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TABLE OF CONTENTS

CONTENTS

VOLUME 21 • NUMBER 3 • FALL 2012

30 Summit introduction 32 Summit pull-out insert

♠ schedule at a glance ♣ rio hotel info and map ♥ summit schedule ♦ sponsorship info and travel tips

33 featured keynote speaker:

TABLE OF CONTENTS

jan hargrave

34 keynote speakers 36 presentation speakers 37 ES-21 Breakout sessions 55 summit application form

CE ARTICLE 14 THE VALUE OF RISK ASSESSMENT: Evidence from recent surveys

IN THIS ISSUE 08 NEW MEMBERS 09 ACFEI NEWS 10 Forensics In the News 13 VALUE OF ACCREDITATION 24 CYBER BULLYING TACTICS 29 PRODUCT REVIEWS 56 NEW IDEAS FOR OLD CRIMES

63 LOGO PRODUCTS 04

THE FORENSIC EXAMINER® Fall 2012

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Fall 2012 THE FORENSIC EXAMINER速

BOARDS

2012 EDITORIAL ADVISORY BOARD *Note: For spacing and consistency considerations, the number of designations listed has been limited to four.

Nicholas G. Apostolou, DBA, DABFA, CPA, Cr.FA Donna Bader, MA, MSN, CFN, DABFN Larry Barksdale, BS, MA E. Robert Bertolli, OD, FACFEI, CHS-V, CMI-V Kenneth E. Blackstone, BA, MS, CFC, DABFE David T. Boyd, PhD, DBA, CPA, Cr.FA Jules Brayman, CPA, CVA, DABFA, FACFEI John Brick, PhD, MA, DABFM, FACFEI Dennis L. Caputo, MS, DABFET, CHMM, FACFEI Dennis H. Chevalier, BS, MSM, DM, CMI-I David F. Ciampi, PhD, FACFEI, DABPS Andrew N. Dentino, MD, FACFEI, DABFE, DABFM James A. DiGabriele, PhD, DPS, CPA, FACFEI John Shelby DuPont Jr., DDS, DABFD Ramond Fish, Phd, MD, FACFEI Per Freitag, PhD, MD, FACFEI, DABFM L. Sue Gabriel, MSN, MFS, EdD, RN Ron Grassi, DC, FACFEI, DABFM, DABFE Richard C. W. Hall, MD, FACFEI, DABFM, DABFE John J. Haberströh, DC, CFC, CMI-V, FACFEI Raymond F. Hanbury, PhD, ABPP, FACFEI, DABFE David L. Holmes, EdD, FACFEI, DABFE, DABPS Leo L. Holzenthal Jr., PE, DABFET, FACFEI Matthew Howard, PhD Edward J. Hyman, PhD Zafar M. Iqbal, PhD, DABFE, DABFM, FACFEI Nursine S. Jackson, MSN, RN, DABFN Philip Kaushall, PhD, DABFE, DABPS, FACFEI Eric Kreuter, PhD, CPA, DABFA, FACFEI Ronald G. Lanfranchi, DC, PhD, CMI-IV, FACFEI Monique Levermore, PhD, FACFEI, DABPS

Jonathan Lipman, PhD, FACFEI, DABFE, DABPS Judith Logue, PhD, FACFEI, DABFSW, DABPS Mike Meacham, PhD, LCSW, DABFSW, FACFEI David Miller, DDS, FACFEI, DABFE, DABFD Leonard I. Morgenbesser, PhD, FACFEI Jacques Ama Okonji, PhD, FACFEI, DABFE, DABPS Norva E. Osborne, OD, CMI-III Ronald J. Panunto, PE, CFC, CFEI, DABFET Larry H. Pastor, MD, FACFEI, DABFE, DABFM Theodore G. Phelps, CPA, DABFA Marc Rabinoff, EdD, FACFEI, DABFE, CFC Jerald H. Ratner, MD, CFP, PA Harold F. Risk, PhD, DABPS, FACFEI Susan P. Robbins, PhD, LCSW, DABFSW Jane R. Rosen-Grandon, PhD, DABFC, FACFEI Douglas Ruben, PhD, FACFEI, DABFE, DABPS J. Bradley Sargent, CPA, Cr.FA, DABFA, FACFEI William Sawyer, PhD, FACFEI, DABFE, DABFM Howard A. Shaw, MD, DABFM, FACFEI Ivan Sosa, MD Henry A. Spiller, MS, DABFE, FACFEI Marilyn J. Stagno, PsyD, RN, FACFEI James R. Stone, MD, MBA, CHS-III, CMI-IV George S. Swan, JD William A. Tobin, MA, DABFET, DABLEE, FACFEI Robert Tovar, BS, MA, DABFE, DABPS, CHS-III Patricia A. Wallace, PhD, FACFEI, DABFE, DABFM, CFC Raymond Webster, PhD, FACFEI, DABFE, DABFM Dean A. Wideman, MSc, MBA, CFC, CMI-III

2012 EDUCATION COMMITTEE

BOARDS

*Note: For spacing and consistency considerations, the number of designations listed has been limited to four.

Larry F. Stewart, MSFS, CFC Joseph A. Juchniewicz, MA, RI, SSI, LPT Kevin R. Theriault, BS, CCI, CFC Joan C. Perin, CPA, Cr.FA,CGMA, CFC Larry D. Crumbley, PhD, CPA, Cr.FA, CFF Amy M. Garcie, DPN, APRN, ACNP-BC, CFN L. Sue Gabriel, EdD, MSN, MFS, CFN Ralph Carnesecchi, MPS, CMI-III

Douglas H. Ruben, PhD, FACFEI, DABFE, DABPS John D. Petkanas, DDS, DAAPM, DABFD, FACFEI Puneet Arora, MD, MBBS, CFP, CMI-V Mark Tomlin, CMI-III E. Frank Livingstone, MD, CFP Jerald H. Ratner, MD, CFP Michael Fitting Karagiozis, DO, MBA, CFP, CMI-V

The American College of Forensic Examiners International (ACFEI) does not endorse, guarantee, or warrant the credentials, work, or opinions of any individual member. Membership in ACFEI does not constitute the grant of a license or other licensing authority by or on behalf of the organization as to a member’s qualifications, abilities, or expertise. The publications and activities of ACFEI are solely for informative and educational purposes with respect to its members. The opinions and views expressed by the authors, publishers, or presenters are their sole and separate views and opinions and do not necessarily reflect those of ACFEI, nor does ACFEI adopt such opinions or views as its own. The American College of Forensic Examiners International disclaims and does not assume any responsibility or liability with respect to the opinions, views, and factual statements of such authors, publishers, or presenters, nor with respect to any actions, qualifications, or representations of its members or subscriber’s efforts in connection with the application or use of any information, suggestions, or recommendations made by ACFEI or any of its boards, committees, publications, resources, or activities thereof. The Forensic Examiner® (ISSN 1084-5569) is published quarterly by The American College of Forensic Examiners International, Inc. (ACFEI). Annual membership for a year in the American College of Forensic Examiners Institute is $165. Abstracts of articles published in The Forensic Examiner® appear in National Criminal Justice Reference Service, Cambridge Scientific Abstracts, Criminal Justice Abstracts, Gale Group Publishing’s InfoTrac Database, e-psyche database, and psycINFO database. Periodicals Postage Paid at Springfield, Missouri, and additional mailing offices. © Copyright 2012 by the American College of Forensic Examiners International. All rights reserved. No part of this work can be distributed or otherwise used without the express written permission of the American College of Forensic Examiners International. The views expressed in The Forensic Examiner® are those of the authors and may not reflect the official policies of the American College of Forensic Examiners International. CONTACT US: Publication, editorial, and advertising offices of ACFEI, 2750 East Sunshine Street, Springfield, MO 65804. Phone: (800) 592- 1399, Fax: (417) 881- 4702, E-mail: editor@acfei.com. Subscription changes should be sent to ACFEI, 2750 East Sunshine, Springfield, MO 65804. POSTMASTER: Send address changes to American College of Forensic Examiners International, 2750 East Sunshine Street, Springfield, MO 65804.

