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Caleb Newquist: Hello and welcome to Oh My Fraud, a true crime podcast where the detectives read bank statements instead of ransom notes. I'm Caleb Newquist. Hey there. How are you? Back for [00:00:30] more. I'm happy you're here. Very happy that you're here. Uh, this is the second interview that, uh, we have done recently. And so we're having like back to back interview episodes because it's summer and Zach and I want to, you know, relax a little bit. But anyway, my guest today is name is Chris Derry, and he is a former detective with the Los Angeles County Sheriff's Office. He worked at the L.A. County Sheriff for over 36 years. And while he did [00:01:00] everything from working in jails to patrol and station detective, he spent the last 17 years of his career working in fraud and cybercrime. And you know what's interesting about this one? If you've been listening to the show for a while, is that we've we've talked to law enforcement people before, right? A few, few people. Uh, Sam Buell of Duke Law and Miriam Baer of California Western School of Law. They were both federal prosecutors in New York [00:01:30] before, you know, they went into academia. Uh, Jim Park of UCLA law. He worked for the New York attorney general before he went into academia. So we've talked to these people and we've gotten perspective of law enforcement, but we've never really talked to a detective before, you know, that worked in law enforcement. We've talked to fraud investigators, right, who work on the on the private side.

Caleb Newquist: But this is, you know, this is our first like, law enforcement officer. All right. And it was a good [00:02:00] chance to talk to one and LA County sheriff. What what more could you ask for? Right. So we we thought it would be a unique perspective. And it was. And so you're in for a good one. How about a how about a review? I got a fun review. Zach brought this to my attention the other day. Uh, this one is on the earmark app and it was on the, uh, producers episode. If you listen to Zach and I talk about the film, the producers [00:02:30] and I won't mention names because I don't want, I don't want, you know, the, the, the throngs of, oh, my fraud fans, uh, taunting this person online or, or, you know, showing up at their house or anything. So I'm not going to say this person's name. But anyway, uh, they wrote one star. Uh, I could have learned just as much about the film by researching it online myself. Ai would have taught me more in a fraction of the time. What new or unique material was presented. The number [00:03:00] of times the two presenters repeat each other's sentences makes this training awful. Okay, so. I just love these so much. Um, the point of listening to podcasts, uh, reviewer in case I don't know. I don't know why you listen to podcasts, but the whole point is to listen to other people talk about something most of the time.

Caleb Newquist: Sometimes they're telling a story, sometimes they're talking about a thing. And a lot of times [00:03:30] if they're talking about a thing that is kind of, you know, uh, commonly known or, or, or, or widely, widely consumed, uh, yeah, you're going to hear things that you could learn elsewhere. Okay. We're not all just walking around. We're not these geniuses all walking around with original thoughts. That's not really how anything works. Okay, so yes, the AI would have taught you pretty much the same thing in a fraction [00:04:00] of a second, but would it have been as fun? Would it have been as fun? That is the question. And I, I submit to you that no, it would not. Okay. Anyway, that was a fun one, wasn't it? Uh, if you like the show or if you don't like the show, gosh, go. Go right ahead. Give us a rating, write a review, send us an email. Oh, my Friday cpe.com. [00:04:30] Or if you see a story that you want me to mention or you think is worthy of an episode, get in touch. Okay. Anyway, Chris Dairy what a nice guy. Uh, like I said, former detective with the LA County sheriff. And we, we cover a lot. So, um, let's get into it. Here's me and Zach. Zach is in there, too. We both sat in. Uh, here's here's us and, uh, Chris dairy. So, [00:05:00] Chris, uh, where did you grow up? Where were the, where were your early years? Like.

Chris Derry: Yeah, so I was, I was born here in Los Angeles and I've been here all my life. I was a Catholic school kid. I went to Catholic school from first to the 12th grade. And, uh, you know, that came with the uniforms and the rules and the, and the discipline, which made me part [00:05:30] of the reason why I went in the direction I went.

Caleb Newquist: Nice. And so, um, and so, so you, you've lived your whole life in Los Angeles, so you must, you must like it there.

Chris Derry: I do. It's if you don't watch the news, it's Paradise.

