Q&A

Jim Ratley and ACFE: Going Broad on Fraud

Five years post-Enron, corporate fraud and white-collar crime continue to make headlines. Jim Ratley of the Association of Certified Fraud Examiners checks in to talk about corporate fraud and effective investigations.

By Scott Berinato

over there, Joe's the first person I look at. No one's watching him because they trust him.

Can you share any stories of new kinds of fraud you're seeing?

There are few new frauds. We had a young man in central Texas who had a secret European investment

fund. If you invested your money, in 30 to 45 days, you'd get a 75 to 100 percent return on your

money. His girlfriend's parents gave him $80,000 and a few months later he gives them a million

dollars back. Well they were big church members, so they told everybody at church. Before long you

had people taking equity loans on their houses and cashing out their 401(k)s. The guy had a five million

dollar mansion on a lake here in Texas. He had a jet, nine luxury cars and a helicopter. If you invested

more than $20,000 with him, you got a helicopter ride. And of course he didn't have any secret

investment fund. He had a Ponzi scheme. He was paying earlier investors with later investors' money.

This scheme dates back to 1923, with Charles Ponzi. Yet it's used over and over successfully. Right

after that a former NFL football player was doing the same thing, using a foreign currency investment

scheme. We actually don't run across much that's new. We run across people who are innovative in how

they perpetrate the older frauds. Oftentimes at a seminar I'll mention a fraud, but I won't mention the

name of the company. At the end of the lecture, a person will come up to me and say, Oh I work for

that company. They probably didn't, but the same thing happened at their company. We see the same

stuff over and over again.

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