Whether a fraud investigation involves a complex Ponzi scheme or a crack supplier, fraud investigators would do well to remember Wesley Snipes’ famous quote in the movie New Jack City: ‘It’s always business; never personal.’ Think about it: The first thing that fraud investigators learn is the Fraud Triangle made up of Motivation, Opportunity and Rationalization.
A fraudster’s family life comes into play in at least two of these elements, and sometimes all three: The #1 listed IRS example of corporate fraud investigations for the year 2013 involved a husband and wife team. Indeed, a suspected fraudster’s personal life is just as important to my investigation as his or her professional life.
Recently, a client came to me because she wanted to know if ‘Bob’, a high-flying tech executive whom she had loaned a large amount of money to, could afford to pay back a judgment.
Bob was the single member of an LLC and kept his own books, so she hit a brick will there. But even before pulling UCC filings and doing the rest of the asset search, a quick look at Bob’s social media told me a lot about his character. In order to understand the perpetrator, I had to go way beyond how he behaved at work and take a long, hard look at his personal life and habits.
His Instagram page featured a constant stream of Bob partying around the world on yachts, flying helicopters and chilling out in massive hotel suites. But when I checked his Facebook page, I noticed something odd: Bob had used exactly the same pictures for both, probably because Facebook stripped out the EXIF data, making his location impossible to verify.
Offline, the picture was scarier. Though Bob’s attempted to keep business and personal funds separate, he had three tax liens and an impending foreclosure on his personal property. Bob is a classic case of what I call ‘The Instagram Illusion’ : He spread disinformation to make everyone believe that he was a high roller, then convinced himself that the fraud was only temporary–until he could pay everyone back.
As for Bob – In the end, my client settled with him partly by using his own instinct for self-preservation against him – he did not want his case to go viral, where it could be spread among friends and clients.