THE FORENSIC EXAMINER® Fall 2012

FOUNDER AND PUBLISHER: Robert L. O’Block, MDiv, PhD, PsyD, DMin (rloblock@acfei.com) SENIOR EDITOR: Julie Brooks (julie.brooks@acfei.com) ASSISTANT EDITOR: Cheryl Barnett (cheryl.barnett@acfei.com) ACFEI CAO: Dana Way (dana.way@acfei.com) SENIOR GRAPHIC DESIGNER: Brandon Alms, (brandon@acfei.com) GRAPHIC DESIGNER: Stephanie Lindberg (stephanie@acfei.com) ADVERTISING: Julie Brooks (julie.brooks@acfei.com)

ACFEI EXECUTIVE ADVISORY BOARD CHAIR Cyril H. Wecht, MD, JD, FACFEI, CFP, Chair, American Board of Forensic Medicine MEMBERS Robert K. Minniti, CPA, MBA, Cr.FA, Chair, American Board of Forensic Accounting Marilyn J. Nolan, MS, FACFEI, DABFC, DABCIP, Chair, American Board of Forensic Counselors James H. Hutson, DDS, CMI-V, Chair, American Board of Forensic Dentistry Kevin Theriault, BS, FACFEI, CFC, Chair, American Board of Forensic Examiners Ben Venktash, Peng (UK), FSE, DABFET, DABFE, Chair, American Board of Engineering and Technology L. Sue Gabriel, EdD, MSN, RN, CFN, Chair, American Board of Forensic Nursing Douglas E. Fountain, PhD, LCSW, DABFE, DABFSW, Chair, American Board of Forensic Social Workers Raymond H. Hamden, PhD, FACFEI, CFC, CMI-V, Chair, American Board of Psychological Specialties Gregg M. Stuchman, Chair, American Board of Recorded Evidence

CONTINUING EDUCATION ACFEI provides continuing education credits for accountants, nurses, physicians, dentists, psychologists, counselors, social workers, and marriage and family therapists. Approvals for continuing education activities are subject to change. For the most up-to-date status, please check the course catalog on our Web site, www.acfei.com, or contact the Registrar’s office toll-free at (800) 423-9737.

ACFEI is an approved provider of Continuing Education by the following: Accreditation Council for Continuing Medical Education National Association of State Boards of Accountancy National Board for Certified Counselors California Board of Registered Nurses American Psychological Association California Board of Behavioral Sciences Association of Social Work Boards American Dental Association (ADA CERP) The Missouri Sheriff’s Association co-sponsors Police Officer Standards Training (POST) accreditation for the American College of Forensic Examiners Institute’s activities. The American College of Forensic Examiners Institute is a member of the National Certification Commission and the Alliance for Continuing Medical Education.

WWW.ACFEI.COM • (800) 592-1399

ACFEI ADVISORY BOARDS American Board of Forensic Accounting Chair: Robert K. Minniti, CPA, MBA, Cr.FA Vice Chair: Stewart L. Appelrouth, CPA, CFLM, Cr.FA, FACFEI Gary Bloome, CPA, Cr.FA Alexander Lamar Casparis, CPA, CVA, MBA, Cr.FA, FACFEI Hugh M. Christensen, CPA, ABV, CFF, CVA, Cr.FA Suzanne D. Hillman, CPA, CFF, Cr.FA, CITP Michael G. Kessler, Cr.FA, CICA, FACFEI, DABFA Eric A. Kreuter, PhD, CPA, FACFEI, DABFA Robert B. Lechter, CPA, Cr.FA Joshua S. Rader, CPA, Cr.FA J. Bradley Sargent, CPA, CFS, Cr.FA, FACFEI Larry Settles, CPA, Cr.FA American Board of Forensic Counselors Chair: Marilyn J. Nolan, MS, FACFEI, DABFC, DABCIP Chair Emeritus: Dow R. Pursley, EdD, FACFEI, DABFC George Bishop, LPC, LAT, FACFEI, DABFE James B. Clarke, MA, LPC, NCC, MAC Rhiannon Condon, LPC, LCSW, LCDC, CADC Laura W. Kelley, PhD, LPC, DABFC, FACFEI William M. Sloane, JD, LLM, FACFEI, CHS-III American Board of Forensic Dentistry Chair: James H. Hutson, DDS, CMI-V Chair Emeritus: Brian Karasic, DMD, MBA, DABFD, CMI-V Bill B. Akpinar, DDS, CMI-V, FACFEI, DABFD Benjamin Antioquia, DDS Stephanie L. Anton-Bettey, DDS, CMI-V Robert Byrd, DDS Dennis Flanagan, DDS R. Gordon Klockow, DDS Chester B. Kulak, DMD, CMI-V, CFC, DABFD John Petkanas, DDS Kathryn Vitiello, DMD

American Board of Engineering and Technology Chair: Ben Venktash, Peng (UK), FSE, DABFET, DABFE Vice Chair: George C. Frank, CFC, FACFEI, DABFE Cam Cope, BS, DABFET, DABFE Robert Durham, PhD, PE Ali Fayad, PE Gregory Harrison, PhD, PE

American Board of Forensic Medicine Chair: Cyril H. Wecht, MD, JD, FACFEI, CFP Vice Chair: Matthias I. Okoye, MD, MSc, JD, FRCP Michael Cardwell, MD, JD Zhaoming Chen, MD, PhD, MS, CFP John A. Consalvo, MD, FACFEI, DABFE, DABFM Louis W. Irmisch III, MD, CFP, FACFEI, CMI-V Michael Fitting Karagiozis, DO, MBA, CFP, CMI-V Lawrence Lavine, DO, MPH, CHS-V, CMI-V Kenneth A. Levin, MD, CFP, FACFEI, DABFM E. Franklin Livingstone, MD, CFP, FACFEI, DABFM Manijeh K. Nikakhtar, MD, MPH, CFP, CMI-V John R. Parker, MD, CFP, FACFEI, DABFM Jerald H. Ratner, MD, FACFEI, DABFE, DABFM S. Sandy Sanbar, MD, PhD, JD, FCLM Gere N. Unger, MD, JD, LLM, CMI-V American Board of Forensic Nursing Chair: L. Sue Gabriel, EdD, MSN, RN, CFN Marilyn A. Bello, RNC, MS, CMI-IV, CFN Wanda S. Broner, MSN, RN, FNE, CEN Cynthia J. Curtsinger, RN, CFN Linda J. Doyle, RN, CLNC, CFN, CMI-III Donna Garbacz Bader Diane L. Reboy, MS, RN, CFN, FACFEI Theresa Wyatt, MSFN, RN,CFN, D-ABMDI American Board of Forensic Social Workers Chair: Douglas Fountain, PhD, LCSW, DABFE, DABFSW James Andrews, MSW, LCSW, CMFSW Matthew A. Capezzuto, PhD, LISW, AFC Viola Vaughan-Eden, PhD, LCSW, CMFSW, DAPA Tina Jaeckle, PhD, LCSW, CFC, CMFSW Shannon C. Lebak, MSW, LSW, CMFSW Michael G. Meacham, PhD, LCSW, DCSW, FACFEI, DABFSW Kathleen Monahan, DSW, MSW, CFC, DABFE Susan P. Robbins, PhD, LCSW, DCSW, DABFSW Christine Routhier, AFSW, LCSW, CMFSW Steven J. Sprengelmeyer, MSW, MA, FACFEI, DABFSW American Board of Psychological Specialties Chair: Raymond H. Hamden, PhD, FACFEI, CFC, CMI-V Raymond F. Hanbury, PhD, FACFEI, DABPS, DABFE Carol J. Armstrong, PhD, LPC, DABPS Martha Barham, RN, PhD Paul David Etu, PsyD Ronna F. Dillon, PhD, DABPS, CMI-V, CHS-III Keith Franklin Kennett, PhD, BA, MA, DABFE Paula M. Mackenzie, PsyD Helen D. Pratt, PhD, FACFEI, DABPS Rodolfo J. Rosado, PhD Douglas H. Ruben, PhD, FACFEI, DABPS, DABFE Richard M. Skaff, PsyD, DABPS Charles R. Stern, PhD, DABPS, CMI-V Joseph C. Yeager, PhD, DABFE, DABPS, FACFEI Donna M. Zook, PhD, DABPS, CFC

