Recent Series of Articles on DPAs in Morning Consult

I was recently interviewed by Morning Consult for a series of articles regarding deferred and non-prosecution agreements and wanted to share those here for anyone interested.  They are linked below (hopefully these links remain “live” for some time).

Part 1 – “More Banks Avoiding Trials in Era of Deferred Prosecution Agreements”
Part 2 – “Ripple Effects of Charging Banks Give Prosecutors Pause”
Part 3 – “Prosecutors in the Compliance Forest”

Advanced Forensic Accounting – May 4th, Richmond, VA

On May 4, 2015, I am offering our “Advanced Forensic Accounting” course in Richmond, VA.  The course offers 8 hours of CPE (for CPAs).  Click here for a link to the official advertisement with all the relevant information.

“Advanced Forensic Accounting” is designed primarily to influence the way that one approaches and thinks when analyzing financial records in the course of a financial investigation.  This is an improved and appropriately modified course that was used to train new FBI Agents at the FBI Academy, many of whom had no prior investigative, audit or financial experience. In 2013 and 2014, the Securities and Exchange Commission engaged us to teach this course to its Enforcement Examiners and Examiners in 7 of their 11 Divisions.

The course begins with an introduction to critical thinking in an investigative environment and how that is different from the way in which an auditor thinks.  Time is also spent discussing how financial records can be used to build a profile of a person and how that profile is useful to an investigation.  Specific and technical steps are then discussed related to how to go about collecting, organizing and analyzing financial information and how to document that analysis.  The vast majority of learning is through participation in and discussion on a detailed practical exercise where the class is given three months of bank statements, including the supporting documentation for each transaction, and tasked to conduct analysis using the techniques discussed.

Come join us and see if you can figure out what Samir Samour is up to!

Messaging Risks – When IS the Right Time?

There was an awful lot of outrage about the Nationwide commercial drawing attention to home accidents affecting children during the Superbowl this year. It didn’t seem that the outrage was so much directed at the message as much as it was the timing – it was done during a time when people were trying to be entertained, not horrified.

I have four young daughters, so I get that anything that makes me think about their mortality (much less my delinquency or negligence contributing to something that harms them) causes a certain amount of discomfort. A lot of discomfort. But I was with my family watching the game when this commercial aired and I have to say, though it certainly put a temporary damper on our festive spirits, it also caused a moment of reflection. I had forgotten about securing a television set in our home that could fall if one of my kids climbed on it (such a scene was in the commercial).

So I am supposed to be angered that I suffered a brief interruption of my precious and fleeting television entertainment-induced happiness to be reminded that I needed to do something the consequences of which could cause a constant interruption of my happiness for the rest of my life?

When exactly is the time for delivering messages that draw our attention to risks? The argument that this commercial was poorly timed because it interfered with our entertainment is, in my mind, absurd. Television is predominately for entertainment. Therefore, there could be no appropriate time for a commercial like this. Perhaps there are some shows that cater to the melancholic, where “depressing” commercials might resonate better?

The idea behind heightening awareness of risks is to draw the largest amount of attention possible to those risks. In the case of this message, using a Superbowl commercial was sure to reach a heck of a lot more people than some educational/informational show that airs in the middle of the night watched by a couple hundred people.

The public uproar stimulated questions relevant to my professional compliance and consulting work – Are we living in a culture that has no appreciation for hearing about and taking actions to mitigate risks? A culture that actually takes offense when we do?

In business, we need to appreciate, understand and act on risks. Yet compliance and ethics professionals face similar challenges with Boards, Executives, Senior Management and even line employees and/or agents of an organization. Though there is an expectation that these roles know about and deal with risks, it’s not something they particularly care to hear about, particularly in the higher ranks, where it is of great importance and impact. They prefer to discuss financial results, stock performance, mergers & acquisitions, etc. – you know, the REAL and IMPORTANT stuff.

I face a similar challenge when trying to develop proactive compliance and ethics consulting work. Organizations simply don’t want to hear about faint, non-imminent, and “philosophical” dangers that could sink or significantly impair their organization.  Much less do they want to spend a little money to properly deal with it.

Using the Nationwide commercial as an analogy, one might think the risk of an unsecured weapon in the home is minimal because one’s children have been well educated on the risks and, due to their obedience, would not play with the weapon. Perhaps true. But what about the kids who come over to play?

