Financial forensics can be de- fined, in short, as the art and science of investigating peo- ple and money to a standard
that would be admissible in a court
of law. The science is the application of financial theory. The art is in
determining what analyses are relevant and may be effectively performed.
Often the method used is dictated
by the nature of the alleged crime
and the nature of available documents. An experienced investigator
may consider various methods before arriving at the most supportable
method. At that point, the investigator must make an informed decision
of whether or not there is sufficient
evidence to arrive at any supportable conclusions.
Building and Presenting a Case
to Meet the High Threshold
When there is a criminal charge of a
financial crime, the prosecutor must
prove guilt beyond a reasonable
doubt. Because of the very personal
impact of criminal trials for both the
victim and the alleged perpetrator,
a criminal case requires that the
proofs meet a high threshold. The
role of the defense attorney is to
convince a jury that this threshold
has not been met. The side that prevails usually has done so because
they understand how a case should
be built and presented.
No Witness? Financial Forensic
Methodology is Critical
In many financial crimes cases, there
may not be a witness who identifies
the perpetrator(s). Therefore, the
success of the prosecution’s case
must rely on the financial forensic
methodology employed by the criminal investigator. Under ideal conditions, the financial forensic investigation includes three basic elements,
which are: 1) obtaining evidence, 2)
analyzing evidence, and 3) presentation of findings.
A financial crimes case is built on
documentary evidence. It is critical
for the investigator to first obtain
relevant information and documentation. This requires an understanding of both financial documents and
financial theory. It is the rare case
where every relevant document is
produced. The investigator must be
adept at understanding the impact
of missing documents and methods
that can be used to work around
missing documents where possible.
If the investigator cannot demon-
strate that they knew what the rel-
evant documents were and made an
attempt to obtain them, the case is
greatly weakened. It is far different
to say that the relevant documents
were all considered during the dis-
covery phase, than to admit that the
relevant documents were not even
considered. In the first case, the
investigator can state the attempt
was made to obtain the documents
and explain how he or she worked
around the lack of some documents.
In the second situation, the investi-
gator has more difficulty supporting
their work since they did not even
attempt to obtain the relevant doc-
Once all of the available documents have been produced, the analysis is performed. The analysis is
geared to determine ( 1) if a crime did
occur, ( 2) the magnitude of the crime,
and ( 3) to identify the perpetrator.
Understandable to the Jury
When the forensic analysis is complete and a conclusion is reached,
the evidence must be presented in
such a way that people with limited
financial knowledge can understand
what happened. The most sophisticated analysis will fail if it cannot
effectively be explained to the relevant parties including, ultimately,
the trier of fact.
Conclusion: Relevant to Both
Prosecution and Defense
Whether an attorney is a prosecutor
or defense attorney, the information in this article applies equally
to investigations involving financial
crimes. The prosecutor is best served
by having qualified criminal investigators who have received proper
training in financial forensics and
can present their findings convincingly. The defense attorney should
retain an expert who knows how to
evaluate the evidence and conclusions presented.
The success of a financial crimes case often must rely on the financial
forensic methodology employed by the criminal investigator.
Keys to Investigation and Analysis
DAVID SUTHERLAND, CPA/CFF, CFE, CLEA
EPPS FORENSIC CONSULTING PLLC
Dave specializes in financial investigations, forensic accounting, litigation
support, fraud examination, and law enforcement consulting services.
He also teaches Financial Forensics in Law Enforcement (FFLE®).
13880 N. Northsight Blvd., Suite 115, Scottsdale, AZ 85260