American Board of Recorded Evidence Chair: Gregg M. Stutchman Ernst F. W. (Rick) Alexanderson, BA, MBA, FACFEI, DABRE Eddy B. Brixen, DABFET Stephen C. Buller Marisa Dery Ryan O. Johnson, BA, DABFE, DABRE Michael C. McDermott, JD, DABRE, DABFE, FACFEI Jennifer E. Owen, BA, DABRE, DABFE Thomas J. Owen, BA, FACFEI, DABRE, CHS-V Lonnie L. Smrkovski, BS, DABRE, DABFE, FACFEI American Board of Certified Criminal Investigators Chair: Robert Boyden, PhD, MS, SCSA Vice Chair: Dennis Chevalier, CPPP, FIPC, CMI-I Joseph Alercia II Dilsher Ali, CAMS, CCI Kenneth E. Blackstone, MS, CFC, DABFE Mark Boutwell, CPPP, FIPC, CMI-I Henry “Scott” Browne Marvin “Gene” Bullington, CFC, FACFEI John Daab, PhD, MA, MBA, MPS, MA, RI Joseph A. Juchniewicz, MA, SSI, CHS-III, RI Eric Lakes, CHS-III, CLWE, MCSE Lt. David Millsap, RI, CMI-III Thomas R. Price, CHS-III, CFC, CCI Harold F. Risk, PhD, DABPS, FACFEI Cyril H. Wecht, MD, JD, CFP, FACFEI Executive Advisory Board of the International College of the Behavioral Sciences CHAIR: Janet M. Schwartz, PhD, FACFEI, DABFE, CHS-V BOARD SECRETARY: Steven Crimando Mike Baer, PhD Duane L. Dobbert, PhD, FACFEI Sue Gabriel, EdD, RN, CFN Mark L. Goldstein, PhD Raymond H. Hamden, PhD, FACFEI, CFC, CMI-V Janice L. Hargrave, MEd, CFC David L. Holmes, EdD Tina Jaeckle, PhD, LCSW, CMFSW, CFC Gary Kesling, PhD, LMFT, LPC, DAPA Lon Kopit, PsyD, LPC, BCPC Carl J. Patrasso, PsyD Katherine Ramsland, PhD, CMI-V Jerald H. Ratner, MD, CFP Doug Ruben, PhD Ronald M. Ruff, PhD

BOARDS

American Board of Forensic Examiners Chair: Kevin Theriault, BS, FACFEI, CFC Jess P. Armine, DC, FACFEI, DABFE, DABFM Ronna F. Dillon, PhD, DABFE, CMI-V, CHS-III Bruce H. Gross, PhD, JD, MBA, FACFEI Darrell C. Hawkins, MS, JD, FACFEI, CMI-V Edward Heyden, EdD, FABFE Michael W. Homick, PhD, DABCHS, CHS-V Michael Fitting Karagiozis, DO, MBA, CFP, CMI-V Anthony Kemmerlin, CMI-IV Ronald G. Lanfranchi, DC, PhD, DABFE, DABFM, DABLEE, CMI-IV John L. Laseter, PhD, FACFEI, CMI-IV, CHS-III Lawrence Lavine, DO, MPH, CHS-V, CMI-V Leonard K. Lucenko, PhD, FACFEI, DABFE, CPSI Marc A. Rabinoff, EdD, FACFEI, DABFE, CFC Luis Rivera, CPA James A Williams, PhD, CFC, DABFE

David Albert Hoeltzel, PhD Gary Krueger, PE, CM J.W. “Bill” Petrelli Jr., AIA, DABFET, CFC, FACFEI Max L. Porter, PhD, PE, CFC, DABFET John Robbins, PE Frank Stephenson, PhD, PE James P. Waltz, HBA, PE

Legal Advisory Board CHAIR: S. Sandy Sanbar, MD, PhD, JD, FCLM Vice Chair: Gere N. Unger, MD, JD, LLM, CMI-V Joseph F. Connolly, II, MMA, MEd, JD, DABCHS Robert Fish, DDS, JD, FAGD Robert D. Hall, PhD, JD Cynthia A. Lee, PhD, JD William “Bill” McClure Robert W. Muench, JD, CHS-IV Dan T. Ramsdell, JD Joshua K. Roberts, JD John F. Romano, JD Malcolm H. Skolnick, PhD, JD Cyril H. Wecht, MD, JD, CFP, FACFEI

Fall 2012 THE FORENSIC EXAMINER®

NEW MEMBERS

WELCOME New Members New PROVISIONAL Members Laura Agbiboa Lev Agranovich Lydia Ajayi Georgia Alexander Magdalena Alexander Dilsher Ali Sabrina Allen Gbenga Alonge Anastasia Anderson Adele Armstrong Julie Arnone Judy Arrand Dauda Balarabe Laura Ballenger Cynthia Bannon Bruneita Battle Shelley Batts Vincent Baudone Diane Bell William Blundell Jesilee Bonofiglio Crystal Bossard Stephanie Bradley Joel Brooks Alison Brown Laurencia Burt Damon Byrd Howard Cannon Frances Cartwright Philip Caruso Joyce Cassens-Marshall Jinger Cathey Kimberly Christensen Jerry Ciffone Valarie Clark Grady Connor Emma Cook Lindsey Cooper Sharon Cooper-Jones Emily Cremeans

Derek Curry Becky Davidson Otha Davis Bruce Davis Andrea de Aguayo Teresa Devitt-Lynch Randy DiCostantino Karen Doub Sally Dowis Archana Duggal Dario Dzinic James Ebaugh Jamie Edwards Latatche Farley Felicia Fields Kitson Francis Jeffrey Fraser Jack Fritz Carin Fuerstenberg Stephen Fuller Fabien Gagnon Evonne Garza Pat Goates Stephen Goux Bessie Grimaldi Nailah Gumbs-Fahie Eunice Guster-Bray Herlinda Gutierrez Erica Guzman Thomas Haller Stephen Halmi Marc Hathaway Andrea Hawkins Cynthia Herndon Rachel Herron Jacquelyn Hexham Marguerita High Kimberly Hillery-Bottorf Shun Hsu Nan Hunt Michael Iliescu

Sharon Jackson Vijaiantie Jadnauth John Janicek Charles Jax Kathryn Jean Kelly Jenkins Carolyn Johnson Kendall Johnson Lana Johnson Barbara Johnson Gail Johnson Paula Johnson Debra Jones Tiya Jones Rahul Kakkar Michael Kaltenbach Charles Keshinro Noreen Khan-Mayberry Barbara King Pamela King Robert Korec Mona Krugger Mathew Kurian Karen Lacy Melissa Lane Kevin Lawrence Ray Leggett Susan Leswing Margaret Livesay Tami Loehrs Delores Long-Coleman Kimberly Marmalich Clifford Marsh Tina Maschi Beverly Massey Michael McDonald JoAnn McGhee Robert McKinney Krashondria McNutt Lori Medina

Due to space limitations, degrees and professional designations are not listed.

THE FORENSIC EXAMINER速 Fall 2012

Angela Melville Anthony Meo Jane Miller Milos Mitric Treyce Montoya Amy Mooney Rhonda Moore Frantz Muse Sylvia Neely-Bond Danyielle Nelson Stephanie Nelson Tracy Nicol Krystyn Niski Arthur Nixon Richard Oelberger John Oldham Gbenga Oleoseni Fanike Olugbala Akinbola Olusola Ayodeji Michael Opela Sr. Murelene Owens Anna Owusu Ted Paddack Ray Paris Yolande Parson Shilpa Patel Cynthia Pile Stephanie Quillin Francisco Quintanar Jr. Richard Ratzlaff Anna Raubic Kenneth Ray Stardust Red Bow Demetra Reed Cheryl Richards Shawn Richardson Richard Rolls Stephanie Salatich Thomas Sandoz LaVern Savage

Bradley Schaffer Linda Schofel Beth Schowalter Vishnu Shankar Nazamodin Shehabuddeen Mei-fu Sheng LaWanda Shepeard Megan Simms Earl Singer Felicia Smith Anita Smith Michael Snyder-Barker Paul Souza Rebecca Stamat Julia States Janet Steinberg Kimberly Sterling April Stewart Michael Stoll George Surowy Robert Taylor Wendy Thomas Robert Thompson Jr. Ronald Thompson Susan Tonymon Ekwi Ukariwe Lara Vanderhoof Pedro Vazquez Loretta Verstuyft Aaron Vick Maribel Villafranca Rai Virasawmi Kathleen Walker Tonya Ware Sharman Warrick Kimberly Weiland Jamie Wenzlick Alicia West Stephen Whittaker Demetria Willis

Jacob Yelvington Jeffrey Yerkey Newly credentialed Dauda Balarabe Bruneita Battle Damon Byrd Jean-Leon Chong Allen Combs Lindsey Cooper Becky Davidson Lisa Geer Kelly Jenkins Carolyn Johnson Pamela King James Krause Mathew Kurian Melissa Lane JoAnn McGhee Shawn Miller Robert Miller Jane Miller Miles Morrison Susan Neubauer Joel Nwoke Fanike Olugbala Patricia Ross Jackie Stefanowicz April Stewart Kimberly Weiland Judy Weimer New Diplomates Kenneth Krumm New Fellows Ralph Wharry

ACFEI NEWS

WWW.ACFEI.COM WWW.ACFEI.COM •• (800) (800) 592-1399 592-1399

ACFEI NEWS and Announcements

THE MOB MUSEUM Photo Source: Kremerbi

TWO MONTHS AND COUNTING!