Caleb Newquist: That's right. That's absolutely right. Like California. Sometimes when you watch the news. California gets this reputation as this. This, I don't know, like that. It's falling apart somehow. And [00:06:00] every time I every time I'm out in California, I'm just like, I understand why there's 40 million people here. There's like, it's amazing. Yeah. Every time I go, I'm like, why don't I live here anyway? Right. So okay. So yeah, so Catholic upbringing that yeah, there's a, there's a clear sense of right and wrong. Um, my wife is Catholic, so I'm, I'm, I'm adjacent. I know, I know that. Sure. I know the drill. So, um, did you, did you as a, as a young person did was that always something that you. Was [00:06:30] it always clear to you like right and wrong? Was that something that as a young person, you even remember having that kind of moral kind of compass was clear to you?

Chris Derry: Yes. I my earliest, one of my earliest memories is being in kindergarten. And there was this heavyset kid in the class and a bully was making fun of him. Mhm. And, uh, I remember just as being a small kid, being so [00:07:00] angered by that and just over overcome with rage that I went up to the bully and I punched him square in the face. And, uh, it felt good, in a strange way.

Caleb Newquist: That's fantastic.

Chris Derry: So I've always, I've always had a I always pull for the underdog. I, I don't like to see people get bullied. I don't like to see cheating, uh, unfairness, you know. Justice is a thing that is [00:07:30] really important to me.

Caleb Newquist: Right. So instead of sports, you were like, can I, can I be one of the officials? Can I be a referee? Is that was. Yeah.

Chris Derry: Or did.

Caleb Newquist: You.

Chris Derry: Yeah. Law enforcement is a lot like being a referee, but yeah. Uh, yeah. Exactly. But you, you know, I always wanted to see fairness.

Caleb Newquist: Yeah. Okay.

Chris Derry: So. So in 1987, I, I joined the sheriff's department in Los Angeles.

Caleb Newquist: Okay. And how old were you at that time?

Chris Derry: Well, I, I applied [00:08:00] when I was 20.

Caleb Newquist: Okay.

Chris Derry: I got through it by the, you know, right as I turned 21. And then I started the academy, uh, a month after I turned 21.

Caleb Newquist: Okay. Cool. What, um, what what leads you toward or was there any, um, on the way to investigating fraud? Were there any, like stops along the way, or did you kind of stumble onto fraud and be like, this is it?

Chris Derry: Uh, well, I, you know, I worked as a station detective for [00:08:30] nine years. And so, you know, that what that means is you're getting, you know, bombarded with everything that isn't specialized. So in, in the LA Sheriff's Department and the LA department homicide is specialized. Uh, major fraud is specialized, Uh, gangs are specialized. Child abuse has specialized. Um, narcotics is specialized. So every, everything else, uh, you know, armed robberies, domestic violence, [00:09:00] all kinds of theft, uh, everything that doesn't fall into those categories that I previously mentioned falls on the, the station detective. So, uh, we were very busy. Part of me as I was getting older and my family was growing up, uh, you know, I, I wanted to go to homicide, but, uh, those guys are on call, and they're getting phone calls at 2:00 in the morning to go to South Central, [00:09:30] you know, every weekend. Yeah. And, uh, and fraud was more, you know, erudite, refined place to work with, uh, with banker's hours. Mostly. Yeah. So. So. And it was a promotion. So after nine years as being a station detective, uh, you know, there was an opening at fraud. And as the station detective, I did. [00:10:00] You know, you work the minor frauds like the, you know, the check frauds, the forgeries and things like that. When you're at a station, you get good at that. And you, you, you like it, it it forms a basis of knowledge for when you go to major font. So I, I put in for major font in 2007 and I got that promotion, which, you know, was I niched, I niched down into specialized [00:10:30] unit in 2007.

Caleb Newquist: Okay.

Chris Derry: So, uh, that that's what drove me into the, into the, the major fraud direction.

Caleb Newquist: Gotcha. So, um, just stopping at kind of like the, the, like the, the, the, the check fraud and, and forgeries and things like that. Were there any of those early cases? Um, aside from like, it sounds a little bit sounds like lifestyle, you know, is like [00:11:00] you said, your kids being the age they were, uh, you know, I, I think that's, you know, your quality of life is definitely something that you were thinking about. But was there something about those early cases that again, just kind of piqued your interest?

