BEST PRACTICES: FOLLOW THE LEADER CRIMINAL BEHAVIOR

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1 BEST PRACTICES: FOLLOW THE LEADER CRIMINAL BEHAVIOR This presentation will provide an overview of the various types of criminal behavior and criminal personalities with which an investigator might be confronted. Also, you will gain an understanding of why those involved in white-collar crime and public corruption engage in such activities. Discuss how reading a person s behavior can aid the investigator in directing the interview and dealing with the suspect in question. RONALD HAGEN, CFE, CICA Director Department of Criminal Justice Central Christian College McPherson, KS Ron Hagen is the director of the department of criminal justice after retiring as a Senior Special Agent, Kansas Bureau of Investigation (KBI), in August Previous to the KBI, he was a captain with the Auburn Hills, MI, police department; and previous to that, he was with the Grand Forks, ND, police department. As director, he is responsible for the administration and operation of the online Criminal Justice Bachelor of Science Degree Program. He also instructs traditional criminal justice classes, as well as online classes. In 2009, SSA Hagen was elected as a trustee to the Kansas Public Employees Retirement System, and he is currently the chairman of the board. Director Hagen began his career as a clerk with the Federal Bureau of Investigation (FBI) in 1968, and also served in the U.S. Air Force (security police) and U.S. Army Reserve (military police). In addition, he is an instructor at Hutchinson Community College, instructing business classes. Director Hagen graduated from the University of North Dakota with bachelor of science degrees in criminal justice studies and public administration. He also graduated from Friends University with a master s in business administration (M.B.A.). He is a Certified Fraud Examiner (CFE), Certified Internal Controls Auditor (CICA), and Certified Kansas Supreme Court Mediator. Association of Certified Fraud Examiners, Certified Fraud Examiner, CFE, ACFE, and the ACFE Logo are trademarks owned by the Association of Certified Fraud Examiners, Inc. The contents of this paper may not be transmitted, re-published, modified, reproduced, distributed, copied, or sold without the prior consent of the author. 2012

2 Introduction Investigators are tasked with investigating cases from beginning to end, which includes interviewing those who might be involved and the suspect. The problem that many interviewers face is how to successfully interview witnesses and suspects. Having the financial knowledge of how the crime was committed based on an audit is part of it. With the help of auditors and accountants, investigators get an idea how the crime was committed. Most whitecollar suspects are intelligent people and in some cases more knowledgeable than investigators give them credit for. Motivations to remove or convert assets vary. With respect to homicides, there are four basic reasons people kill: sex, drugs, money, or they are criminally insane. The reasons for white-collar crimes are usually financial. Certainly the money can be used for sex and drugs. Most criminally insane individuals don t commit crimes for financial gain. Human beings commit all types of crimes from the bizarre to boring (unless it affects you). Why do they do what they do? A man named Flip Wilson coined the phrase The devil made me do it. Let take a look at this devil, also known as one s own rationalization for committing a crime. Objectives When an investigator receives a complaint of a possible financial crime, it is best to determine if it is actually criminal in nature. The use of accountants, auditors, CFEs, or others in the financial world can assist in a criminal investigation. This could be an easy case or it might involve many suspects, many jurisdictions and thousands of documents. But the bottom line is who committed the crime. In any investigation there are six questions the need to be answered, and, if done, correctly you have solved the case

3 We shall address those in time. The more one knows about a suspect the easier it is to communicate with them. How we accomplish this is the topic of this presentation. Law enforcement officers and some private investigators might only have a basic understanding of financial crimes and should ask for help when the case is not totally understood. When they do this the language of the experts may be foreign to them. Once it has been understood, the case has to be logically investigated and those who need to be interviewed must be located. So what motivates one to commit white-collar crimes should be explored. Will they tell you? Possibly. Wichita, Kansas, experienced a serial killer who was active for more than twenty years known as BTK. When he was caught the investigators spent a considerable amount of time thinking how to interview him. Dennis Radar called himself BTK, which stood for bind, torture, and kill. Radar also had a degree in criminal justice and was a military veteran, a city official, and a VIP in the church he attended. The technique the investigators used was to let him teach them how serial killers operate, including BTK... and he did! To ask him if he killed anyone would have resulted in the answer no and that would have been the end of the interview. Radar needed to be important and he was given that opportunity to be the center of attention. This can work in some white-collar cases. Most people want to communicate even when they are trying to hide something; it is human behavior. The investigators knowledge and ability to use that knowledge to get a confession is what it is all about. The ability to understand criminal behavior will allow that to happen

