Episode 83: Best Evidence: Interviews in Fraud Investigations with Leah Wietholter
At the heart of all successful forensic accounting engagements or fraud investigations is the reliance and analysis of evidence. Best circumstantial evidence in a financial investigation are sources of information or data that are furthest removed from the influence of a subject. If you want to ensure that you uncover facts resulting in defensible investigative analyses in your cases, you are in the right place. In this six-part series, Leah Wietholter reviews the most common best evidence data sources in order of reliability by exchanging seats from host to guest to thoroughly discuss this topic with guest host, Bethany Pigott.
Leah Wietholter, MBA, CFE, PI, CPA is the CEO and founder of Workman Forensics headquartered in Tulsa, Oklahoma. With career aspirations at 12 years old of becoming an investigator, Leah worked for the FBI while completing her accounting undergraduate degree and masters in business administration. After working in public accounting for over two years as a staff tax accountant and forensic accountant, Leah opened Workman Forensics - a firm dedicated to forensic accounting and fraud investigations. Since starting the firm in 2010, Leah has worked over 150 cases providing data-focused solutions resulting in settlements and testifying in both state and federal courts. Read her full bio on the Workman Forensics team page.
The information in today's podcast is just a glimpse of what's inside Leah's book—Data Sleuth: Using Data in Forensic Accounting Engagements and Fraud Investigations. Available on Amazon!
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Transcript
Leah Wietholter:
Hi, I'm Leah Wietholter, your CEO and founder of Workman Forensics in Tulsa, Oklahoma. And this is The Data Sleuth podcast. At the heart of all successful forensic accounting engagements or fraud investigations is the analysis of evidence. Best circumstantial evidence in a financial investigation are those sources of information or data that are furthest removed from the influence of a subject.
In this six part series, I'm going to review the most common, best evidence data sources in order of reliability by exchanging seats. I'm going to go from host to guest, so we can thoroughly discuss this topic with our guest host, Bethany Pigot. If you want to ensure that you uncover facts resulting in defensible investigative analysis in your cases, you are in the right place.
Bethany Pigott:
Welcome to The Data Sleuth podcast. I'm your host, Bethany Pigott, and we are sitting down once again with Leah to talk about best evidence in cases. So we're going to talk about interviews today. Leah, what is the number one mistake clients make when they realize they have an embezzlement situation on their hands?
Leah Wietholter:
They're mad and so they fire the employee.
Bethany Pigott:
So how does this impact the investigation?
Leah Wietholter:
If you look at it from an investigator standpoint, the best source or piece of evidence just walked out the door. Guess who knows what they did? They do. No one knows what they did, how they did it, why they did it better than the person that you just fired. So as long as you don't have a corporate policy that prohibits this, you don't want them to leave prematurely. You don't want to entrap them. I don't want to set up opportunities for them to just keep doing what you think they've been doing, but I just want them to stay on, keep doing their job.
They can keep stealing if they want. Don't set them up, but just let them keep stealing and then work a sample of your case and then go interview them and talk to them. We're going to talk more about that, obviously, but yeah, that's the number one thing. Firing an employee too early. Because as soon as they walk out that door, they know what they've been doing. It's weird. It's like we forget that the subject knows what they were doing.
Bethany Pigott:
Yeah. So with a rookie investigator, what is a common mistake that they make when-
Leah Wietholter:
They interview the subject too early. So just like when the employer fires the employee, or interviews them even prematurely, when the investigator does it, my experience, you get one shot to interview somebody, you get one shot to interview a subject or even a close association or related party of the subject. You really only get one shot.
And so just take a little longer to make sure that your data analysis, that everything about your investigation, at least a good sample, make sure that that's done before you go talk to them. Because if not, just like when an employer fires somebody too early, if you go interview this person too early, in both cases, in both instances, that person is going to go hire a criminal defense attorney.
Now, you're going to have to go through a criminal defense attorney every time you want to talk and anytime it's going to be incriminating to them, their attorney is probably going to say they're not answering that. So I mean, just take a minute before you go interview this subject. I actually had a case a couple years ago where we were, it was an investigation of an entire bank.
And so we're working this massive bank investigation involving the shareholders and owners and a law enforcement agency decided to go out and interview one of the shareholders and or top management of the bank that was no longer there. Well, we didn't know this. No one had the financial data that we had. No one had the financial investigation that we had. We were the first part of this investigation.