Chris Derry: Yeah. Well, I think so. Like most cops, when they're confronted with fraud, they want to turn and run in the other direction because yeah, you know, there's, there's an element of complexity to it that is uncomfortable. And, um, that [00:11:30] for me, it just came natural. I, you know, I'm, I'm good with numbers. I, I, uh, you know, I find fraud fascinating. Uh, the complexity didn't bother me. And, uh, you know, so I think, you know, it was something I could do where other people. You don't want anything to do with it. They'd rather deal with the shootings and the murders and write.

Caleb Newquist: The 2 a.m. calls.

Chris Derry: Yeah, they'd rather do that than get, you know, dumped [00:12:00] with a bunch of, uh, you know, bank records and.

Caleb Newquist: Bank statements.

Chris Derry: And bank statements and or spreadsheets or checks or whatever. So, you know, but, you know, I didn't mind that. And I, I found it kind of fascinating. And so, you know, I was confident that I could handle, you know, the, the larger, more complex cases.

Caleb Newquist: Yeah. And there is something I think there is something to be said for wanting to do the thing that nobody [00:12:30] else really wants to do.

Chris Derry: Yeah, yeah.

Caleb Newquist: Okay. So then, so then the major fraud, you, you end up in major fraud And so you're, you're, you're very specialized now. And so do you remember your first major fraud case? Or do you remember an early major fraud case that made an impression on you?

Chris Derry: You know, one case in particular I got before I went to real estate, where a bookkeeper that worked at a, uh, [00:13:00] a building materials yard in South Los Angeles, uh, she was intercepting customers checks coming in for payments, and the checks were made out to her company, but the check would come in, she would erase the invoice from the company's computer system and then take the checks and deposit them into the ATM, into her own bank account. Uh, they weren't endorsed. They weren't [00:13:30] made out to her, but she deposited them into the ATM. They were, uh, they credited her account and over about a three year time period, uh, she deposited 225 checks for $1.6 million. And, and it wasn't it wasn't discovered until the owner of the company, uh, brought in an auditor who was able to determine that [00:14:00] the amount of goods they were selling, uh, did not match up with the sales. And so, yeah, so something he knew something was wrong. So, uh, he called one of his customers and found out that they had, you know, paid for a, you know, a pallet of concrete or something like that.

Caleb Newquist: Yep. Yep.

Chris Derry: And so the owners, you know, went to his system and didn't see the order, nor [00:14:30] did he see the check. But he asked the customer, hey, send us a copy of the check that you paid us with. And he saw that it had been deposited into a specific bank. Right. That wasn't.

Caleb Newquist: His.

Chris Derry: That wasn't his.

Caleb Newquist: Yeah. That's right.

Chris Derry: So he went to his bookkeeper and, uh, you know, she fell on her sword. Okay. And admitted to like 300, 000 of theft. But, [00:15:00] uh, once we got the records, it was it it turned out to be 1.6. And, um, you know, she bought a house, she bought a, you know, expensive car or a lot of expensive motorcycle for her husband, decorated her house with all kinds of autographed sports memorabilia, etc., etc.. So that, you know, that was one of my first cases and was not not atypical of the kind of stuff that was, you know, coming across our desk.

Caleb Newquist: Right. You know, after 225 [00:15:30] checks, who can keep track anymore? Yeah, that's that's pretty great. But do you think so? Thinking back to that case was was the bookkeeper were they they knew what they were doing. And did you did you get a sense that. To them. Did they. Did it seem like. What do you remember. Did they feel entitled to it? Did they. Was it just opportunistic? And they thought. [00:16:00] Or did they need some extra money? And they thought, oh, I'm going to pay this back? Or what do you remember about their kind of motive? But then also kind of rationalization for what they were doing. Do you like what do you recall?