4 Investigation There are six basic questions to answer. They are who, what, when, where, how, and why. If the investigator can answer all these questions he or she will most likely have solved the case. To have a criminal case we need a victim. No victim, no crime. We also must have a written law that addresses what was violated. Anticipatory crimes cannot be prosecuted unless there is an overt act to commit the crime. We need to identify what was actually taken, not what might have been taken. When investigating a loss of a business, it is necessary to understand what the business is and how it handles its finances. Some businesses have a language unique to their industry. It is important to understand what they are telling you and to translate their language into lay language. You may also find their bookkeeping is unique and possibly only understood by those who are using it. Again, make sure you understand. Ask questions and take notes. What crimes have been committed? There may be more than one crime as well as federal and state violations. What actions could have caused this situation? Are there any internal controls that are actually used? Showing the investigator what is supposed to work is much different than the actual practice. If the internal controls were compromised, how did it happen? Have someone in the company who is not a suspect show you how those controls work. It is always interesting when you interview the suspect (who should be the last person to be interviewed) to have them explain how the controls work. You may find it amusing

5 Where did the money go? This is when you need an auditor or accountant not affiliated with the victim or suspect to look at the business records and bank records. You need to tell them what you want them to do and why. Don t expect the accountant or auditor to know what you want; they don t. There is going to be a cost to do an external audit. Law enforcement should not engage in an audit unless they are a trained accountant or auditor. Agencies should also be aware that audits take time and the use of a law enforcement officer for this purpose may not be the best way to maximize ones resources. There are trained professionals who can be used for this purpose. Yes, there is going to be a cost to the victim or prosecutor s office. Keep detailed notes! Go slowly and be methodical. Make sure you understand what everyone is doing and why. Some of these cases take a long time to complete and keeping notes of the activities is a great way to explain to your bosses or prosecutor why the case is not done in one hour like the TV cases are. Human Behavior There is really nothing in this world that is considered normal, as everyone has their own personality. With regard to what generally motivates people, it could be how one experiences sensation and perceptions of their world, degree of consciousness (lights on but nobody home concept), ability to learn, sex, age, and emotions. There are basic survival motivations such as hunger. Will one steal food or drink to survive? The need for companionship and to believe that one s own attitudes and behaviors are consistent with one another. At times we will see those who have a need to control others and their environment (white-collar criminals?). The pyramid of human needs developed by Abraham Maslow provides a

6 base of basic needs to the top of the pyramid indicating self-actualization. The reasons why some commit crimes and some do not are contained somewhere in this pyramid. The strongest need will either motivate positive actions or negative ones. Regular people sometimes use poor judgment mixed with a situational factor and end up committing a crime. That does not make a career criminal. The legal term intent may have some bearing as that is one of the elements needed to show a person should be prosecuted. Motive and ability are the other two factors needed to show mens rea (a guilty mind) and actus ruse (the guilty act). Criminal Behavior Criminal behavior is a special category of human behavior that is defined by a large range of culture forces. Factors that contribute to criminal behavior are biological factors, psychological factors, sociological factors, phenomenological factors, culture factors, and routine ecological factors. Biological What are the biological roots of criminal behavior? Psychological What factors contributed to this behavior? Sociological What factors contributed to this behavior? Opportunity What was the setting and opportunity for this crime to occur? Environment What is acceptable in one s culture? Frauds can almost always be included in white-collar crimes. The reason to commit a fraud is normally for personal gain. Embezzlement is a common form of fraud and is basically the transfer of assets that one is entrusted

7 with but converts it to personal use. Why do they do that? The fraud triangle (Cressey) should be considered. Opportunity Pressure Rationalization What the investigator needs to realize is that the suspect has already rationalized why they did what they did. To tell them it is wrong just puts them on the defensive. Remember BTK; he knew what he did and he already rationalized his behavior. Would you like to know what they know? Think like them, not how you normally think. Treat them with respect and show that you are curious how the asset went missing. I am so confused, so show me how that happened (Columbo). Remarkably, most will tell you because humans have an instinct to help. There a few people on death row who helped me with a case their case, which is why they are on death row. Economic Crime Typologies There are basically five types of classifications of whitecollar crimes. Those involved maybe categorized as: Occasional Conventional Professional Corporate Organized What makes economic crime different than other crime is best understood by the individual who commits the crime, the level of sophistication, the length of activity, how the crime was actually committed, the offender motivation and drive for profit. The bookkeeper who removes money to pay a gambling debt has rationalized his behavior much differently than the married corporate executive trying to

8 maintain a lifestyle that may include an extramarital affair or being blackmailed because of that situation. Those parties actually involved in the Enron misunderstanding have provided information indicating it was a business decision that just didn t work out very well. Employees who were affected by the bad business decision might have another view on that explanation. Other corporations with executives who have acted badly hold similar views about why things happened the way they did. Then there are those who will explain to you The devil made me do it! The interviewer needs to understand the environment and motivation that made a good person go bad. Criminals are not born, they are taught. Criminologists have provided numerous theories as to why people commit crimes. Those theories are as varied as the appearances of people who commit crimes; some might have been born bad, and others might have been turned into criminals by their environment. The reality is people learn behavior to commit crimes. The ego (voice of reason), superego (conscience), and id (basic needs) are areas that provide the avenue for people to commit crimes. The ego directs and controls the id by requiring it to seek gratification within socially accepted bounds. The ego acts like an executive who sees to it that the gratification of impulses will not be adverse to the person. The superego is the moral part of the self. This three-part structure might cause conflict and, when any part fails, it might result in criminal behavior. Rationalization can cause this failure or it can be a result of this failure depending on the theory you believe