The rationalizations in business are really no different.  I can’t tell you how often I heard victims of a fraud (both when I was an FBI Agent and now as a consultant) tell me something like “But Sally was such a nice and religious lady whose been with us for 15 years – she COULDN’T have stolen from us!  You must have made a mistake.” 

To all the compliance and ethics professionals out there working hard to do the right thing, whose risk messages too often fall on deaf ears, I raise my coffee cup to you. You ever need an ear, my number ain’t hard to find.

Improving Corporate Settlement Agreements

I recently put out a paper providing suggestions on how government agencies and defense counsel might improve corporate settlement agreements (e.g. deferred prosecution agreements, non-prosecution agreements, consent agreements, administrative agreements, etc.).  I believe that the vast majority of current agreements are not effectively addressing corporate compliance and ethics programs and thereby failing to achieve the spirit of what the parties to the agreements, particularly the government, hope – the prevention and timely detection of future misconduct.

For those interested in reading the paper, please click here.

10 Thanksgiving “Thanks” of Occupational Fraudsters

Happy Thanksgiving 2014.

While we enjoy family, football and food this Thanksgiving and give thanks for our blessings, don’t forget that occupational fraudsters are giving thanks too!  And their “thanks” may be your bane.

Here are ten things occupational fraudsters may be thankful for around the dinner table (at a fine dining establishment, of course) this Thanksgiving:

  1.  Non-existent and/or poor internal controls
  2. Trust of those above and around them and that fraud can’t happen to them
  3. Fear of retaliation by those who might report them
  4. You think external auditors look for and find fraud
  5. Law enforcement focus on non-financial crimes
  6. Non-existent/weak compliance programs
  7. Ineffective internal audits
  8. Management emphasizing fast growth & earnings over ethics – poor ethical tone
  9. “Golden parachutes” and/or lack of meaningful disciplinary measures and criminal referrals
  10. Clearing Accounts and Adjusting Journal Entries

Mom’s Lessons

If you were wondering whether or not I had dropped off the face of the earth for the last six weeks, you guessed right.  October of 2014 was a month that, along with September 2001, I would love to utterly erase from my memory.

My mother, who had been so courageously battling cancer for the last five years, lost the battle on October 17, 2014.  Despite a contractor catching my house on fire and a kidney stone suddenly showing up, I was able to get to Bristol, VA and be with my mom before her passing.  I remained in Bristol to support my dad and help with all of the funeral arrangements.  After the funeral, I packed their house up and moved dad up to Fredericksburg, VA with my family.

As I reflected on my mom’s life and lessons, there were a few in particular that I find relevant to the work I do today, particularly in the area of compliance and ethics.  My mom was raised in a second generation Italian family in extreme poverty in New Orleans.  I recall hearing stories of how she slept together with her sister and brother in a small room where they had to take turns staying awake to keep the rats off of them.

Despite the obstacles, mom appreciated the value of hard & honest work, education, and selfless service.  Working various jobs, she put herself through nursing school and began what became a forty-one year long career as a nurse.   Mom’s nursing accomplishments were of no comparison with Nobel Prize winners and will never be remembered outside of the small circles of those whom they affected, but they are nonetheless as profound and meaningful, both to those affected and to those who might see in her life and work the impact and role of a positive high ethical tone and commitment to always doing what was right and in the best interests of her “customers” – her patients.

My mom always stressed the importance of honesty and showed me the benefits of it every time I owned up to something I did wrong as a child.  As long as I was honest about my mistakes, the punishment was appropriately reduced.  Thank God – or I would still be in “time-out” some forty years later!   That is a lesson I have carried all my life and am trying hard to pass on to my children, as well as those with whom I work.

Positive ethical tone within an organization begins with honesty.  And ends with dishonesty.

An effective compliance & ethics program will include on-going education and training.  While my mom worked hard to put herself through school to become a nurse, she never stopped her education there.  Over the course of her career as a nurse, she took on many new challenges/specialties, some of which she did pioneering work in.  The lesson is that education never stops.  We never stop learning and we always have room to learn more, regardless of where we are now in our lives and careers.  Compliance training IS on-going education.  It is not checking a box.

Being a nurse is among the most altruistic jobs one might have.  Caring for those who, in many instances, can’t care for themselves.  Helping them with the most humbling and/or simple tasks – many tasks that even family might shy away from.  Not losing sight of their human dignity and treating them with respect, even as they lost respect for themselves.  My mom was always a champion of the patients, even when being so was not always in the financial best interests of the hospital or kindly looked upon by her superiors.  As best as I know, mom never had to deal with any “corporate” fraud issues as a nurse/employee, but she certainly had her share of ethical issues.  Sometimes described as a “firecracker” when it came to advocating for her patients, I am sure mom upset her share of hospital superiors of lesser ethical constitution over the years.

