How financial investigators spot scams, assess allegations, and uncover fraud—plus real cases of CFOs, finance execs, and union leaders caught stealing.
Auditors don’t just check the math—they follow the money, expose deception, and, sometimes, bring down criminal enterprises. Early in my career, I learned that understanding fraud isn’t something you get from a textbook. You have to live it.
I’ve spent 34 years in financial federal criminal investigations, another four as a Senior Forensic Auditor, and a fair bit of time before that in law school, where I learned how to argue about everything, including lunch options.
In this issue, I’ll break down how financial investigators assess allegations and decide whether to pursue a case. We’ll walk through the key questions investigators ask—like what law was broken, what’s motivating the informant, and how much of their story checks out. Plus, we’ll look at real-world fraud cases, including a CFO who siphoned $40 million through fake businesses, a finance director who gambled away stolen payroll funds, and a union president who treated member dues like his personal travel fund.
Fraud leaves a money trail. The key is knowing where to look.
As a reminder—
Fieldnotes: Personal case insights and lessons
Emerging Risks: What’s happening in the world of fraud
Before we go any further: this is not legal advice. If you need legal advice, go find yourself a lawyer—not some guy on the internet that used to chase fraudsters.
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Lessons from the field:
How Investigations Begin
Every investigation—criminal, civil, or administrative—starts with an allegation. These come from everywhere: anonymous letters, ex-spouses, employees, and even other law enforcement agencies. If the information has some merit for further review, I always made it a rule of thumb to personally interview the source of the allegation, if possible, even if others had interviewed them and prepared their report of allegation. You never know what extra details might surface.
Early in my career, I was assigned as “officer of the day,” a glorified title that meant you sat in a tiny room by the office entrance.For eight hours the “office of the day” handled the hotline calls and walk-ins who wanted to report a crime. Most “officer of the day” informants were unreliable with wild allegations. One guy swore two FBI agents were shooting nuclear X-rays bullets into his apartment. When I suggested that it didn’t sound much like a financial crime, he insisted that the FBI promised him that my agency would be interested in his compliant… (Spoiler: they weren’t and we weren’t.) But every now and then, someone walked in with a potential golden platter case.
Three Questions That Drive My Review of an Allegation
Once I had an allegation, I needed to decide if it was worth pursuing. My process boiled down to three questions:
- What financial law might have been broken?Laws provide an investigative roadmap. To convict someone, the government must prove every element in the law beyond a reasonable doubt. Take tax evasion (Title 26 USC 7201)—it generally has three elements:
- Was a tax return filed?
- Did the person take steps to avoid paying taxes?
- Were those actions intentional?
- What’s the informant’s motive?
People don’t always come forward out of civic duty. A bitter ex-spouse or disgruntled employee might have an axe to grind. But that doesn’t mean they’re information is wrong. The more bitter the information, the more I needed to verify their claims before moving forward. The last thing I want was to be used as tool of revenge based on inaccurate information. - How much did the informant get right?
When reviewing an allegation, I was limited in my actions in determining the viability of the information received. I could access government database and law enforcement agencies, tax information, and observe locations with a drive by, to name a few. Even though I am limited in my early checks, I would keep a score card on the information the informant got right and what they got wrong. If too much didn’t add up, I walked away.
The Final Decision
If the allegations appeared to hold water, I now needed to convince my boss—and their boss—that we had a legitimate financial crime worth pursuing. If not, I cut my losses and moved on.
Fraud Finders:
What’s Happening in the World of Fraud?
If you want to stay informed, keep an eye on your local Department of Justice (DOJ) press releases—a source of real-world case studies on what not to do. Here are a few recent gems:
Former CFO Pleads Guity to Embezzling Over $40 Million.
This CFO orchestrated an embezzlement scheme through three principal forms: 1) He moved funds to the bank account of an entity he owned and controlled, then moved it to another entity for his benefit. 2) He used funds to pay for credit card purchases from outside entities he owned and controlled. 3) He used funds to purchase unauthorized cashier’s checks used for his personal benefit.
Woman Sentence to Three Years in Prison for Embezzling Three Million Dollars.
As a Director of Finance and Human Resources, she accessed the company’s payroll and banking system to direct salary, bonuses, and expense reimbursement payments for benefits that she was not entitled to receive. As part of her fraud concealment, she provided false financial statements to the company’s board. In total, she gambled most of the three million dollars away.
Union President/Financial Secretary/Treasurer Stole $58K on Flights, Hotels, Jewelry
(ZacExplains note: wow, talk about a walking Segregation of Duties concern!)
While President, Acting Financial Secretary, and Acting Treasurer of the union, he issued himself and family members unauthorized checks, many containing forged second check signatures. He also used the Union debit card for personal flights to Florida, Las Vegas and Atlanta, hotel rooms, rental cars, and a jewelry store purchase.
Crime pays… until it doesn’t.
Final Thoughts
Fraud never really changes—just the methods. Keep learning, stay skeptical, and if something seems off, follow the money. And for those still convinced they can outsmart auditors, regulators, and investigators? Well, I’ll be reading about them in the next round of DOJ press releases.
Until next time-