Chris Derry: Well, you know, fraud, like any other type of theft, is driven by two main things, greed or desperation. And, you know, I came a lot, you know, I came, I saw a lot of [00:16:30] greed. This individual, Uh, you know, she wanted to live above. You know what she could afford. You know, I had another case, uh, when I was new. It came into our office. There was a a commercial building in Los Angeles that was selling for $8 million. The owners of the building hired an attorney to, uh, handle the sale. And so the sale went through, and, [00:17:00] uh, the $8 million transaction closed, and the company got their escrow settlement statement, which shows where all their money went. And they saw a line item on the escrow settlement statement, $250,000 debit for to a company that they didn't recognize. So they went to the attorney and they said, hey, uh, what's this, a, B, C, Inc., $250,000 charge? And the attorney said, [00:17:30] oh, to sell your property, we need to do an environmental impact report. So they said, oh really? Great. We'd like to see a copy of it. Yeah. So yeah.

Caleb Newquist: So a quarter million dollars. Yeah. I would like to see that report.

Chris Derry: So so the attorney said, yeah, sure. Well I'll get you a copy. Crickets. Crickets. Crickets. Three months of crickets. Okay. So the the company filed a report with us. Uh, [00:18:00] we get search warrant, bank search warrants. We trace the money to the account of the company, which was in Illinois. But then the bank records show that the money immediately went out of that bank and went to the bank of a Ferrari dealership in Newport Beach, California. So we go to the Ferrari dealership. Hey, you know, give us the deal file for this transaction. And it was the sale of a [00:18:30] Ferrari to this attorney. Now, that's that's just greed. Yes. Straight greed. Uh.

Caleb Newquist: Guy wants a nice car. Yeah. Guy wants a nice car.

Chris Derry: Yeah. Hubris. Greed. It's not desperation. Um. You know, so he ends up getting prosecuted and disbarred. But, you know, we see that kind of stuff, you know, over and over and over again.

Caleb Newquist: So a couple of [00:19:00] just simple questions. Um, starting with like this major fraud, this major fraud specialization that you had, how many detectives were in that group with you?

Chris Derry: Well, it's kind of sad to say, but when I started there, we had a little over 90 investigators spread out over the entire Los Angeles County, and they were broken up into teams. You know, the southwest fraud team, the North fraud team, the East fraud team. There [00:19:30] were two elder abuse teams. The real estate team. There was an identity theft team. North. Identity theft team. South. And there were 90 of us. When I left, 17 years later, we were down to a little over 40. Wow. Yeah. So we're you know, what would happen is two people would retire, and then they would hire one to take your place. Two people retire. Hire one. And so they will list down. Whittle this [00:20:00] down until, you know, we were down to about, well, less than half of what it started out when I when I got there. So the, you know, the priorities shifted in the department, you know, budgets tightened. Yeah. And, uh, we had to do more with less.

Caleb Newquist: Of course, like, like all of us, it seems like that's, that's, that's the way, That's the way. Things have been trending for a while now. Um, yeah. Okay. So that's very [00:20:30] interesting. Um, I want to I'll probably come back to that later, but um, let's start, I'll ask maybe, uh, again, a more kind of practical question. So you're in the major, you're in the major crimes. You're, you're, you're picking up cases. How does a typical case land on your desk? Like walk us through that bit.

Chris Derry: Uh, most of the time it comes through from a patrol station. So somebody will, you know, make a report, they'll call the sheriff's department, and [00:21:00] a patrol deputy shows up at their house or business, they file a report, and then it gets, you know, sent over to us for, for screening. They sometimes they, uh, you know, the business owner will get come straight to us like, uh, in real estate fraud. A lot of times the, the title insurance company Who's left holding the bag at the end of it? Well, contact us directly and ask [00:21:30] us to conduct an investigation. But most of the time, that comes through patrol.

Caleb Newquist: Okay. And but it does sound like occasionally like a victim will come directly to you and say, hey, this happened. I need you to look into it.