But someone else, an agent had gone out and interviewed a close related party to the subject. So at the end of our investigation, when it was a good time to do interviews, because we have all this information and we've got emails that this guy signed, we see transactions, we see how this guy has benefited kind of peripherally from some dealings of the bank. We've got great evidence to go talk to him.
Our PI that was going to do the interviews called him up and he said, "I've already talked to you guys. I'm not talking to you again." So we were stuck. We couldn't even wrap up that part of the investigation because someone had jumped the gun. Now, in a big investigation like that, it's understandable that somebody's going to think, "Oh, this is my next step. I've done everything I could do."
And it wasn't like we were even coordinating with this [inaudible], we were working with a different agency, so. But I just thought it was a great example because I talk about this so much in especially a case of the man cave, that when I saw it play out again in real life, I was like, "Yes, I'm not crazy. If you go interview too early, it's going to take away some of your best evidence."
Bethany Pigott:
So do you have some recommendations you can make to employees and also to investigators when they're approaching this whole best evidence of interviews?
Leah Wietholter:
Yeah. Leave the employee in his or her position for a couple of weeks, perform a covert investigation. Like I said, don't try to entrap them. Just look back historically, do preliminary background research on the subject, analyze the data, bank statements, credit card statements, whatever the data source is for the scheme. Just look at a sample of six to 12 months so that you can fully understand what's been going on.
You don't have to, they've been employed 10 years, you don't have to go back six, seven years. Just look at the last six to 12 months. You're probably going to catch it anyway. Most of these losses are exponential. So they start out small and then every year they grow exponentially. So if you're looking at the last six to 12 months, theoretically that should be your period of greatest loss.
So you're going to have more transactions to look at and all that. So just look at how much money is missing for that period. Then confront or interview with the data findings in hand. Don't go in just because you have one time that it happened. I can't tell you how many times just being a boss, an employee will say, I'll go in and say, "Hey, I've noticed that this is happening." And they'll say, "Well, can you give me specific instances of it?"
So let's walk into this interview and say, "I have specific instances of it." Right? Now, you cannot trap the employee in the interview. They have to be free to leave. You also have to consult corporate policies to be able to do this. You also might want to consult with the company's legal counsel. Legal counsel may want to be present. And during this interview, you may have to sit in silence for a long time.
One of the longest ones that I participated with, a lot of times I'll send in a retired law enforcement professional who's done a lot of interviewing. They'll go in to do this confrontational thing, and then they'll ask, "Will you meet with the forensic accountant to go over the details? But this one time, the PI had to actually sit there for about three hours, and most of it was silence before they could get the guy to confess.
He was just thinking through, "What's going to happen whenever I finally let everyone know that this is the case." He was a deacon at his church, he had kids in private school, private colleges. They were from a very small town, and this was going to get around. And so he's processing, "When they find out what I did, what is my life, what is my wife going to think? What are my kids going to think?"
So anyway, but get the story, get the confession. I really suggest recording it. I learned about a new app. And I'm pulling it up right now because I don't remember the name. I learned about a new app this week when I was speaking at an event. It's called Otter.ai. And yeah, O-T-T-E-R, and it will record the conversation and transcribe it at the same time, which is just crazy and awesome.
Bethany Pigott:
Magic.
Leah Wietholter:
Yeah, magic. So but I do suggest that you record it because if somebody, I just think that's kind of best evidence to protect yourself. There's plenty of times when people have been asked not to record it, but I don't know why. If I am doing my job recording, it shouldn't be a problem. But I want to get the story and confession first from the individual. I may have to sit through lots of silence and then go through the data findings.
If I'm doing both, go through the data findings and say, "Can you tell me what this transaction was for?" After they've confessed, "Can you tell me what this transaction was for?" And get the subject's input. Have them say, "Yep." In case of the man cave, we ask, "What's this transaction for?" And in our fake interview, I mean, this really happened in real life, but in our recreated interview, the guy says, "Well, bought a boat." So that's what you're wanting. Get his input on those things or her.
Bethany Pigott:
Yeah. Are employee subjects really willing to talk and confessed when approached this way?
Leah Wietholter:
Yes. Yeah, it's pretty wild. So like I mentioned, case of the man cave, the subject in that case, he did. I mean, it took a little bit, but he confessed and said, "Yeah, this is what I've been doing." In The Data Sleuth book I have a story about Jeff, and Jeff is the one that took, I think, close to three hours to confess. So whenever given the opportunity, that happens. I know that my mentor at the Bureau used to say that anytime they had bank tellers that were stealing, they would go and talk to them, and by the end, they're crying, confessing.
