A Massive Financial Fraud
In 2009, a Middle Eastern country uncovered preliminary indications of a massive financial fraud involving several key financial markets and major financial institutions around the world, including one of the largest brokerage companies in the Middle East. After evaluating a select circle of established international investigative firms, the government’s justice department asked Hillard Heintze to take the case.
Intensive Forensic Accounting and Analysis
Over an accelerated 30-day period – a highly abbreviated schedule, especially given the need to conduct forensic accounting and analysis of nearly three terabytes of unstructured data – the Hillard Heintze criminal investigative team uncovered evidence that (1) proved a crime had been committed; (2) showed how the criminal acts had been carried out; and (3) identified the specific criminal activity and responsibilities of each person associated with this case.
The unusually complex Ponzi-related scheme involved potential fraud losses of more than US$200 million that, over many years, consisted of complicated undetected methods of misusing and misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets and underreporting liabilities sometimes with the cooperation of regulatory officials. The crimes included money laundering, bank fraud, accounting fraud, embezzlement, rogue trading and the likely abuse of regulatory oversight responsibilities and powers.
Recovering Funds and Improving Controls
The information and evidence provided in the Hillard Heintze final case report has allowed the government’s prosecutors to begin criminal proceedings against the individuals responsible. At the same time, Hillard Heintze’s findings have permitted the government and financial institutions impacted by the losses to (1) mount an aggressive campaign to track and recover the diverted assets, and (2) begin immediately establishing a more robust set of controls and critical process improvements necessary to reduce the likelihood of this scheme recurring in the future.
Unplugged: The Project Manager's Post-Engagement Perspective
Typically with these types of crimes – particularly highly intricate, very complex schemes such as this one – the persons who concocted them are either highly intelligent process specialists or deeply embedded in the organization they are defrauding. Or both.
The good news is that there are very, very few major financial crimes whose internal mechanics – ‘who did what when and how’ – can’t be systematically revealed with the right care, approach, team and skills. And patience, I might add.
What made this case an exceptional one is that we were able to do this in 30 days (not 300) – in a major capital city in the Middle East, working in a foreign language and examining huge quantities of digital document evidence.