Chris Derry: Yeah. Well, yeah. So mostly the victims go to patrol like they call the police patrol car shows up, takes the takes their first report. Then it makes its it makes its way to our office, [00:22:00] and then it gets screened. We say we'll take it or we won't take it. You know, we could kick it back down to patrol. Okay. Detective, if we don't think it's complicated enough or, uh, difficult enough or sometimes, like, uh, there was one case in particular I got where, uh, an out-of-state lender got ripped off for more than $1 million, and they had tried to pitch their case to [00:22:30] the FBI. The FBI wouldn't take it. So they got on a plane and came straight to our office in LA and pitched it to us directly. So, you know, that kind of, you know, stuff did happen to him.

Caleb Newquist: So is that so when you talk about screening cases, does it really come down to the complexity where it's it's like, well, this is this is check fraud. This is pretty straightforward. So this isn't appropriate for what we do. And it's like, oh, this involves real estate or this [00:23:00] involves, um, investment fraud of some kind. And that is considered, uh, a major fraud case. Is that basically what it boils down to when you do the screening part of it?

Chris Derry: Yeah. Right. So the sheriff's department has a, you know, a case assignment manual where they say, look, if it, if it meets this criteria, this criteria, this criteria, it goes to major fraud. If it's not because it stays at the station. So, uh, sometimes things kind of skirt the line or you don't know if it [00:23:30] quite fits the criteria. So it it could make it to us. Then our screeners, the supervisors look at it and go, wait, wait a minute. This is this, you know, we're sending this back to the station. This is something that they can handle, you know, or if it comes to us and it's like, oh, this thing is an absolute mess. Yeah. So, you know, we would take it.

Caleb Newquist: So at this point in your career, so you're in major crimes and you've, you know, you, you've [00:24:00] had a lot of different experiences in law enforcement aside from, you mentioned, you mentioned the numbers being a thing that will scare people away. Um, working on fraud cases. What would you say that you were able to learn? Like, what was it that you, what were some of the skills that you were able to like pick up and like that, there was a little bit of a education involved when it came to the fraud cases versus, you know, more of the, the innate stuff. So again, [00:24:30] not being scared of numbers being one of the key things. What would you say are kind of the, some of the important things that you learned versus the stuff that you just like felt more innate to you or more natural?

Chris Derry: Uh, well, you learn how to, you know, get records from, uh, disinterested third parties who, uh, don't care about your case, but you need their information to, uh, make your case. So, you [00:25:00] know, unlike, you know, uh, a robbery for a patrol, uh, detective, you know, he goes to the liquor store. The owner of liquor store wants this guy caught. You know, they're more than cooperative with you, and they'll give you their video, they'll give you whatever they, you know you want, But, you know, here you have a victim claiming fraud. Uh, it's like, oh, okay, cool. So now you have to send a search warrant to the bank, the phone company, the internet service provider that, you [00:25:30] know, whoever and you know, these entities don't really care about whether your case gets solved or not. And, you know, they take their sweet time giving you their records and sometimes they're not complete and you have to keep going back and forth. And so, you know, you learn how to, you know, draft your search warrants to get the specific things that you want and need to make your case. Uh, you know, you hone your skills [00:26:00] at interviewing people and, and, uh, not only victims, but, you know, suspects and how to gain their trust and get them to admit to what it is they did if they're going to do that, um, you know, it's it. You learn how to collate, absorb and collate massive amounts of data. And a lot of times the stuff that you get from these third [00:26:30] party companies, it comes in a mess. And so you learn how to, to pick out the information you want, present it in a, in a, in, for instance, let's go back to the $1.6 million fund. You get the bank records, you've got thousands of pages of records spanning right? Three years. You can't just give that to the Da.

Caleb Newquist: Right.

Chris Derry: So here's, here's the proof, you know, here's the proof. You know, you spend 100 [00:27:00] hours, you know, figuring out, no, you have to go through, pull out all the relevant transactions, categorize them in a spreadsheet, you know, chronologically makes order. So it's, I think the one thing I learned was Taking massive amounts of data and absorbing it and collating it and making it make sense, and then being able to present it to a prosecutor in a, in an understandable, [00:27:30] you know, an accurate way.

Caleb Newquist: And the and when it came to talking with prosecutors, was there a similar kind of screening process where they said, this is great, but we're not taking this case for this reason or that reason or it's like, it's like, uh, we want to take this case, but we need more like, what was that piece of it like?