1. Network with peers: In today’s changing economy you never know when you will need to take advantage of professional contacts that you’ve made at a conference. Due to the multidisciplinary facet of the Executive Summit, you are sure to make contacts you would not make elsewhere. 2. Reset your mind: Even if networking and schmoozing isn’t your thing, meeting up with peers and taking the time to take in new information related to your profession is worth it. Look at it as a chance to reset your mind. 3. Stay current with today’s topics: New information is constantly emerging in the field. Attending the Summit and being exposed to like-minded peers can give you new ideas and new ways to be more efficient and effective in your job. 4. Take a break from your routine: Stepping away from the daily grind for a few days can do wonders in helping you clear your mind and refocus.

Source: http://www.visitlasvegas.com/listing/the-mob-museum/25733/

DID YOU KNOW? ♦ The world’s biggest mechanical neon sign is that of the cowboy in Las Vegas. ♦ Over 60,000 pounds of shrimp are consumed in Las Vegas every day, almost as much as in the whole United States.

ACFEI FILL INNEWS TEXT

The 2012 Executive Summit is fast approaching and we are busy working to make this the premier networking and learning event of the year! As busy professionals, it is sometimes difficult to justify taking the time out of your schedule to attend a professional meeting. However, attending a conference is an excellent way to re-energize yourself, and can make you more successful and productive in the long-term. Here are four great ways attending the 2012 Executive Summit can re-energize you:

The Las Vegas Museum of Organized Crime and Law Enforcement—aka The Mob Museum—is an interactive museum dedicated to the history of organized crime and law enforcement. The museum presents a bold and authentic view of organized crime’s impact on Las Vegas history and its unique imprint on America and the world. The museum presents the real stories and actual events of mob history via interactive and engaging exhibits that reveal all sides of the story about the role of organized crime in the U.S. The Mob Museum offers multiple perspectives and provides a contemporary, engaging, challenging, and educational experience.

♦ Howard Hughes bought his first hotel in Las Vegas. He went to stay at the Desert Inn in 1966 and stayed on for two years before his eccentricities and demands became too much for the management who then asked him to leave. He retaliated by buying the hotel and continued to stay there.

For more tips: http://pmtips.net/ways-attending-professional-conferences-reenergize/ Source: http://www.venere.com/blog/las-vegas-fun-facts/

Fall 2012 THE FORENSIC EXAMINER®

FORENSICS IN THE NEWS

Fo r e ns ic S ci e n t i s t t r a c k s

FORENSICS IN THE NEWS

Crim e S cene i nva d e r s A forensic scientist is unmasking the planet’s tiniest criminals – minute creatures who contaminate crime scenes and threaten to throw detectives off the scent. Italian-born Dr. Stefano Vanin, who lectures at the University of Huddersfield in the UK, is making valuable discoveries which will enable crime scene investigators to determine whether injuries to a body or damage to a corpse’s clothing were caused by a human killer... or were the work of insects which moved in after death had taken place. Very often, says Dr. Vanin, tiny creatures can cause lesions to a dead body which closely resemble injuries left by a human assailant. For example, ants which clamber over a corpse’s face can deposit marks which mimic the effects of a punch. It is vital that detectives are quickly able to separate post-mortem insect damage from wounds that were caused before death by a killer. Dr. Vanin is building up a body of knowledge about the various ways in which insects can distort crime scenes, and he reports on some of his latest findings in the journal Forensic Science International. This time he investigates the damage caused to dead bodies that are found underwater, where they are preyed on by aquatic creatures. It was the retrieval of the body of a 28-year-old man in the River Brenta, at Padova in Italy, that provided Dr. Vanin with the opportunity to add another piece to his jigsaw of knowledge. The man had drowned—witnesses had seen him struggling in the water -- and there were no signs of injury on the body. But during the autopsy a series of small abrasions in the upper eyelids were discovered. These were caused by large numbers of amphipods—tiny, eyeless crustaceans which had been feeding on the body and were discovered when the corpse was pulled out of the water. This enabled Dr. Vanin and his colleagues to analyze and record the post-mortem damage caused by the amphipods. The marks were very similar to those deposited by ants on dry land. As a result, when detectives and forensic scientists are examining future corpses recovered from fresh water, they will have data which will help explain unusual markings on the body.

ScienceDaily (May 11, 2012) — Marks on a dead body could indicate violence and therefore murder. But they might have been made by legions of insects. A forensic scientist has built up data that will be a big aid to detectives faced with investigating gruesome discoveries.

Hyp e r ia galba 10

A Symbiotic amphipod collected in the Belgian part of the North Sea. PHOTO CREDIT: Hans Hillewaert

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Significant Skull Differences Between Closely Linked Groups ScienceDaily (Apr. 12, 2012) — In order to accurately identify skulls as male or female, forensic anthropologists need to have a good understanding of how the characteristics of male and female skulls differ between populations. A new study from North Carolina State University shows that these differences can be significant, even between populations that are geographically close to one another.

DNA Fingerprinting Enters 21st Century* ScienceDaily (Apr. 27, 2012) — As any crime show buff can tell you, DNA evidence identifies a victim’s remains, fingers the guilty, and sets the innocent free. But in reality, the processing of forensic DNA evidence takes much longer than a 60-minute primetime slot. To create a victim or perpetrator’s DNA profile, the U.S. Federal Bureau of Investigation (FBI) scans a DNA sample for at least 13 short tandem repeats (STRs). STRs are collections of repeated two to six nucleotide-long sequences, such as CTGCTGCTG, which are scattered around the genome. Because the number of repeats in STRs can mutate quickly, each person’s set of these genetic markers is different from every other person’s, making STRs ideal for creating a unique DNA fingerprint. Now Whitehead Institute researchers have pulled STR identification into the 21st Century by creating lobSTR, a threestep system that accurately and simultaneously profiles more than100,000 STRs from a human genome sequence in one day -- a feat that previous systems could never complete. The lobSTR algorithm is described in the May issue of Genome Research. “lobSTR found that in one human genome, 55% of the STRs are polymorphic, they showed some difference, which is very *This story has been cut from its original form.

surprising,” says Whitehead Fellow Yaniv Erlich. “Usually DNA’s polymorphism rate is very low because most DNA is identical between two people. With this tool, we provide access to tens of thousands of quickly changing markers that you couldn’t get before, and those can be used in medical genetics, population genetics, and forensics.” To create a DNA fingerprint, lobSTR first scans an entire genome to identify all STRs and what nucleotide pattern is repeated within those stretches of DNA. Then, lobSTR notes the non-repeating sequences flanking either end of the STRs. These sequences anchor each STR’s location within the genome and determine the number of repeats at the STRs. Finally, lobSTR removes any “noise” to produce an accurate description of the STRs’ configuration. According to Melissa Gymrek, who is the first author of the Genome Research paper, lobSTR’s ability to accurately and efficiently describe thousands of STRs in one genome has opened up many new research opportunities. “The first and simple next step is to characterize the amount of STR variation in individuals and populations,” says Gymrek, who was an undergraduate researcher in Erlich’s lab when she worked on lobSTR. “This will provide knowledge of the normal range of STR alleles at each locus, which will be useful in medical genetics studies that would like to determine if a given allele is normal or likely to be pathogenic. Another direction we are looking at is to look at STRs in case/control studies to look for STRs associated with disease. The list goes on, but these are some of the first questions we’re looking to tackle.” Fall 2012 THE FORENSIC EXAMINER®

FORENSICS IN THE NEWS

The researchers looked at the skulls of 27 women and 28 men who died in Lisbon, Portugal, between 1880 and 1975. They also evaluated the skulls of 40 women and 39 men who died between 1895 and 1903 in the rural area of Coimbra, just over 120 miles north of Lisbon. The researchers found significant variation between female skulls from Lisbon and those from Coimbra. “The differences were in the shape of the skull, not the size,” says Dr. Ann Ross,

professor of anthropology at NC State and co-author of a paper describing the study. “This indicates that the variation is due to genetic differences, rather than differences of diet or nutrition.” The researchers found little difference between the male skulls. Specifically, the researchers found that the female skulls from Lisbon exhibited greater intraorbital distance than the skulls of Coimbra females. In other words, the women from Lisbon had broader noses and eyes that were spaced further apart. This difference in craniofacial characteristics may stem from an influx of immigrants into Lisbon, which is a port city, Ross says. However, it may also be a result of preferential mate selection—meaning Lisbon men were finding mates abroad, or were more attracted to women with those facial features. “Finding this level of dimorphism between groups in such close proximity to each other highlights the importance of examining human variation if we hope to make informed assessments of skeletal remains,” Ross says. “That’s true whether you’re working in a biohistorical context or engaged in forensic analysis with law enforcement.”