There is something, I mean, this person's been hiding this secret for such a long time, there is something about somebody else knowing about it for once, especially when it's been happening for years and years and years. So it does work. Although that seems to be whenever I host cases of the man cave, that seems to be the thing, "Really, the guy confessed?" And it's like, yeah, get a load off. Plus, I think it's even kind of known from TV shows and things like that that if you cooperate with law enforcement, it goes better for you.
I mean, that's a common thing that is said. But I think at that moment it's more emotional. And if you can get over the embarrassment of it. I think it also takes a lot. I don't read a whole lot on psychology, but I do think it takes a lot for someone who's sitting in that situation, and even though you're not trapping them, they're going to have to get up and leave. And even getting up and leaving is going to say something.
Bethany Pigott:
Yeah.
Leah Wietholter:
Not to mention, okay, at the end of the day, we're still dealing with financial evidence. We got your signature on checks. We got... yeah.
Bethany Pigott:
Yeah, you can't really skirt around that when there's this hard evidence right in front of you.
Leah Wietholter:
Right.
Bethany Pigott:
Yeah. All right. Well, we're going to take a quick break and then we'll be back to finish talking about interviews.
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All right, welcome back. So Leah, in thinking about how you have to work with law enforcement and then you have these people that you're approaching, I was just thinking as you've been talking, what does that collaboration look like with law enforcement? What are the dynamics there? Maybe even, what is an example of a really great collaboration that worked out? I don't know, just anything in this realm of topic I was just thinking that might be good for the listeners to hear about.
Leah Wietholter:
Yeah. So with law enforcement, having worked so many of these cases for the Bureau, I volunteered with Tulsa Police in their fraud area, fraud division for a while, and even the state auditor. But so I know what they're looking for. And the way this typically works is that somebody will hire us to investigate the case, go through all the evidence we've talked about on these last several episodes.
We're going to go through that. We're going to put together a report, and I am preparing my report for law enforcement to take it. I've taken this case as far as I can as a private investigator or a forensic accountant. I don't necessarily have subpoena power. There's only such certain information I can get to, but I've taken it as far as possible. Sometimes I've even been known to put further investigation recommendations if I think, "Oh, it'd be really helpful if somebody could subpoena X, Y, or Z."
But I'm going to put together this report for law enforcement thinking about what are the charges they're going to be filing, what's the evidence that they need? Because that makes that conversation really easy. Now, as it relates to interviews, if I have the opportunity to get the subject's confession before they're fired, that is going to give law enforcement a step-up. We've already got this, especially if it's recorded, that's great evidence, if it's recorded and transcribed.
I mean, just the more, I'm going to use the word, I think this word's kind of goofy, but contemporaneous evidence, the evidence is being created at the time that it's occurring. So the more of that that I can provide to law enforcement, the better to help them build their case. And that's as far as I can take it sometimes, most of the time. That's as far as I can take it, turn it over to law enforcement. And I have relationships with people in law enforcement.
Those are relationships that I work to build and maintain and cultivate. This isn't like I'm just calling somebody up. I mean, I may be calling somebody up for the first time, but it's probably because so-and-so that I do have a relationship said, "Give this person a call." So I'm constantly trying to manage those relationships so that whenever I call, they know, "Oh, Leah's worked..."
They know the standard of the quality of case that I work, the quality of report that I work, that I'm thinking of them when I'm preparing this, that I haven't stopped halfway. And I'm like, "Oh, just let law enforcement handle it." Really vet this. So that helps with transitioning that. If the individual, getting back to our top of here, so if the individual has been fired and I can't interview that individual, I think that is a great time to make sure all the other evidence is presented well in a report.
But that's when law enforcement really is going to have to do that interview, and I leave that interview to them. I think there's one time I tried to do an interview after the individual was fired. This was pretty early on in my career, and I was just kind of curious how it would work. And I thought, "Yeah." And I had a retired FBI agent who was a friend of mine when I worked at the Bureau.
We both went and we drove out to the middle of nowhere Oklahoma to do this interview, but we thought, I was just like, "Hey, let's just see what they'll tell me. Maybe she doesn't know she was fired because she was stealing money." I don't know. And we showed up and she just said, "I don't think I can talk to you." And the agent who was with me said, "Well, can we at least just tell you what our role is and we'll just do the talking."