Chris Derry: Yeah, that happened. So you, you know, you can put your case [00:28:00] together and, uh, you know, get it over to the DA's office and for some reason or another, they're going to, you know, reject the whole thing. Or they might say, look, I like this. We're going in the right direction, but I need you to get a, B, c, d you know they'll reject it, ask for further investigation. Uh, sometimes there's an issue with statutes like fraud cases take a long time to put together. So you. Yep. There's this thing called the statute of limitations. [00:28:30] Uh, where from the moment of discovery, uh, in the state of California, in a fraud case, you have four years to, to, uh, to file a case against somebody once the fraud is discovered. But sometimes you'll take it to the Da, you're close to that statute of limitations, and they'll say, no, you know, I don't want to take it because there's case law that says, not only does that four year clock start, uh, [00:29:00] from the moment of discovery, the clock starts when someone should have discovered, uh, so. Wow. So, so they have to make a judgment call on whether this victim, you know, were you checking your bank statements? Were you opening your mail? Were you you know, you got a copy of this fraudulent deed mailed to you in March of 2012, but you didn't copy [00:29:30] it.

Chris Derry: You didn't call the police till August. Like what? You should have open your mail and known that that there was a problem. So. Mhm. You know, you got these, uh, statute of limitation issues that are a judgment call for that for the prosecutor. So yeah, there's, you know, you put it together and then it becomes a, you take it to the D.A. in my case, the D.A., uh, and it's a collaborative effort moving forward. Sometimes they'll file the charges and then more investigation, more investigation, post [00:30:00] filing as you're moving through the court process into the hearings and, you know, and then pretrial, if you go to trial, then it really gets. And it's I mean, you really have to like, track this down, track that down, you know, find this person re-interview this person, uh, find these witnesses. So, you know, it's, uh, it's, it's, you know, I hope that answers your question.

Caleb Newquist: Yeah. It does. Um, I want to go back to the, to the, one [00:30:30] of my previous questions, which is it's like, aside from like your, you not being afraid of numbers, was there something else that you felt like you kind of just had a knack for when it came to investigating fraud cases?

Chris Derry: Uh, well, maybe just a fascination for it. Like, uh, yeah, to me, uh, the psychological behavior of these people is fascinating. Like. Mhm. Um, the, the, you know, the [00:31:00] Hispanics have a term called huevos, like the huevos of these people to do the things, to do the things that they're doing. Like, uh. Like sometimes I would get these cases and I would just laugh out loud because, you know, holy smokes. Like the audacity, the, the hubris of these people. Uh, you know, I always found it really fascinating. So, you [00:31:30] know, some investigators would get a case and they'd be on, you know, oh, no, you know, they fell out on the pile and I'll get to it when I get to it. But I had an enthusiasm for these things. I a fascination for the behavior. I love putting the puzzles together. I love digging into it, getting the records back. It was, you know, it was like, you know, uh, every case was a puzzle. Every suspect [00:32:00] was fascinating in his or her own way. And, uh, I, you know, I think the thing that was different about me was I really enjoyed it.

Caleb Newquist: Yeah. So you mentioned the suspects and you, you said that they kind of they they were fascinating and fascinating in their each in their own way. What was, what was like the common what what was the common denominator? What was the common characteristic that [00:32:30] you saw over and over and over? It sounds like greed was possibly one or hubris, or was there was there something else in that, in those kind of a profile that was just consistent all the way through?

Chris Derry: Well, I've somewhat, I mean, I, I found the, the fraud suspects were a little bit a little bit smarter or craftier. Yeah. And what they were doing, like, uh, the guy, the guy that goes into the liquor store with a gun and steals [00:33:00] money from the register. It's kind of on the scale of Cro-Magnon, man, you know.

Caleb Newquist: Yeah. An adrenaline junkie?