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ACCREDITATION

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Value of Accreditation Douglas Ruben, PhD, FACFE, DABFE, DABFM, DABPS, is a forensic psychologist and national consultant on family therapy, addictions, and media psychology. His seminars on applied behavior analysis, adult children of alcoholics, and parenting span the nation. He has been an instructor for Cross Country Education for 11 years, presenting over 1,000 workshops on family assessment and treatment from Portland, Oregon to Portland, Maine. Dr. Ruben is author and co-author of over 60 books and over 100 professional articles. He is on the editorial board of The Forensic Examiner® and has a private practice in Okemos, Michigan.

1. What duties does your job require you to perform on a regular basis? Kemmerlin: I am a member of an Investigative Unit that provides investigative support to 35 boards and commissions within the Department of State’s Division of Professional Regulation. The primary responsibility of our Investigative Unit is to investigate complaints against licensed professionals in 53 different professions, and to assist the division in the maintaining of professional standards that govern the licensed professionals. I am tasked with investigating medical complaints for the Board of Medical Licensure and Discipline. Duties I perform on a regular basis include reviewing complaints (including responses to complaints), obtaining and organizing medical records, analyzing medical records, obtaining and reviewing relevant legal documents (e.g., depositions, interrogatories, expert testimony, etc.), interviewing complainants, respondents, and witnesses, preparing comprehensive investigative reports (with relevant attachments), consulting with co-investigators from the Board of Medical Licensure and Discipline, case review with Deputy Attorney Generals, and testifying at Board Hearings.

3. How has your certification enhanced your career? Kemmerlin: This Board certification has enhanced my standing within the division’s investigative unit, among my peers, and in the medical community at-large. I am able to routinely conduct superior medical investigations and produce superior investigative reports. I am more confident at every stage of the investigative case, from the initial assignment, investigation, preliminary report, formal discovery, final report, prehearing preparation, and hearing, all the way to the post hearing. I am able to provide credible and timely testimony at Board hearings. I am a more effective teacher of the facts and circumstances of the case, more competent, more believable, more persuasive, and more prepared as a result of the many opportunities to learn and grow with other members of ACFEI.

Ruben: Eighty percent of my practice is forensic examinations largely consisting of court evaluations of competency to stand trial, diminished capacity, criminal responsibility, expert and fact witness, work-safety risk, DUIL risk, insurance fraud, disability determination, prevocational readiness, parental competence, and guardianship competence. Lately, more consultations on cases reviewing other psychological evaluations. 2. Which ACFEI certification(s) do you hold? Kemmerlin: I am a Certified Medical Investigator IV (CMI-IV) with the American College of Forensic Examiners International. I am greatly impressed with having the opportunity to progress through more difficult levels of certifications (I-V) en route to gaining diplomate status. The course work has been both challenging and rewarding. Ruben: Diplomates and specialities in forensic psychology, child and family specialites, medicine, and from American Psychotherapy Association: FACFEI, DABFE, DABPS.

Ruben: Listing as specialty earns immediate respect and recognition from attorneys and court as an expert testifier and meeting the Daubert Standard. 4. What would you say to other professionals who are considering pursuing the same certification? Kemmerlin: I recommended this program to one of my investigative colleagues. He recently completed his Medical Investigator III requirements and was appointed to ACFEI’s education committee. He is already out shining me. We are both seeking to embody our unit’s mission statement, “INVESTIGATIVE EXCELLENCE THROUGH INTEGRITY AND PROFESSIONALISM.” Our association with ACFEI helps make this happen.

ACCREDITATION

Grandmaster R. Anthony Kemmerlin, Sr. is a CMI-IV with the American College of Forensic Examiners International. He is employed as a Licensed Medical Investigator with the Delaware Department of State, Division of Professional Regulation. He is also founder and Special Operations Master Instructor with Xtreme Threat Group. Grandmaster Kemmerlin is a 10th degree blackbelt in Kemm Aiki Bujutsu Martial Arts. He also holds instructor level credentials with the Delaware State Police Detective Licensing Division in Handcuffing, OCAT (pepper spray), MEB (baton) and in First Aid, CPR and AED with the American Red Cross.

Ruben: First, check with the state laws and policies in which one practices. If the state recognizes the diplomacy (such as Florida, Michigan, etc.), take the valued time to prepare for courses, written and oral examination to gain further legitimacy of expertise. Benefits abound. One salient advantage is testimony. On the stand, expert witness examination and cross-examination are more amiable, dignified, and fact-based regarding the case at hand, instead of time spent on discrediting your background. n Fall 2012 THE FORENSIC EXAMINER®

CE ARTICLE: 1 CE CREDIT

The Value of

RISK assessment: E v i d e n c e f r o m r e c e n t s u r v e ys

CE ARTICLE

By Barbara Apostolou, PhD, CPA, CGMA, and Nicholas Apostolou, DBA, CPA, Cr.FA, DABFA, CGMA

ABSTRACT Financial fraud continues to plague both consumers and business firms, and its detection and prevention remain a serious challenge for regulators. Five major surveys have recently been conducted to understand the magnitude and nature of present-day financial fraud. These surveys were prepared by the Big Four accounting firms: Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers. Although the surveys differ in terms of methodology, questions asked, survey emphasis, and respondents used, the findings tell a similar tale. For example, all the surveys indicate that fraud and corruption are on the rise. The current global economic environment has significantly increased the pressure on employees to achieve financial goals. Companies need to be more proactive in anticipating fraud and corruption. Results emphasize the value of undertaking a fraud risk assessment on a regular basis, and support the importance of surprise audits and anonymous tips in detecting fraud. The surveys validate the global reach of fraud and corruption in spite of increased scrutiny on the problem in the recent decade. Lessons from Fraud Surveys Financial fraud continues to plague both consumers and business firms; its detection and prevention is a serious concern for regulators and corporate managers. At the national level, President Obama established the Financial Fraud Enforcement Task Force in November 2009 to combat financial fraud related to mortgage lending, securities law, stimulus spending, and the federal bailout of the financial sector. The task force includes senior-level officials from more than 20 federal agencies, 94 U.S. attorneysâ&#x20AC;&#x2122; offices, and state and local partners; it is the broadest coalition of federal, state, and local partners ever assembled to combat financial fraud. On June 17, 2010, THE FORENSIC EXAMINERÂŽ Fall 2012

the Financial Fraud Enforcement Task Force announced the results of the largest collective enforcement effort ever conducted in confronting mortgage fraud. The nationwide takedown, Operation Stolen Dreams, has involved 1,215 criminal defendants nationwide, including 485 arrests allegedly responsible for more than $2.3 billion in losses. The new task force is the latest effort to bring to bear the resources of the government on a problem that defies easy solutions. In response to the dramatic collapse of Enron in 2001 and public outrage over the accounting scandals at prominent companies like WorldCom, Xerox, Merck, and Adelphia Communications, Congress passed the Sarbanes-Oxley Act of

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CE AT HOME STUDY COURSE: 1 ce credit To get credit and complete the article, please go to http://www.acfei.com/ FEFA0112 to take the exam and complete the evaluation. If you have special needs that prevent you from taking the exam online, please contact the registrar at 800.423.9737. This article is approved by the following for continuing education credit: (ACFEI) The American College of Forensic Examiners International provides this continuing education credit for Diplomates and certified members.

After studying this article, participants should be better able to do the following: 1. Discuss the most common forms of fraud affecting business firms. 2. Identify industries most affected by fraud. 3. Explain the most common fraud detection techniques. 4. Describe strategies to manage the risks associated with fraud, bribery, and corruption. Keywords: Fraud surveys, fraud risk assessment, asset misappropriation, accounting fraud Target Audience: Accountants and forensic professionals Disclosure: The author has nothing to disclose Program Level: Basic Prerequisites: None

CE ARTICLE Fall 2012 THE FORENSIC EXAMINERÂŽ

Overview of CORPORATE DECEPTION

CE ARTICLE

Corporate deception typically is subdivided into three major categories: (1) asset misappropriation, (2) corruption, and (3) financial statement fraud. Although other fraud schemes exist, these three are most prevalent in terms of occurrence and dollar loss to the organization. Each fraud category is summarized with a real case example.