And she still, even at the end of it, she still was like, "Let me go call my attorney real quick," because she wanted to talk to us. But so that's when I think, because you don't have to talk to me. I mean, I own Workman Forensics. I do not represent anyone with actual authority from a prosecution standpoint in this space.
So that's when that's a really good time to let, and let law enforcement work through their whole process. And then they've got a point where they're going to include those interviews. And so let them do that in that way. But if they are still on your client's dime, that's an excellent time to go interview that employee.
Bethany Pigott:
And you normally interview unannounced?
Leah Wietholter:
Oh, yes.
Bethany Pigott:
Yeah. You don't give them a heads-up, "Hey, we're coming."
Leah Wietholter:
No, no, no. No.
Bethany Pigott:
And then my other question was with the law enforcement thing, have there been times when they've already done an interview before you get the case, like that there's already interviews on file or anything?
Leah Wietholter:
No.
Bethany Pigott:
That you have to review or anything? Okay.
Leah Wietholter:
Maybe if I'm on the other side, if I'm on the criminal defense side, maybe I look at interviews that way. I'll look at their notes from the interviews in that way. But typically, I mean, what I've seen happening, and it's just been kind of growing in popularity over the last few years, is that if a client, a business owner, knows that they have embezzlement and they contact law enforcement, if law enforcement senses this is more than a check fraud or this is more involved, this is going to involve business records, they will actually tell the person, "You need to go find a forensic accountant." We have a case that we started a couple weeks ago that that's exactly how it happened. They said, "Go find a forensic accountant, then come back to us." So rarely have they done any work at all until we've put it together.
Bethany Pigott:
Okay. Yeah. That answers my question for sure. Are there any other outcomes you've noticed when you've approached subject interviews this way?
Leah Wietholter:
Yeah. So it can have the potential to exonerate some employees or some subjects of investigations. I believe in our last episode, or two episodes ago, I talked about a controller who had purchased golf clubs on the credit card. And so just, if this owner had just gone and fired this lady, she would've just been misunderstood over some $3,500 golf clubs.
But by having an interview with her, she was able to say, "Well, remember you gave me permission to do this." And then he goes, "Oh, I sure did." So that exonerated a subject. It's also possible that subjects might be willing to provide additional information after the fact. This is really wild to me, but as I mentioned in The Data Sleuth book, I tell a story about Jeff. And Jeff had set up a fake company to, well, to steal money.
I was going to make it more complicated than that, but he had set up a company that his buddy owned, and he was creating fake invoices of inventory. And he sold, he was a distributor of, I don't know, let's just say widgets. He just sold a bunch of stuff. So he was representing that he was selling inventory that he wasn't, or that the customer was buying inventory that they weren't.
And so there should be actual products there. This is probably one of the most complicated data cases I've ever worked in my career. I really want to figure out how to turn it into a case study because it was so complicated and so interesting. But so Jeff takes three hours to confess to this case or to his actions. He finally confesses. They say, "Okay, will you come to Tulsa?" It wasn't in Tulsa.
"Will you come to Tulsa and will you meet with our forensic accountant so that she can go over what she's seeing in the data?" And he says, "Yes." So he shows up. We go through everything I'm seeing in the data. These are the patterns. What did this mean? What were you doing when you did these things? Because he had a lot of access to the system. And so he answers all my questions, and at the end, he says, "Leah, here's my cell phone number.
If you need any more information, you can just give me a call." And I thought, "Okay, yeah, right." But I took his number down. So I go back to try to finish quantifying this loss, and I see a new pattern that we had not discussed in our interview. And so I thought, "Well, I'll just try to give Jeff a call." I call him up, "Hey, Jeff, I..." First of all, he answered. I mean, that was kind of shocking. But then second of all, I said, "Hey, I'm seeing this in the data and I wondered if you'd help me out."
And he goes, "Leah, I totally forgot, I did that too." And he ends up just telling me about what it represented. And he was like, "And you also might check for this," whatever it was, this other pattern. So you just don't know what additional information somebody might be willing to provide. We think about them as trying to, "Oh, no, I'm not going to tell you anything. Plead the fifth," type stuff. But they also know, I mean, in Jeff's story, the company didn't prosecute. They just kept his 401k. So for him to cooperate, it really benefited him.
Bethany Pigott:
Oh, wow. So how common is using this method of subject interviews in your experience?
