Fraud Law Resources for Oregon and Washington
WILL THE ACCOUNTANT FOR THE DEFENSE PLEASE RISE!
By Donald L. Scanlon, CFE, CPA, CVA
as published in The Oregon Defense Attorney, September/October 2004, Vol XXV, No. 6.
The idea of an “Accountant for the Defense” might seem a little odd except in a fraud case. Why would a criminal defense attorney need (or want) an accountant? After all, “bean counters” tend to be a little anal and spend an inordinate time trying to “balance” their world. These folks generally like to sit unobtrusively in a back room with their heads bent over pieces of paper avoiding anyone’s notice and, most definitely, avoiding confrontation at all costs. Then, there is the “odd duck” of the profession—the forensic accountant.
Forensic accountants use their accounting and investigative skills in legal matters—generally referred to as “litigation support”. We are concerned with subdivision of this subject—investigative accounting, more commonly known as fraud investigation. Kessler International, a large multinational firm specializing in forensic accounting and corporate investigations has distilled the essence of the field into their trademark: “Accountants look at the numbers. Forensic accountants look behind the numbers.” Traditionally, investigative accountants deal primarily in the realm of white-collar crime—certainly a growth industry in America. The explosive growth rate of identity thefts can create a complex paper nightmare that may need to be explored. In addition to these traditional areas of accounting, investigative accounting is applicable to other areas of criminal law.
Many criminal cases involve financial matters where the application of forensic accounting might not be so obvious. These could encompass such diverse areas as financial elder abuse, asset forfeitures, burglary, and any other crime where money is involved. Overwhelmingly, forensic accountants are prosecution oriented. The stereotypical fraud examiner or investigative accountant seems to wear a white hat while riding into town on a white horse. The largest fraud related organization, the Association of Certified Fraud Examiners, was founded by a former FBI agent and seems devoted to this duty. The Association’s mission statement emphasizes “… to reduce the incidence of fraud and white-collar crime and to assist the Membership in its detection and deterrence”. Publications representing the views of the American Institute of Certified Public Accountants relate almost exclusively to the prevention, detection, and prosecution of fraud. One sentence in their Consulting Services Practice Aid does, however, state that an accountant might be retained by the defense in a criminal matter although there is little, if any, guidance in appropriate roles. There is most certainly the opportunity for valuable input from a qualified accountant in any number of cases.
Financial or accounting facets of any crimes is almost always circumstantial in nature. Through a process of inference, the prosecution attempts to convince the trier of fact that a crime has been committed by a defendant. Prosecutors will frequently go to great lengths to present a convincing case. Of course, your job as defense attorneys is to shoot holes in their case by showing that the evidence is does not support their position and by creating reasonable doubt. The job of the accountant for the defense is to help create this reasonable doubt just as Dr. Henry Lee did at O.J.’s murder trial. Lee seemed to do a good job of confusing the state’s evidence by questioning police procedure, lab techniques, etc. In some respects, it seems as though he took the state’s evidence, stirred it up in a big pot, and served up a baffling concoction, thereby hopelessly confusing the jury. In so doing, he shot a big hole in the prosecution’s case. Perhaps that’s why he’ll be a witness for the state in the Scott Peterson trial (in process as this is written). Many times a good accountant can accomplish the same results in money matters. Just as the prosecution’s expert tries to tie a defendant to a crime, the defense expert’s goal is to find reasonable alternative explanations of evidence that tend to exonerate the accused and confuse the prosecution’s case to the maximum extent possible.
In California, the affect is quite clear. Standard jury instructions provide “…if the circumstantial evidence is susceptible of two reasonable interpretations, one which points to the defendant’s guilt and the other to innocence, you must adopt that interpretation which points to the defendant’s innocence… In Oregon, however, this determination must be made by the trial judge as a matter of law.
The test in Oregon is “…whether any reasonable trier of fact, accepting reasonable inferences and reasonable creditability choices could have found the essential elements of the crime beyond a reasonable doubt…Whether particular circumstantial evidence is sufficient to support a particular inference is a legal question for the court to decide.” Because this type of evidence frequently requires an acceptance of a number of inferences, there is a clear possibility that the inferences will become “stacked” to the point where too great of an inferential leap is required. I refer to this phenomenon as a “quantum leap in logic”.