2002 (SOX), the most significant legislation affecting securities laws and corporate conduct since both the Securities Act of 1933 and the Securities Exchange Act of 1934. SOX made it a criminal act to falsify financial statements and established severe penalties for fraudulent financial activity. In addition, SOX created the Public Company Accounting Oversight Board (PCAOB), which reports to the Securities and Exchange Commission (SEC) to regulate auditors and the nature of services they furnish to clients. The federal government also responded to the public demand to curtail corporate fraudulent activity by creating the interagency Corporate Fraud Task Force in July 2002. By 2007, this task force was responsible for 1,236 total corporate fraud convictions, including 214 CEOs and presidents, 53 CFOs, 23 corporate counsels or attorneys, and 129 vice presidents. In November 2009, the Corporate Fraud Task Force was replaced by the Financial Fraud Enforcement Task Force. Despite formal efforts from the public and private sectors, the incidence and extent of financial fraud continues to escalate. This article summarizes and compares the findings of five major surveys recently conducted on fraud by the Big Four accounting firms Deloitte (2011), Ernst & Young (2010), KPMG (2007, 2009), and PricewaterhouseCoopers (2009): 1.

GCC Fraud Survey (May 2011) Deloitte

Driving Ethical Growth—New Markets, New Challenges 11th Global Fraud Survey Ernst & Young (E&Y)

Profile of a Fraudster Survey (2007) KPMG

Fraud Survey (2009) KPMG Forensic

The Global Economic Crime Survey (November 2009) PricewaterhouseCoopers (PwC)

These five surveys offer insight into the consequences of fraud and present evidence on the effectiveness of programs and controls to reduce those fraud risks. Lessons can be learned because the surveys are based upon actual experiences with fraud internationally. Asset Misappropriation The term asset misappropriation describes any scheme that involves the theft or misuse of an organization’s assets. A salient example is the case of the United States v. United Technologies

THE FORENSIC EXAMINER® Fall 2012

(1997), which involved false purchase orders and submitting false invoices, provides a realworld illustration of asset misappropriation. A division of United Technologies Corporation (UTC) paid the United States $14.8 million for conspiring to divert $10 million in United States military aid into a slush fund subject to the exclusive control of an Israeli Air Force officer. The settlement resolved a claim filed by the United States in U.S. District Court in Miami, Florida, against UTC. UTC and former Israeli Air Force officer, Rami Dotan, set up a $10 million fund with U.S. military aid that could be spent at Dotan’s discretion, without the required oversight of the Defense Security Assistance Agency or procurement authorities within Israel. In 1991, Dotan was sentenced to 13 years imprisonment by an Israeli military court for his role in related schemes. UTC acquired the $10 million in funds for Dotan through false billings under a contract with Israel to develop and manufacture a PW1120 turbojet engine for an Israeli LAVI fighter aircraft. UTC prepared false purchase orders and submitted false invoices to Israel between March and July 1987 to collect $10 million for engine improvement work that was never performed. UTC and Dotan unlawfully concealed a side-deal to use this $10 million as a “bank” for Dotan. At the direction of Dotan, the complaint said, UTC paid approximately 2.4 million of the $10 million to Yrretco Inc. and Airtech Inc., two New Jersey companies. The manager of Yrretco and Airtech deposited hundreds of thousands of dollars of the U.S. military aid into the personal bank accounts of Nehemia Oron, a former IAF Colonel, and Yoram Ingbir, the owner of Ingbir Engineering. In 1992, the United States recovered $2 million from Yrretco, Airtech, and Oron, a co-conspirator. Dotan confessed to the Israeli police that he and Ingbir planned to split Ingbir’s earnings. Corruption Corruption describes any scheme in which a person uses his or her influence in a business transaction to obtain an unauthorized benefit contrary to that person’s duty to his or her employer. The Foreign Corrupt Practices Act of 1977 (FCPA) specifically prohibits bribery of foreign officials in an effort to win foreign government contracts. An example of the application of the FCPA was the $24,800,000 fine assessed to Lockheed Martin in 1995 (Amato, 1996). Lockheed agreed to pay criminal and civil fines after pleading guilty to violating the

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FINANCIAL STATEMENT DECEPTION Financial statement fraud occurs when an organization’s financial statements are falsified to make it appear more or less profitable. Many of the famous cases like Enron and WorldCom illustrate this type of fraud. Another illustration of financial statement fraud is provided by a recent case in which the SEC charged Dell Inc. for accounting manipulations in violation of the Securities Acts (Securities and Exchange Commission, 2010).

FCPA by paying a consultant from a funding source that disallowed it. The case resulted from the 1989 contract between Lockheed and Egypt calling for the sale of three C-130 aircraft for approximately $79 million. The investigation uncovered payments by Lockheed to its Egyptian consultant, Dr. Leila Takla, in exchange for her assistance in making the sale. The contract, which was funded by U.S. taxpayer money through the Defense Security Assistance Agency (DSAA) Foreign Military Financing (FMF) program,

required Lockheed to certify that no consultant fees were being paid out of FMF grant money. The DCIS was alerted to a possible violation when DSAA, during a routine review, discovered Lockheed had an agreement to pay a $1.8 million commission to Dr. Tekla. Once DSAA discovered the agreement, Lockheed canceled its consultant arrangement, but subsequently wired $1 million to Dr. Takla’s Swiss account in consideration of the earlier agreement. Dr. Takla was a member of Parliament in Egypt and thus a foreign official as specified under the FCPA.

Former worldcom executives and other officials being sworn in prior to testifying before a house committee on Capitol Hill in July 2002. (MCT PHOTO)

Deloitte’s GCC Fraud Survey 2011 The Gulf Cooperation Council (GCC) consists of six Arab states that have formed a political and economic union: (1) Bahrain, (2) Kuwait, (3) Oman, (4) Qatar, (5) Saudi Arabia, and (6) United Arab Emirates. The GCC reflects a significant concentration of economic activity with global impact. The purpose of Deloitte’s survey was to determine how organizations have been impacted by fraud in the face of the recent financial crisis. The confidential web-based survey of 1,100 corporate executives consisted of 28 questions related to the detection and prevention of fraud. Of those responding to the survey, 35% reported at least one instance of fraud during 2010. The most frequent types of fraud were asset misappropriation, theft of information, procurement fraud, and corruption or bribery. The survey requested information about fraud risk management programs in place. Most of the respondents report the presence of a corporate code of conduct and ethics policy, which are both widely regarded as effective deterrents. However, only 50% have a whistleblowing policy that would permit anonymous tips, which generally is believed to be the most effective means for detecting fraud. Only about half of the respondents had a fraud risk assessment or fraud prevention plan in place. In spite of the fact that fraud losses typically are in the Fall 2012 THE FORENSIC EXAMINER®

CE ARTICLE

In March 2006, it was reported that Dell’s board uncovered evidence of misconduct, including accounting errors and “deficiencies in the financial control environment,” while conducting an ongoing investigation of the company’s accounting. The board’s investigation was prompted by an SEC inquiry that began in August 2005. In August 2007, Dell announced it would restate four years of financial results (fiscal years 2003-2006 and the first fiscal quarter of 2007) after a separate internal audit found that senior executives sought accounting adjustments “motivated by the objective of attaining financial targets.” According to Dell, “a number of these adjustments were improper,” and “(t)he investigation found that sometimes business unit personnel did not provide complete information to corporate headquarters and, in a number of instances, purposefully incorrect or incomplete information about these activities was provided to internal or external auditors.” In July 2010, Dell agreed to pay $100 million to resolve the SEC investigation. The settlement also resolved allegations that Dell misrepresented aspects of its commercial relationship with Intel Corp. The SEC’s complaint alleged that Dell’s senior accounting officials engaged in improper accounting by maintaining a series of cookie jar reserves that it used to cover shortfalls in operating results from 2002 to 2005. Cookie jar accounting refers to the practice of using unrealistic estimates and strategic choices of accounting methods to smooth out its earnings. Dell CEO Michael Dell and former CEO Kevin Rollins each agreed to pay a $4 million civil penalty; former CFO James Schneider agreed to pay a $3 million penalty plus over $121,000 in disgorgement and interest; and former regional vice president of finance Nicholas Dunning agreed to pay a $50,000 penalty. The company and the individual executives settled without admitting or denying SEC’s allegations.

Table 1: Frequency of Fraud Risk Assessment Frequency

millions, 40% of the respondents state that $50,000 or less was spent annually on fraud prevention. These findings suggest that resources should be invested in fraud detection and deterrence, especially since the economy is in decline.