Leah Wietholter:
I have used this less than five percent of the time, but in that five percent they've been 100% effective. But typically I'm hired after there's been confrontation, after they've fired them, after they've paid them out all of their vacation, after they've done all this stuff. Let's go see what the damage is before you start writing them checks and before they find out that they're even being investigated.
Bethany Pigott:
So is all lost in that situation if they don't leave the subject employed?
Leah Wietholter:
No, no, no. It's just Jeff's investigation because it was so complicated and the data was so tricky to deal with, it would've resulted in a lot higher fees from me. But being able to call Jeff or to interview Jeff and say, "Hey, this is as far as I could get with this data. What did this represent?" And then he told me, and then I was able to take that information, "Okay, every time I see this pattern, this represents this." And then I've got him telling me this. I mean, that just helps with my report to create context.
And so every time that's happened, I mean, what better than having Bill in case of the man cave say, "Oh yeah, I bought a boat. Yeah, it's in my shop." So but otherwise, if he hadn't, I would've had to track down titles, we would've had to work with the attorney or law enforcement to subpoena the records from the company where he bought the boat, who was it titled to? There's a lot more steps when the subject can just say, "Oh, yeah, I did that. Oh yeah, this is what this means." But even if they're not there, we can still get there. It's just going to be more expensive.
Bethany Pigott:
Yeah. It definitely sounds like the best case scenario, but also reinforces what you've said about using these as complete of a dataset as you can to bring it, because then I would imagine that it's a lot harder for them to look at that and not tell you anything.
Leah Wietholter:
Right.
Bethany Pigott:
If it's staring them in the face. But if you don't have much to go on, then that interview might not go so well, and then you might have to do all that stuff on the back end like you talked about.
Leah Wietholter:
Exactly.
Bethany Pigott:
Is there anything else that you want to say about this subject as we conclude today?
Leah Wietholter:
I think that's it. And I would also say just for any new investigators, sometimes my case doesn't even make it far enough. I mean, yeah, maybe the subject's not there, but sometimes just what we have is enough where sometimes we just decide we're not going to try to figure out how to investigate the subject. There have been cases, which I'm thinking of one specifically.
This individual was still let go before we started our investigation, but the loss was over $7 million. And there was just something kind of, well, this individual just had really narcissistic personality tendencies. And I think I still would've recommended, as much as I would've loved to have gotten that confession, based on things he did, which were very [inaudible], he made everyone in the office call him Mr. So-and-so.
There was just a lot of... yeah, very narcissistic. And so there is something about, and this is what I learned at the Bureau, there's something about being able to do a full investigation from a law enforcement perspective without someone knowing about it. And so in that case, I may have considered, even if he had still been employed, I think I may have considered letting law enforcement have that first shot. So that's something to think about.
I don't need the glory of getting that confession. We need to make sure we're creating the best result for our client. And in something like that, while I think I am entirely qualified to have gotten that confession with my team, I really want to make sure I'm giving law enforcement the advantage, all the advantages. So if they can go ahead and do a whole lot of their investigation without him being paranoid, without him looking over his shoulder, I mean, he thought for a long time he wasn't being investigated. COVID happened. So that really delayed some stuff.
So that gave law enforcement plenty of time to put their case together against someone who really kind of has this politician, "I can beat anything. I'm smarter than everybody" type thing. And so that's just maybe something to think about if you're an investigator and you're working a case that it's, I mean, especially when somebody has a lot of connections, is really well known in the community, maybe you let law enforcement do it. Now, if law enforcement's not going to take your case, that's a totally different story. But I knew law enforcement was going to take this case.
Bethany Pigott:
Yeah, that's some good wisdom right there. Hopefully you have helped people make some mistakes just by that comment at the end. So thank you for that. So this concludes our six part series, so thanks Leah.
Leah Wietholter:
Yeah, thank you so much Bethany for hosting. And yeah, thanks Bethany for hosting these six episodes, and I hope it's been really helpful. For our listeners. I will say that we just have a lot going on over here at Workman Forensics and all The Data Sleuth things and speaking events and investigation games. So we are going to actually let this conclude our 2023 podcast series, and we'll be back in early 2024. Thank you for listening to The Data Sleuth podcast.
If you enjoyed this episode, please leave us a review wherever you listen. The Data Sleuth podcast is a production of Workman Forensics in Tulsa, Oklahoma. To learn more about our investigation services and resources, please visit workmanforensics.com. You can purchase your copy of Data Sleuth using data in forensic accounting engagements and fraud investigations on Amazon, Goodreads, or wherever you like to purchase books.