Turning on a dime

Refocusing your fraud examination as unexpected twists arise


By James S. Peet, Ph.D., CFE; Kenneth J. Wilson, CFE, CSAR

When a case takes an unanticipated turn, these fraud examiners regroup and refocus their examination to discover evidence that eventually helped obtain a felony conviction on a corrupt city official.

When a client retains you to investigate a particular crime, you might discover another fraud. We saw a fraud examination morph from what appeared to be a straightforward case into something completely different. We adapted, changed our investigative focus and helped find evidence that local police and prosecutors used to obtain an Alford plea from a corrupt city official. (An Alford plea is a defendant's guilty plea in connection with a plea bargain without the defendant actually admitting guilt, i.e. a "no contest" plea.) Along the way, we helped form a strong team with city officials and law enforcement, which helped show that outside fraud examiners could be helpful.

EMBEZZLEMENT OR DESTROYED DOCUMENTS?

In April 2012, Bob Noe, the city attorney for Selah, Washington, contacted Ken Wilson about a potential fraud case involving the former city manager. Wilson's workload was heavy, so he brought in James Peet, a local fraud examiner, to assist. We both have prior law enforcement experience and are state-licensed private investigators.

The first meeting, which was in the city's council chambers, included Noe, the two of us, Mayor John Gawlik and the city's only detective for the 14-officer police department, Rich Brumley.

Those at the meeting suspected that the former city manager, Frank Sweet, might have embezzled approximately $24,000 from a city-managed grant fund. The city had later written the amount off as bad debt. As an aside, it was mentioned that several city employees had seen Sweet destroy numerous documents during his last days with the city, which might hinder the fraud examination.

City officials alleged that Sweet, who had been the city manager for 16 years, had abused his position, accepted favors from city vendors, created positions for family members and removed personnel files. Also, the city couldn't account for profits from the sale of some city-owned real estate.

In the time between Gawlik's election to mayor in 2011 and Sweet's termination at the end of January 2012, witnesses saw Sweet take documents from city files into his office. The witnesses said that he made multiple trips with large bags — possibly containing shredded documents — from his office to a large recycling dumpster behind city hall.

Sweet also had asked the city's contracted IT support technician to delete all of Sweet's files on the city's network server. However, before he complied, the technician saved all the city manager's files and made copies. The technician, at Sweet's request, also wiped clean all of Sweet's files on his desktop computer in his office. When the technician opened the operating system, he noticed many files had already been deleted.

When Sweet left his position, he reported that his city-issued laptop had been stolen, which raised more red flags.

The IT technician told Brumley about Sweet's requests. Brumley obtained a search warrant and immediately seized the city servers' hard drives and Sweet's desktop computer.

At our first meeting, Brumley gave us a flash drive of the data the technician had copied from one of the city's three servers prior to wiping them clean. The city gave us permission to retain the services of a computer forensics expert, so we added Dr. Gordon Mitchell with Future Focus Inc., in Woodinville, Washington, to the fraud examination team. Mitchell and Wilson had collaborated in the past, so we knew he possessed the talents necessary for this case.


 


For full access to story, members may sign in here.

Not a member? Click here to Join Now. Or Click here to sign up for a FREE TRIAL.


 Your Rating:
Your Review:
  
Reviews
 
By Jeff_82