CE ARTICLE

E&Y’s Global Fraud Survey 2010 E&Y’s global fraud survey was conducted on behalf of its Fraud Investigation & Dispute Services practice and published in 2010. E&Y interviewed more than 1,400 chief financial officers, as well as heads of legal, compliance, and internal audit in 36 countries between November 2009 and February 2010 to obtain their views on how companies are managing the risks associated with fraud, bribery, and corruption. Consistent with the findings of the other surveys, companies are finding that fraud and corruption are on the rise. Almost one in six of all the respondents had experienced a significant fraud in the past two years. Recent Experiences of Fraud Fraud is still commonplace in virtually every country in the world. More than a quarter of the respondents were from Western Europe, which has experienced a significant upsurge in fraud since the previous survey, from 10 to 21 percent. The financial crisis of the last two years has increased the pressure on upper management to meet financial goals, which becomes particularly onerous when companies are operating in the recessionary phase of the business cycle. Frequency of Fraud Risk Assessments In spite of the widespread attention to the fraud problem, there exist executives who have never performed a fraud risk assessment. This step is essential if a company is attempting to preempt the possibility of fraud. The incentive for fraud increases when resources are scarce and budgets are tight as they are now in the current economic environment faced by business firms. Table 1 summarizes the frequency of fraud risk assessments as reported by those surveyed; 25% either did not engage formally or were not aware if the process was undertaken.

THE FORENSIC EXAMINER® Fall 2012

% Responding

Less than six months ago

Between six and 12 months

More than 12 months

Never

Do not know

Adapted from 11 Global Fraud Survey, page 6. th

Table 2: FACTORS MITIGATING FRAUD RISK % Believing Factor Reduces Fraud Risk

Factor Internal controls

Internal audit

Management reviews

Internal education and communication of anti-fraud policies

External audit

Encouragement and protection for whistleblowers

Regular rotation of personnel

Adapted from 11th Global Fraud Survey, page 22.

Table 3: PrEVENTING MANAGEMENT OVERRIDE % Believing Factor Detects Frauds Sooner

Factor Stronger internal audit

More robust segregation of duties

Stronger compliance

Additional board or audit committee oversight

Stronger legal function

Better use of outside advisors to test fraud risks

Additional regulatory oversight

Adapted from 11th Global Fraud Survey, page 23.

Well-Defined Investigative Roles An organization should have well-defined responsibilities for the different groups who respond to the first indication that fraud, corruption, or other malfeasance has been detected. Roles for internal audit, legal, compliance, and finance should be clearly delineated. For example, the steps taken to respond to information provided by whistleblowers have to be specified. The CFO often plays a central role in the process of responding to indications of fraud. It is symptomatic

of a company’s deficiency in its anti-fraud policies if the CFO’s role in conducting investigations is not well-defined. Many companies lack clear investigative roles for the key participants in the process. Directors’ Concern about Potential Liability Directors have become increasingly more concerned about potential liability. Worldwide economic doldrums leading to incentives to engage in fraud certainly are a dominant reason for this concern. However,

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Table 4: FRAUDSTER PROFILE Personal attribute

% of Cases

Aged between 36 and 55 years old

Male

Acted alone

Fraud against employer (internal fraud)

Member of senior management

Tenure with employer of 2-5 years prior to fraud

Employed in finance department (most common)

Fraud details

% of Cases

Asset misappropriation most common

---

Acted within local market

Committed multiple acts of fraud

Timeframe of fraud one year or less

Timeframe of fraud one to five years

Adapted from KPMG Profile of a Fraudster Survey 2007, page 6.

Table 5: FRAUDSTER PROFILE Condition

% of Respondents 66

Management override of internal controls

Inadequate oversight by directors over management

Collusion between employees and third parties

Collusion between management and third parties

Collusion between employees and management

Other factors

Source: KPMG Fraud Survey 2009, page 6.

companies are still not doing enough to educate directors in their role as safeguards against fraud and corrupt practices. Factors Mitigating Fraud Risk Factors believed to mitigate fraud risk are summarized in Table 2. Internal controls are perceived as the most important factor to mitigate fraud risk (74% of those surveyed). SOX requires audits of the effectiveness of internal controls over financial reporting, which no doubt leads to heightened awareness of their significant role in reducing fraud risk. The internal audit department is viewed by many as a pivotal defense against fraud and corruption by the great majority of respondents. In an environment where budgets for internal audit departments have become constrained, internal audit department heads have to find

the resources to properly train their employees to detect and respond to instances of fraud. Further, many internal audit departments find themselves pressured to focus less on risk and more on operating efficiency. Fraud risk increases when management has the ability to override internal controls, and it is an issue that receives considerable attention by both internal and external auditors. Respondents expressed confidence that a stronger internal audit department is the best line of defense to prevent management from overriding established internal controls (Table 3). However, internal audit departments face a conundrum difficult to resolve: assessing the possibility of management committing fraud while not fostering management mistrust. Direct communication with the audit committee can ease this concern.

KPMG Fraud Survey 2009 KPMG sponsored a formal survey that involved telephone interviews of executives of U.S. organizations with annual revenues of $250 million about fraud risks and associated panned responses. Sixty-five percent of those responding stated that fraud continues to pose a significant risk. The top three types of fraud reported were (1) asset misappropriation (35%); (2) corruption (31%); and (3) financial statement fraud (14%). The number one concern facing the executives is the loss of public trust (71%) if a fraud were to occur, followed by legal fines/sanctions (54%). Most of those surveyed expected that fraud risks would increase in the future. A second part of the study was to identify fraud risk management plans. The conditions that enable fraud are summarized in Table 5, with inadequate internal controls (66%) as the most likely factor. The executives were asked about the best means to detect fraud in their organizations. Internal audit (47%), employee tips (20%), line managers (13%), and external auditors (9%) were cited as the top four sources of information. Only 10% of those responding reported that no formal program was

Fall 2012 THE FORENSIC EXAMINERÂŽ

CE ARTICLE

Inadequate internal controls or compliance programs

KPMG Profile of a Fraudster 2007 In 2007, KPMG analyzed hundreds of actual fraud investigations conducted by its forensic departments within the EMA region (Europe, India, Middle East, and Africa) to produce a profile of the individuals who commit fraud and what conditions permit fraud to occur. A total of 360 fraudulent acts were included in the analysis. A summary of the fraudster profile is presented in Table 4. A male finance department employee aged 36-55 acting independently was most likely to perpetrate asset misappropriation in the cases examined. Motivation for committing fraud was most often cited as greed for position, power, or influence. Weaknesses in internal control were noted as the most prevalent condition permitting a fraud to occur. Whistleblowing (i.e., anonymous tip) was the most common means of fraud detection (25%).

Table 6: FACTORS CONTRIBUTING TO FRAUD Factor

% of Cases

Financial targets more difficult to achieve

Fear of losing job

Desire to earn bonus

Executives to achieve financial goals

Bonuses not paid current year

Pressure to maintain lender relationship

Belief that competitors pay bribes to win contracts

Other factors

Adapted from The Global Economic Crime Survey, page 5.

Table 7: TYPES OF ECONOMIC CRIME Crime Type

Table 8: FREQUENCY OF FRAUD RISK ASSESSMENT

% of Cases

Asset misappropriation

67 38

Monthly

181

Bribery and corruption

Quarterly

351

IP infringement

Biannually

354

Money laundering

Annually

937

Tax fraud

Not at all

855

Illegal insider trading

Did not know

359

Total

3,037

100

Other

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% of Total

Accounting fraud

Adapted from The Global Economic Crime Survey, page 6.

in place to deal with a fraud discovery. The areas that have the most room for improvement in terms of fraud risk mitigation are (1) employee communication and training and (2) technology-driven continuous auditing and monitoring techniques, with 67% and 65%, respectively, reporting the existence of a moderate to significant room for improvement. PwC’s Global Economic Crime Survey 2009 PwC’s fifth biennial report is based upon a web-based survey of 3,037 senior representatives of organizations in 54 countries. The 2009 survey investigated the root causes of economic crime, and the way in which it affects businesses worldwide. Of those responding, 905 (30%) had experienced at least one incident of fraud in the previous 12 months. The backdrop of the global economic downturn has affected most of the companies, with

No. of Responders

Frequency

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Adapted from The Global Economic Crime Survey, page 8.