9 Dealing with Factors Associated With Interviews Those who commit crimes might be living beyond their means and need the money to keep up their lifestyle. Women are more emotional than most men. Men are, for the most part, logical and will also challenge your intelligence. Both have rationalized why they did what they did. Men think larger than women in this respect males remove larger amounts where females take smaller amounts. An example is the reactions of recently divorced individuals. When purchasing an item to make them feel better because of the divorce men and women will buy differently. A man will buy a Corvette and a woman some nice clothes. Different personalities have different needs. If someone commits a fraud such as identity theft, how did they get the name? Let them teach you, even if you know. Most successful attorneys who practice in various courts ask questions of witnesses who are on the stand. To be successful, they already know the answer to the question; it is how they ask it and when it is asked in direct or cross examination makes it effective. Preparing the questions when interviewing should be based on the personality of the person being interviewed. Make sure they understand what is being asked. Can you trick someone to get an answer? Yes, it is not illegal to do that. Can you lie to someone to get an answer? It depends on the state. Most indicate that you can. Will the suspect lie to you? Probably, and let them do so without interruption. Let them think it is their show. They will be under the impression that they are controlling the interview. People like to be in control. You can tell the ones that are by their position in the company and how they got there. Those who like to control do not like authority. So would it be better to take control or let them? If your case is very solid then your purpose is to give them the

10 opportunity to explain their involvement. They will most likely lie so let them. Juries like to hear liars. If they are curious as to what you know they will continue to talk. That tells you they are guilty, because those who are innocent do not care what you know. Those Who Think They Are All That Whether your subjects are judicial, political, religious leaders, or executives, they have different personalities. Normally they are very intelligent and educated. You will find a fair amount psychopaths exist in this group that commit crimes. These social predators are wired to commit antisocial and criminal behavior because they have an emotional dysfunction that interferes with their ability to feel. They are for the most part self-serving, especially in the political arena. These folks demand respect and if they do not get it they will not talk to you. Part of their personality is superficial charm and a sense of self-worth. They will not accept responsibility for their own actions. But they will blame others for the position they are in. Use that as a tool to let them talk and as they explain their plight, eventually they will indirectly tell you what they did. It is something like speaking in third person. Initially exploit their need to be important then go into the teaching mode and let them help you put them in jail. Remember these folks are not to be confused with psychotics as these individuals will be rare in the world of white-collar crime. They are smart and will try very hard to get you to talk to see what you know. Be careful of that. Most successful interviewers speak about 15 percent of the time. The person being interviewed speaks the other 80 percent of the time. Learning to listen to the words not the sound will be more effective in getting to the truth. Most people do not lie but they just omit certain details

11 Insure that your witnesses are credible and have not embellished what they know. If they do, find out why. Are they involved? Do you think they are? Professional people have a tendency to circle the wagons because there maybe more than one person involved, especially in the Do you know who I am? personality. Summary Remember that there are egos to contend with. You will find the more status your subject has, the larger the ego is. Law enforcement and attorneys also have ego issues. Try to keep them in check. Do a thorough background on who is to be interviewed. Learn their behavior. What makes them think the way they do? Do they have a vanity license plate that is not work related? If so they need attention otherwise why spend the money. Do they dress in clothes that are more expensive that what should be able to afford? This is not to be confused with being dressed well; the cost is what we are looking at. They need to be a someone so treat them as such so you can get them to talk. Those who embezzle do so basically because they need the money. Most people need to be needed. Be their friend and there is nothing wrong with agreeing with the reasons why they removed assets from a company. Be their buddy! We are not the judge but we want to use what we know of the person to our advantage. Human behavior does not allow one to react well when initially being accused of a crime. If they did it, they know what they did so the you did it so tell me you did it approach will not work well. We also find that the approach of how did this happen? is a better approach as the person usually does not normally go into the defensive mode unless they did not do it. The ones that did not commit the crime will let you know. The I

12 didn t do it without being prompted in the first few minutes should tell you he or she probably did not do it. Human behavior goes back to the basics. Criminal behavior may be learned or acquired in some way that includes various defenses or rational reasons why they did what they did regardless of how bizarre the reasons may sound to you. Understand these individuals might not think like you, but you need to begin to think like them to find out what happened. Listen to the words! Sounds are really not that important, as they might be used by a person to emphasize an important issue or detract from an answer. Criminals are like anyone else; they will respond with words that actually indicate what happened but not in a direct way. The survival mode kicks in and most people do not lie, they just forget. Removing money from the company and putting it in their personal bank account for safe keeping is something that one can forget. If you do not specifically ask them they will not tell you. There is no real definition for criminal behavior other than it is behavior that people engage in that is a violation of a written criminal law. Why they do it varies with the individual. Understanding why people do what they do to survive and achieve their wants and needs is a beginning. When they fail to obtain those goals in a legal way but that desire is still there, that is when they figure out ways to achieve those goals in other ways that become illegal; thus, they have entered into what is known as criminal behavior