Academic journal article Journal of Accountancy

CPAs: Criminal-Pursuing Agents; Accountants Work in Various Ways, Sometimes Even Undercover, to Fight Illegal Activities Ranging from Fraud to Racketeering

Academic journal article Journal of Accountancy

CPAs: Criminal-Pursuing Agents; Accountants Work in Various Ways, Sometimes Even Undercover, to Fight Illegal Activities Ranging from Fraud to Racketeering

Article excerpt

[ILLUSTRATION OMITTED]

Ronald L. Durkin feared for his life. That's not something you would expect to hear from a CPA describing a meeting with potential clients. But these were not your ordinary clients.

And this was not your ordinary accountant.

Durkin was an FBI agent working undercover as he had a drink with known members of an organized crime group at a fancy restaurant in Los Angeles. The goal was to establish a business relationship between their crime ring and a faux accounting firm Durkin had established. If all went well, the meeting would be another step in building a case against the criminals. If something went wrong and Durkin's cover was blown, he could find himself in mortal danger.

"You had to be careful," he said. "These were very bad guys."

All went well at the meeting until it came time for Durkin to pay the bill. Then something went wrong.

Nearly very wrong.

"By mistake I pulled out my personal credit card, instead of my undercover credit card, and started signing," he said. "I then thought, 'What am I doing?' So I jumped up, went straight to the waiter, tore up the bill, and yelled at him that he charged us for something we didn't order and that he needed to bring us a corrected bill."

Luckily for Durkin, none of his drinking companions noticed his mistake, and his undercover operation continued. It was not, however, the last time Durkin found his life in potential danger.

KEEPING CRIMINALS ACCOUNTABLE

Society at large would be more likely to view CPAs as bean counters than as crime fighters. But CPAs such as Durkin have been battling bad guys as far back as most people reading this article can remember. Sometimes, accountants work behind the scenes in a forensic role, scouring financial and other documents to ferret out fraud. Other times, accountants take on a more forward role in the fight with a variety of law enforcement and regulatory agencies.

The FBI has a long history of hiring accountants as field agents. Accounting, in fact, represents one of the five "FBI Special Agent Entry Programs" that qualify an individual for potential employment with the bureau (the others are language, law, computer science/information technology, and "diversified"). According to numbers provided by the FBI, the bureau employs about 700 CPAs as special agents. These CPAs take on a variety of assignments, including the investigation of complex financial crimes as well as counterterrorism, cybercrime, and counterintelligence cases.

The role of accountants at the FBI has grown in recent years. In 2009, the bureau established the Forensic Accountant Program (FAP) and instituted the Forensic Accountant Unit (FAU) as part of an effort to recruit and retain top-tier accounting professionals to conduct the financial piece of complex investigations. Today, the FBI employs about 600 forensic accountants, more than 40% of whom are CPAs (for more details, see "CPAs and Forensic Accountants in the FBI"). Forty-one FBI agents hold the AICPA Certified in Financial Forensics (CFF) credential, according to the AICPA Forensic and Valuation Services Section.

The FBI is far from alone in employing CPAs, including many with the CFF credential, to help find and fight financial crimes including Ponzi schemes, bogus investment scams, and other types of fraud. The SEC's Division of Enforcement employs roughly 100 accountants, most of whom are CPAs, according to Michael Maloney, CPA/CFF, the division's chief accountant. CPAs with the Division of Enforcement work closely with attorneys to investigate financial reporting issues, investment schemes, stock offering frauds, and the like. By law, the SEC is not allowed to conduct undercover investigations.

Other large employers of CPAs in crime- and fraud-fighting roles include the IRS and various state regulatory bodies, including the Texas State Securities Board (TSSB). …

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