Fraud Examination, 4E
Chapter 8: Investigating Concealment
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Learning Objectives
 Describe concealment investigation methods and how
they relate to fraud.
 Understand the value of documents and electronic records
in a fraud investigation.
 List the different methods of obtaining documentary
evidence.
 Understand how to perform discovery sampling to obtain
documentary evidence.
 Explain how to obtain hard-to-get
documentary evidence.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Concealment
Perpetrators must conceal their fraud by covering
their tracks, obscuring evidence, and removing
red flags where possible.
Accomplished by manipulating documentary
evidence
For an electronic perspective, concealment can
also be accomplished by modifying or deleting
records in corporate databases.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Unlike witnesses, documents do not forget, they
cannot be cross-examined or confused by
attorneys, they cannot commit perjury, and they
never tell inconsistent stories on two different
occasions.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary Evidence
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Investigators must understand the following
aspects of documentary evidence:
 Chain of custody of documents
 Marking of evidence
 Organization of documentary evidence
 Coordination of evidence
 Rules concerning original versus copies of
documents
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Chain of custody documents
 Record must be kept of when a document is received and what
has happened to it since its receipt.
 For computer-based evidence, professional programs like EnCase
and The Forensic Toolkit calculate checksums that support the
chain of evidence.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Marking the Evidence
 A transparent envelope
should be used to store the
evidence, with the date
received and the initials of
the examiner written on the
outside.
 A copy of the document
should be made, and the
original document should be
stored in the envelope in a
secure place.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Organization of the Evidence
 Fraud cases can create tremendous amounts of
documentary evidence
In one case, 100 people worked full time for over a year to input key words
into a computer so that the documents could be called up on demand during
the trial—there were literally millions of documents.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Today, in especially large cases, it is not
uncommon to have electronic files of all
depositions and other testimony of all exhibits with
the testimony.
FBI’s Document Conversion Lab (DocLab)
 Saves incredible amounts of time and space
 Increases search capabilities exponentially
 Enables information sharing far and wide
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Evidence database should include the following:
 Dates of documents
 Sources of documents
 Dates on which documents were obtained
 Brief descriptions of document contents
 Subjects of documents
 Identifying or Bates number
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Coordination of Evidence
 Some investigations are simple and involve only a
few people.
 Some investigations are large and involve
investigators, legal counsel, accountants, expert
witnesses, and management representatives. In
these type cases, investigation analysis software
can be useful.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Two popular investigation analysis software are:
 Analyst’s Notebook14
 Xanalys Link Explorer
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Original Documents
versus Photocopies
 Originals are preferable to
photocopies
 In certain jurisdictions,
only four situations permit
photocopies
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 The original document has been lost or destroyed without
the intent or fault of the party seeking to introduce the
secondary evidence.
 The original document is in the possession of an adverse
party who fails to produce it after a written notice to do
so, or when the party in possession is outside the
jurisdiction of the subpoena power of the court.
 The document or record is in the custody of a public
office.
 The original documents are too voluminous to permit
careful examination, and a summary of their contents is
acceptable.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Obtaining Documentary Evidence
 The best way to obtain documentary evidence is
through computer-based queries of accounting
and other databases.
 Another useful method of obtaining documentary
evidence is through traditional audits, including
discovery sampling.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Audits
Auditors conduct seven types of tests







Tests of mechanical accuracy (recalculations)
Analytical tests (tests of reasonableness)
Documentation
Confirmations
Observations
Physical examinations
Inquiries
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Because gathering
documentation is a normal
part of their work, auditors
can often gather
documentary evidence as
part of an investigation
without arousing
suspicion.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Discovery Sampling
 Discovery sampling is the easiest of all statistical sampling
variations to understand.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Documentation of Discovery Sampling
 The investigator should document the method
used for determining sample size and the method
used for selecting the sample.
Evaluation of Errors
 If the investigator finds errors, he or she must
determine whether the errors were unintentional
or are indicative of fraud.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Consideration of Nonsampling Risk
 The investigator should also consider
nonsampling risk, which is the risk that a finding
will be misinterpreted.
 Misinterpretation can be reduced by:
 careful planning,
 performance,
 evaluation of the sampling procedure
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Hard-to-Get Documentary Evidence
The most common examples are:
Web-based e-mail accounts
Private bank records
Tax returns
Brokerage records
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Hard-to-Get Documentary
Evidence
 Three ways to obtain
documentary evidence:
 Subpoena
 Search warrant
 Voluntary consent
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
Document Experts determine whether…
 a document was written by the person whose signature it
bears
 a document has been forged
 a document has been altered by additives, deletions,
obliterations, erasures, or photocopying
 the handwriting is genuine
 the entire document was printed on the same machine
 a document was printed on the date it bears or before or
after
 two or more documents are significantly different or
substantially the same
 pages have been substituted in a document.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
Aspects of Documentary
Evidence
 Two well-known
organizations of document
experts can offer in fraud
investigations.
 FBI: Questioned Documents
Section of the Forensic
Analysis Section
 American Board of Forensic
Document Examiners, Inc.
Albrecht, Albrecht, Albrecht, Zimbelman
© 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license