From an actual case:
· Cash was stolen from a safe.
· The defendant had access to the safe.
· The defendant made some cash purchases.
THEREFORE (quantum leap in logic): The defendant must have stolen the money. This conclusion requires pure impermissible speculation rather than a “reasonable inference”. At trial, it was shown that everybody but grandma had access to the safe and that the defendant had legitimate sources of cash available.
RESULT: The jury found the accused “Not Guilty”. However, to this day, law enforcement is convinced to the contrary.
Unlike defense attorneys, accountants are not advocates for the defendant. In fact, they are only advocates for their own opinions. Accounting literature is replete with admonishments to the effect that the expert witness must give fair and objective testimony without being an advocate for their client. How is it then that two equally qualified experts can give radically different testimony in court? To see examples of this we only need to look to numerous high profile cases such as the aforementioned Simpson murder trial, which, while in the realm of forensic science, demonstrate the point. Seemingly, one expert is prepared to show that the sky is blue while another is prepared to show that it is really green. The forensic expert can rely upon assumptions or hypothetical facts put forward by the attorney in forming his opinion. The basic assumption is that my clients rendition of the facts is true and that, in a criminal matter, he is innocent. In this situation, both can testify truthfully. This cannot, of course, be taken to the point of absurdity, lest the expert lose his creditability in both the instant and future cases. Over exuberant experts soon gain reputations as “prostitutes” who’ll say whatever the highest bidder wants to hear. This reputation serves to limit his useful life as an expert particularly for bench trials. Given this, what can the accountant do for you?
First, an accountant can help you understand the case against your client. Most accountants are poor lawyers as many lawyers are poor accountants. Accountants frequently revel in details while many attorneys prefer the big picture concept. The combination can provide the best defense for a client. If you, as the defense attorney have trouble fully understanding the case, what about the prosecutors. Generally, they’re in the same boat. However, they rely on either their investigators or law enforcement to put their case together. Many of the people on the prosecution’s team have the mentality that a suspect is guilty until proven innocent. Therefore, all evidence is seen as incriminating. The possibility that what they call evidence might not be quite as good as they believe or that, if a crime was committed, it wasn’t your client.
What about the alleged drug dealer who has some cash in his pocket or owns a few assets? The immediate conclusion is that this must be drug related. What about a legitimate source?
In many communities, the investigators who take on white-collar types of crime are street cops who’ve been around awhile, risen through the ranks and are now ordained as detectives or investigators. Many simply lack the requisite training and experience to understand and put together a case. With the help of an experienced accountant, you may be able to discover enough holes in the case to win acquittal or least moderate the damage to your client simple by exploiting inconsistencies in a case.
Evidence in these cases tends to be fairly voluminous and can become confusing to a jury. They are confronted with unfamiliar subjects and, sometimes, a myriad of witnesses. A good expert can help you to organize this material and present your case for in an understandable manner. This could involve building and explaining a scenario to demonstrate your client’s position. The use of visual presentations with tools such as Powerpoint can be extremely effective. A well constructed presentation can walk a jury through a case and point them in the desired direction.
For any of this to happen, you must be able to qualify a witness as an expert to accomplish these goals. The issue is summarized in Rule 702 of the Federal Rules of Evidence which states, in part “…witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise…”. To survive voir doir and more importantly, give credence to your expert in the eyes of the jury, you must address these areas:
If nothing else, a good forensic accountant should be able to at least create a little smoke on your client’s behalf, making the prosecutor’s case a little bit less of a “slam-dunk”.
 Kessler International, available at <http://www.investigation.com/forensic_accounting.htm>, last visited May 31, 2004.
 Association of Certified Fraud Examiners, Mission Statement, available at <http://www.cfenet.com/about/mission.asp>, last visited May 31, 2004.
 American Institute of Certified Public Accountants, Consulting Services Practice Aid 97-1, Fraud Investigations in Litigation and Dispute Resolution Services, A Nonauthoritative Guide, 1997.
 CALJIC 2.01.
 State v Bivins, 191 Or.App. 460, 83 P.3d 379.