblower in the huge Ranbaxy USA drug fraud case, challenged attendees to increase their efforts to combat health care fraud in countries beyond the U.S. "Health care fraud is one of the most heinous frauds there is," Thakur said during the Wednesday closing General Session. "And there is more of a need for you — with all the wonderful work you do in the financial area — to expand that and look at health care fraud."

In 2004, Dr. Rajinder Kumar, Thakur's manager at Ranbaxy, requested Thakur to investigate reports that the company had provided false data to the World Health Organization. Thakur discovered a company culture that not only tolerated fraud, but also apparently celebrated and encouraged it. Kumar presented the investigation's damning results to the company's board and resigned.

Thakur also resigned and took his findings to the U.S. Federal and Drug Administration (FDA). After a nearly nine-year ordeal, Ranbaxy, in the largest drug safety settlement to date with a generic drug manufacturer, pleaded guilty on May 13, 2003 to seven federal felonies and agreed to pay $500 million in fines, forfeitures and penalties.

For "Choosing Truth Over Self," the ACFE honored Thakur with the Cliff Robertson Sentinel Award.

"At the core of fraud is a personal decision," Thakur said in his acceptance remarks. "Even when you look at very large corporations that indulge in fraud there are people who essentially make decisions that lead to that situation. Your organization is important because you try to educate people — tell them what is right from wrong. Thank you."


Humberto Aguilar's life* has been a study of polarizing contrasts. He told conference attendees at Wednesday's general session that after graduating from the University of Florida Law school in 1978, he wanted "to be the best criminal lawyer" he could be. Yet, shortly after beginning his law practice he began laundering money for his drug-dealer clients. He was in the running for a state judgeship, but, in 1990, he was indicted on 27 counts of racketeering, money laundering and other charges for assisting his clients. "I went to prison because I committed a crime," but he also said, "I never considered myself a criminal." He was a peace-loving attorney who never stole from his clients, but he shot two hit men in a defensive gunfight — wounding one and killing another.

Aguilar, the son of Cuban refugees, said defending others was "the most rewarding and enjoyable thing I've ever done in my life." However, those others — 1980s Miami drug runners — soon became his buddies. "One of my clients came to me and said, ‘look, I've got a problem.' " The problem was that the client had storage containers packed with $100 bills that he couldn't spend.

Aguilar didn't know how to launder money, but soon his Miami attorney friends tutored him in the finer points of washing bucks.

Federal agents eventually arrested him, but he skipped his $3 million bail and fled to Spain. The feds caught up with him in Spain where he spent 29 months in a Spanish prison while he fought extradition. He lost his fight, was shipped back to the U.S., was convicted and spent 77 months in a federal prison.

He now writes for the Money Laundering Bulletin and Complinet.com, speaks to law enforcement groups and — contrast of all contrasts — assists in money-laundering investigations of worldwide terrorist organizations.

*The ACFE doesn't compensate convicted fraudsters.

Dick Carozza, CFE, is editor-in-chief of Fraud Magazine.

For more conference coverage, visit FraudConferenceNews.com.