tracing and recovering fraud losses

© 2019 Association of Certified Fraud Examiners, Inc.

Tracing and Recovering

Fraud Losses

Case Studies and Practical Applications

© 2019 Association of Certified Fraud Examiners, Inc. 2 of 27

Introduction

▪ This session contains two case studies

designed to help you apply the course material

to real world investigations and to expose you

to some of the practical implications of the

course material.


Case Study 1: The Addison House

▪ You are an investigator for the Hidalgo

government, and you work in the Inspector

General’s Office, which is responsible for

investigating cases involving procurement and

program fraud.

▪ After learning about the article in the Hidalgo

Times, your supervisor asks you to look into the

allegations made in the article.



▪ Questions:

1. Make a list of the claims made in the article.

2. Draw a link diagram illustrating the points made in

the article.

3. What are some possible explanations regarding how

Albert Andy purchased the $4.6 beachfront home?



▪ Conduct an initial assessment.

▪ Questions:

4. Identify the order in which you would conduct each

of the above steps. Why?

5. Where would you look for the property records for

the Addison House?

6. What Internet sources could you use to get

background information on Krobo Partners and

Easyfinders Equipment?



▪ Check the records regarding the contract

between Easyfinders and the Hidalgo

government.

▪ Use the Internet to get information on Krobo

and Easyfinders.



▪ Check the property records for the Addison

House.

▪ Question:

7. What leads did you identify in these records? How

should you follow these leads?



▪ Follow the new leads.

▪ Question:

8. Develop a list of topics that you would like Snyder to

answer during the interview.



▪ Interview Stephen Snyder.



▪ Get information on the D. Denton Corporation.

▪ Question:

9. What leads did you identify in the D. Denton

Corporation records? How should you follow these

leads?



▪ Search for Ronald M. Archibald and a physical

address for the D. Denton Corporation.



▪ You visit the Addison House.

▪ You decide to interview Mary Molina.

▪ Question:

10.Develop a list of topics that you would like Molina to

answer during the interview.



▪ Interview Mary Molina.

▪ Questions:

11.What new information did you learn from your

conversation with Molina?

12. Is there anything you should have asked about, but

did not?



▪ Check Albert Andy’s declaration of income and

assets.

▪ Question:

13.Based on Andy’s declaration of assets, is it feasible

that he could afford a $4.6 million home? Why or

why not?



▪ Interview Albert Andy.

▪ Questions:

14.Based on your conversation with Andy, what

questions do you still have? Where could you find

the answers to those questions?

15.After talking to Andy, you decide to conclude the

initial assessment. Summarize the new facts that

you learned during the initial assessment, and based

on the information obtained so far, state whether you

think a formal investigation is necessary and explain

your reasoning.



▪ Question:

16.Based on the information learned in the initial

assessment, you decide to conduct a formal

investigation. Develop an investigative plan that

outlines what steps you should take.



▪ Begin a formal investigation.

▪ Question:

17.How might you be able to determine how the

Addison House was paid for?



▪ Determine how the Addison House was paid

for.

▪ Make an informal request for assistance from

the Cayman Islands.

▪ Check the tax records for the Addison House.

▪ Question:

18.How can you find out more information about

Northern Star?



▪ Make an informal request for assistance to

obtain information about Northern Star.

▪ Question:

19.How should you follow the leads identified in

Northern Star’s records?



▪ Investigate the payments to Carl Cantrell.

▪ Questions:

20.What key information did you learn from your

conversation with Carl Cantrell?

21. Identify any other open leads that you should follow.

22.What should you do next?


Case Study 2: Dr. John Jones

1. From the facts, identify the possible legal basis

for any recovery by IllCare or Providential. Your

analysis should answer the two questions listed

below.

a) What fraud offenses did Dr. Jones commit against

IllCare and Providential?

b) Have any contractual duties or obligations to IllCare

or to Providential been breached?



2. Who might be liable for the legal offenses you

identified in your response to Question 1?



3. Analyze potential civil remedies available to

IllCare and Providential by answering the two

questions on the next slide.



a) For each of the following remedies, identify whether

they would be available based on the potential legal

offenses you identified in your responses to

Question 1:

• Damages

• Rescission

• Constructive trust

• Civil forfeiture

b) How else can IllCare and Providential potentially

recover their losses other than through the litigation

remedies you have identified?



4. Identify the assets of both Dr. Jones and Mrs.

Jones that might be used to satisfy a possible

fraud judgment against either or both of them.

Include the following in your answer:

a) The estimated value of the asset

b) Whether there are exclusions that might prevent you

from using the assets to satisfy a judgment



5. Plan an investigation to locate other leviable

assets of Dr. Jones and any other potential

defendants.



6. Trace the payments from your clients to Dr.

Jones for the fraudulent claims. Can those

proceeds be located at the present time, and, if

so, where are they located? If you do not have

enough information, identify what additional

information you need to trace the fraudulent

proceeds.



7. Develop a recommended course of action for

the HMOs to maximize the recovery of their

losses. Include answers to the following

questions and explain how and why you arrived

at each decision:

a) What course of action would you recommend for

civil litigation, criminal action (criminal restitution or

restitution as a condition of probation), or other non-

litigation remedy?

b) Whom should you sue in the civil litigation? Why?



8. Assume that you decide to pursue civil litigation

in Kansas state court. Outline a plan for

securing (before judgment) the proceeds or

assets that could be reached through the

litigation. Include any provisional remedies, as

well as any separate legal actions to resolve

third-party claims or to reach proceeds or

assets now owned or in the hands of persons

other than the target defendant(s).



9. Unfortunately, the requests for provisions relief

were rejected, but the case proceeds to trial.

The HMOs obtained a judgment against both

Dr. Jones and Overland Labs for the full

amounts of their losses. What proceeds or

assets can be levied upon to satisfy the

judgment, and how would the HMOs go about

recovering them?

tracing and recovering fraud losses

Documents