62% reporting a decline in financial performance. In addition, 40% of all respondents believed that the risk of economic crime had risen due to the recession. Factors Contributing to Fraud The economic downturn has made achieving financial targets more difficult, increased competitive pressure, and made employees concerned about job security (Table 6). As a result, employers are increasingly tempted to artificially enhance revenues and/or reduce. The increasing pressure to achieve financial targets is accompanied by worries over bonus and fear of losing employment. When employees are terminated in cost-cutting efforts in a recession, the anxiety level among those remaining inevitably rises. Types of Economic Crime Table 7 shows the types of economic crime incurred by those respondents who reported

economic crime in the recent 12 months prior to the survey. The three most common types are (1) asset misappropriation, (2) accounting fraud, and (3) bribery and corruption. Asset misappropriation, the theft or misuse of assets was experienced by two-thirds of the companies in the survey. Accounting fraud was the second most frequent type of economic crime, but has experienced the steepest upturn. The rise in accounting fraud could be a byproduct of intense pressure to meet financial goals caused by the economic downturn. The survey defines accounting fraud as including an assortment of acts that use financial data to perpetrate a deceit. Fraud Risk Assessment A fraud risk assessment is a crucial tool in preventing fraud because it can identify potential risks and weaknesses in internal controls that create the opportunity to commit fraud. Table 8 summarizes the responses when those surveyed were asked how often their organization performed a fraud risk assessment. In a period in which economic crime is on the increase, 28% of those responding do not even engage in a fraud risk assessment, and 12% do not even know if it is performed. Thus 40% are not benefiting from this very critical strategy. A company’s failure to perform this procedure is a serious deficiency in their effort to combat fraud. Going further, the survey correlated reported frauds and the frequency of fraud risk assessments. As expected, the more frequent the fraud risk assessment the more often that fraud is discovered in a timely manner. Size as a Determinant of Fraud A company’s likelihood of fraud is directly related to its size. Only 15% of the small companies surveyed experienced fraud, while 46% of organizations with more than 1,000 employees reported having experienced economic crime within the last 12 months. Several reasons account for the correlation of size of company and incidence of fraud, including: • Larger companies often engage in more complex transactions that can lead to more opportunities to engage in fraud; • Larger companies can implement a greater number of controls and risk management tools to increase their chances of detecting fraud; and • The larger and more complex the organization, the greater the anonymity of the employees.

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Former WorldComm CEO Bernard Ebbers leaves Manhattan federal court in New York after being sentenced to 25 years in prison, Wednesday, July 13, 2005. (MCT PHOTO)

Table 9: INDUSTRIES WITH FRAUD % Reported Frauds

Industry

Insurance

Financial services

Hospitality and leisure

Transportation and logistics

Government/state-owned enterprises

Retail and consumer

Energy, utilities and mining

Entertainment and media

Automotive

Aerospace and defense

Manufacturing

Pharmaceuticals and life sciences

Chemicals

All others

Adapted from The Global Economic Crime Survey, page 12.

Table 10: COMPARISON OF FRAUD SURVEYS Deloitte 2011 Methodology

Survey

E&Y 2010 Interview

KPMG 2007 Analysis of actual fraud cases

KPMG 2009 Phone interview

PwC 2009 Survey

Time period of survey

2010

2009-2010

2000s

2008-2009

2009

Number of participants

1,100

1,409

360 cases

204

3,037

Number of countries

> 10

Percentage of companies experiencing fraud

35%

17%

100%

Not provided

33%

Most common fraud

Asset misappropriation

Not provided

Asset misappropriation

Best fraud detection technique

Anonymous tips

Internal audit

Anonymous tips

Internal audit

Percentage of companies performing a fraud risk assessment

73%

75%

Not provided

72%

Fraudster’s most likely department

Operations

Not provided

Finance

Not provided

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Communications

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Fraud and Industry Table 9 provides evidence that no industry is immune to fraud. The four most fraudprone industries in the 2009 survey are (1) communications, (2) insurance, (3) financial services, and (4) hospitality and leisure. Insurance and financial services have reported consistently high levels of fraud over the ten years the survey has been conducted. In addition, financial services is the sector that has experienced the largest increase in fraud according to the survey, with 56% of respondents reporting an increase in the number of incidences in the last 12 months.

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Actions against Fraudsters Actions taken against internal fraudsters extend from doing nothing to dismissal and filing of criminal charges. When discovered, the majority of internal fraudsters were dismissed. Interestingly, 22% of respondents reported issuing warnings or reprimands as the only consequence. For external fraudsters, the majority of respondents chose to bring civil action and/ or criminal charges and terminated the business relationship. Perhaps more serious consequences would serve as a stronger deterrent. Profile of Fraudsters Of the respondents who reported fraud by external fraudsters, 45% had experienced fraud by customers and 20% by agents/intermediaries. The survey highlights the increase in frauds committed by middle management. Economic crimes committed by middle managers now account for 42% of all internal frauds, up from 26% in 2007. Reasons cited for the rise in frauds committed by middle management include the need to maintain living standards and jealousy of higher earners whose compensation or bonuses were believed to be unfair. Conclusion Although the five fraud surveys differ in terms of questions, emphasis of the survey, and the respondents chosen, certain findings are consistent among the surveys (Table 10). Fraud and corruption are on the increase. The worldwide financial may account for a large part of this upsurge, but it will be interesting to see if the trend changes as the world economy recovers. Many companies still need to be more proactive in anticipating fraud and corruption. Internal controls cannot be depended upon alone to detect and discourage fraud. Fraud can be committed in many different ways; deterrence and detection requires companies to employ a range of tools. Each survey offers a different vantage

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point, yet the lessons are consistent: fraud is still a problem and efforts can be made to defeat it. The U.S. government has invested considerable resources into fighting the problem of fraud, which is a global problem. The importance of effective internal controls led to the SOX requirement for audits of the effectiveness of controls. However, the surveys reveal that weak controls persist as a condition that permits fraud to occur. Continued emphasis on the importance of controls by both regulators and managers is essential. Every organization should undertake a fraud risk assessment on a regular basis. It is startling how many companies fail to exercise due diligence to prevent fraud and/or corruption. For example, surprise audits have been found to be an important tool in the struggle against fraud but they are implemented by less than 30% of companies victimized by fraud. In addition, anonymous tips have been shown by various surveys to be a very effective method that can be used to detect fraud. The critical importance of tips in detecting fraud suggests that every organization should implement a fraud reporting system, which can be done with the assistance of vendors who will ensure anonymity to the whistleblower. Fraud hotlines should be a necessary part of a fraud reporting system because of their effectiveness in encouraging anonymous tips from employees. Fraud and corruption remain a worldwide problem. The global economic downturn has significantly increased pressure on organizations to maintain profitability, thereby creating incentives to engage in fraud. The results of these five surveys can provide management

with information on how to direct scarce resources to deter fraud and/or detect it in a timely manner. n REFERENCES Amato, C. (1996). Lockheed-Egypt: An investigation of foreign corrupt practices act violations. The Journal of Public Inquiry: Fall 1996 (29-30). Deloitte (2011). GCC fraud survey 2011: Facing the challenge of fraud. Retrieved December 28, 2011 from http://www.deloitte.com/assets/Dcom-Lebanon/Local%20Assets/Documents/FAS/Deloitte%20 %20GCC%20Fraud%20%20Survey%202011.pdf. Ernst & Young (2010). Driving ethical growth窶馬ew markets, new challenges, 11th global fraud survey. Retrieved December 28, 2011 from http://www.ey.com/Publication/vwLUAssets/EY_11th_GLOBAL_FRAUD_ Survey/$FILE/EY_11th_GLOBAL_FRAUD_Survey.pdf. KPMG (2007). Profile of a fraudster survey. Retrieved December 28, 2011 from http://www.kpmg.co.uk/pubs/ ProfileofaFraudsterSurvey%28web%29.pdf. KPMG (2009). Fraud survey 2009. Retrieved December 28, 2011 from http://www.ethicspoint.com/Upload/ Articles/21001NSS_Fraud_Survey_082409.pdf. PricewaterhouseCoopers (2009). The global economic crime survey: Economic crime in a downturn. Retrieved December 28, 2011 from http://www.pwc.com/en_GX/ gx/economic-crime-survey/pdf/global-economic-crimesurvey-2009.pdf. Securities and Exchange Commission (2010). SEC charges Dell and senior executives with disclosure and accounting fraud. Retrieved December 28, 2011 from http://www. sec.gov/news/press/2010/2010-131.htm. United States v. United Technologies Corporation, No. 95-8251-CIV-MARCUS (1997).

Interested in learning more about forensic accounting? Attend ES21 for the Forensic Accounting Hot Topics Panel Discussion with moderator Robert Minniti and panelists Lamar Casparis, Stewart Appelrouth, and Eric Kreuter.

Contributors Barbara Apostolou, PhD, CPA, CGMA is a Professor of Accounting in the College of Business and Economics at West Virginia University, where she teaches undergraduate and graduate auditing courses. She is the author or coauthor of numerous professional and academic articles on fraud and forensic accounting topics and is the author of several online fraud detection technique courses.

Nicholas Apostolou, DBA, CPA, Cr.FA, DABFA, CGMA is visiting professor at West Virginia University where he teaches MBA courses in financial and managerial accounting. He is a Fellow of the American College of Forensic Examiners Institute. Dr. Apostolou has authored or coauthored extensively in academic and professional literature on financial and forensic accounting topics. He has co-authored several books on investing topics.