It’s a great lesson for us.  By placing greater value on what we do and doing things right (rather than on where our stock price is), we find a more fulfilling and long-lasting success.  When someone acts unethically or engages in some sort of misconduct, we have to speak up – until somebody listens.

I recall with both joy and sadness a little boy named Stephen, who was a cancer patient under my mom’s care in a pediatric intensive care unit.  I was living far away at the time, working as an FBI Agent.  In caring for Stephen, my mom had learned that he had dreamed of one day becoming an FBI Agent and so she asked that I might visit him when I next came to town – in fact, she made certain to remind me of it MANY times as I planned my next visit!

When I got to town, my mom made sure that the hospital was my very first stop.  She also insisted that I wear a suit – my official FBI Agent “uniform.”   After Stephen’s chemo treatment(s) that day, she rolled him in a wheelchair to a private little waiting area where she had asked me to wait.  Stephen was probably about ten years old and his cancer was terminal – in its latest stage.   It was obvious that this child had suffered much and long, and was still in pain.  He didn’t have a single hair on his head and maybe weighed forty pounds in all his clothes.  Yet when my mom introduced me as her FBI Agent son, he lit up like a Christmas tree.  My mom and Stephen’s mom left briefly, so that we could have our “top secret debriefing.”  I let him hold by badge and credentials, let him see my handcuffs and the gun holstered on my hip, and answered every question he could muster the strength to ask – and many that I knew he would ask if he could.

When our time was over, I gave Stephen an official FBI t-shirt, a junior FBI Agent badge, some FBI pens, and other little things that I can’t even remember – though they meant the world to him.  I learned a couple months later that Stephen had passed and that he had specifically requested that he be buried in that FBI t-shirt that I gave him.  To this day I can’t think about that without tearing up.

This is just one example of how my mom took the time to listen to her “customers” and to appropriately do more for them than what just her job required.   She got no honors, medals, promotions, mentions or bonuses for this – and that was fine by her.  The joy brought to Stephen was priceless.

I’ll miss you mom.  Thanks for all you did for me and for everyone you touched.  I hope I can pass on the lessons I learned from you to my children as well as you passed them on to me.  I also hope that I might follow your example(s) with the same humble obscurity as you sought and that I might touch just one tenth of the number of lives that you did.

Tell Stephen hello for me.

Advanced Forensic Accounting – Norfolk, VA

I am offering my wholly unique and practical “Advanced Forensic Accounting” course on November 5, 2014 in Norfolk, VA. The course is worth 8 hours of CPE for CPAs, which should be accepted also for CFEs, CIAs and others who accept CPA CPE.

Using just three months of bank account information, will you be able to unravel “Sammy’s” plan? Lives may depend on it….

This unique and interactive course is designed primarily to influence the way that one approaches and thinks when analyzing financial records in the course of a fraud or financial investigation. It is an improved and appropriately modified course (i.e. nothing “classified”) that I developed and used to train new FBI Agents at the FBI Academy, many of whom had no prior investigative, audit or financial investigations experience.  In 2013 and 2014, the SEC engaged me to present this course to many of its Enforcement Examiners and Examiners in most of its 11 Divisions.

The course begins with an introduction to critical thinking in an investigative context, followed by a discussion about how financial records can be used to profile a person and how that profile can be critical and useful in an investigation. Specific and technical steps are then discussed about collecting, organizing and analyzing financial information and how to document that analysis.

The vast majority of learning is through participation in and discussion about a detailed practical exercise where you are challenged with a forensic accounting role within a real-life scenario. In the scenario,you work in teams and are provided with three months of bank statements,including the supporting documentation for each transaction, and tasked to conduct analysis and live internet research using the techniques you have learned. The places and people in the scenario are mostly real or otherwise back-stopped on the internet to challenge and enthrall new and experienced financial investigators alike.

The practical based nature of this course, team-work (as small teams and as a larger class) and double-reinforcement of the learning through repeated application works, effectively impacting the way that you think and making you a better financial/fraud investigator.

The course not only works – it’s the most fun eight hours of CPE or similar training you’ll ever have outside of Hogan’s Alley!