Chris Derry: Yeah. Or just like very basic, but the the the person that puts together an elaborate fraud and some of them were extremely elaborate. You know, they have a higher level of intelligence, which makes the case more interesting. And they, you know, I'm not a psychologist, but they seem to have, uh, risk taking [00:33:30] personalities. And, you know, something that really stuck with me is when you, when you're investigating these cases, you get the records, you, you, you put it all together. One of the last things you do before you take it to the Da generally is you execute search warrants as the residences and the businesses of the suspects, you know, to get their digital devices or any other evidence that links them personally to the fraud. Something we saw [00:34:00] over and over and over again is the suspects would have, uh, casino players, club cards from all kinds of different casinos. Now, I never knew if, you know, it was hard to differentiate. Were they stealing so they could gamble?

Caleb Newquist: Yeah.

Chris Derry: Or were they the personality that loves to gamble the risk.

Caleb Newquist: Yeah.

Chris Derry: Yes. Was the was the risk [00:34:30] of, you know, the same person that loves to gamble is not the same person that loves to put together these types of frauds and, and roll the dice, so to speak, in doing this crime to see if they can get away with it.

Caleb Newquist: Right. And then sometimes it's somebody who has a gambling problem, ends up doing something colossally stupid.

Chris Derry: Yeah. Right.

Caleb Newquist: But that's probably, that's probably more of that's, that's kind of more of a, you know, in, in terms [00:35:00] of like Thinking about motive or rationalization. You know, the thing, you know the, you know, the elements of a fraud triangle which comes up in, you know, virtually every case. Um, if, if you have someone dealing with addiction, if you have something dealing with like a gambling addiction, the desperation you mentioned that earlier to the desperation is probably the driving force as opposed to a [00:35:30] clever person being like, oh, I see an opportunity here that most people don't see. And then, you know, and then it's like, well, now that I've taken advantage of this opportunity, that was fun. But I also really like a craps table. And, you know, this isn't my money anyway, so we might as well go have some fun with it. Right? That's interesting. Now, um, sorry to I'm getting this is a little bit getting into the weeds, but now was money laundering something that was within [00:36:00] your purview as as a detective, like, you know, you there's a pretty cut and dry, uh, place where you say, oh, this person took money that did not belong to you, did not belong to them, uh, through means of deception. Um, and, and that's, that's pretty clear. But like the, the, the, the, the steps to conceal the source of that. Was that something that you guys also did or did that kind of like veer into federal territory? And [00:36:30] that wasn't part of the work that you did?

Chris Derry: No. We saw that there's state statutes prohibiting money laundering. We, we saw money laundering through casinos, and we saw money laundering through real estate.

Caleb Newquist: Right. Probably lots of real estate.

Chris Derry: Right. And if the if the if the prosecutor thought he could charge it, they would they would charge it.

Caleb Newquist: Okay. Now, you you eventually end up in real estate. So can you tell us a little bit about like what [00:37:00] that that evolution, like you going from major, you know, you're, you specialized into, uh, major fraud cases and then you specialize even further into real estate. Like, can you tell us about that?

Chris Derry: So, uh, in, in the state of California, there's a statute that says, uh, that each county can charge, uh, anywhere from 1 to $10 on a real estate document that's recorded that [00:37:30] will fund the investigation and prosecution of real estate fraud. So, uh, and that that money is administered by the district attorney of each county. So in LA County, the district attorney, uh, they get the funds from, from that pot of money and they fund their prosecutors and then they give money to agencies around the county that specifically, specifically [00:38:00] supposed to be used for the investigation of real estate fraud. Our, uh, department had six when I started. We had six. When I left, we had four. Uh, we had six investigators dedicated to investigating nothing but real estate fraud. And the, the MOU said that the case had to involve a fraudulently recorded document, which could be a fraudulently recorded transfer deed or a security instrument, [00:38:30] like a deed of trust. So, uh, we got all those cases. I went to that team and it was a really interesting time because it was right in the wake of a real estate meltdown in 2007 and 2008. And at the time, our office was getting bombed with loan modification scams. So we had We had one case in particular. It was a company in, uh, [00:39:00] Pico Rivera that was, uh, run by an attorney. They were doing loan modification scams. So if you were, you know, getting your foreclosure notice, they'd said, okay, you give us 5000, $10,000, we'll stop the foreclosure on your house. And so the people would pay and then the suspects, in order to stop the foreclosure, what they would do is they would record what's called a fractionalized deed.

Chris Derry: So they would [00:39:30] they would execute a deed, transferring the A like 5% of the property to someone who was in bankruptcy and then record it. The person who they were transferring that 5% to didn't even know that that was happening. The suspects would just go to the bankruptcy rolls, find somebody in bankruptcy, you know, deed 5% interest to that property, then record it. And that would create an automatic stay. And the lender could not move forward for [00:40:00] 60 or 90 days with foreclosure. Sometimes they would forge the the homeowner's name on the deed. Uh, sometimes they would the homeowner would sign it and not know what they're signing. The bottom line is eventually the the lender would get their property back. And these people were out there ten grand. This one case, we had 515 victims that were. And the [00:40:30] way it came to light was, you know, hundreds of people were in the parking lot of this place in Pico Rivera with the metaphoric pitchforks and torches, right. You know, demanding the heads of these people when all their houses got foreclosed and they were out there $10,000. So when that case came in, I started thinking, well, maybe real estate fraud isn't the best direction for me to go in. But, you know, I, you know, worked with my partners. We were [00:41:00] able to put this thing together, get get prosecutions, get convictions. The attorney was disbarred. So, uh, it was a baptism by fire.

Caleb Newquist: Right?

Chris Derry: With that, with that particular case.

Caleb Newquist: Right. It was a case of supply and demand. Yeah. There's a there's a large supply of, of, of real estate fraud going on or real estate adjacent fraud. And, um, you know, demand from demand from victims who were, yeah, [00:41:30] shelling over money and they thought they were getting a service that they weren't getting, they were being deceived.

Chris Derry: Exactly. And, and, uh, a lot, a big percentage of them did not speak English. So that had another, you know, complexity to it. So, um, you know, that's crazy. But in real estate fraud, the, the, the cases we had most often were where where people were, uh, targeting the equity in other people's homes, trying to steal, uh, the equity out of their houses.

Caleb Newquist: Oh, interesting. Now, [00:42:00] how would that work? Can you just. Yeah. I'm just.

Chris Derry: Yeah.

Caleb Newquist: I don't know if I can, I don't know if I can puzzle this out in like, 10s. So I'll just ask you, like, so how, how would that work? How would someone who is not the owner of a home, who is doesn't have a name on a mortgage? How could they access somebody's equity in their house?

Chris Derry: Yeah. So you have the fraudsters, you know, checking real estate records and identifying properties that are that have a lot of equity. Yep. So, you know, they can [00:42:30] see, hey, this house was bought in 1975. Oh, it was paid off in 2001 or whatever. And now it's worth $1.5 million and there's no loan on it. So they would identify who the homeowner is. There was a lot of different variations of the scam. But basically, you know, they would identify properties with large amounts of equity, either paid off properties or properties that had very small loans, you [00:43:00] know, relative to the value of the property. Then they would, uh, steal the identity of the homeowner and either obtain a loan against the property or sell it outright. And, uh, you probably have a lot of questions about how they could do something like that. But yeah. But, uh, it happens with, uh, show frequency. Yeah. And it's pretty disturbing. Yeah.

Caleb Newquist: Yeah. [00:43:30] So it's, it's kind of a combination. It sounds to me there's like, it's a combination of knowing how the system works, but then also identity theft and also, um. Yeah. You know, uh, iced tea in their veins, basically. Yeah.

Chris Derry: Yeah.

Caleb Newquist: Because that that can be, that has to be the idea that someone could sell your house fraudulently. Um, that'll disrupt somebody's life to [00:44:00] a pretty, like terrible degree.

Chris Derry: Yeah. It's very scary. Yeah. And, uh, you know, we've had cases where people actually got evicted. You know, true homeowners got evicted because the house, the the identity theft suspect sold it or they, they bought it or they sold it, pretended to be the owner. And then the new owners sold it again. Oh, wow. So now you're now you're downstream two, two owners. And now those owners [00:44:30] are evicting the true the true property owner. Man, this is so sad. We had a case in Long Beach where that where an elderly woman actually got evicted from her property. Uh, and it took, It took like a year to unwind the whole thing and get everything back the way it was. But it was these are these are pretty heinous crimes done by, you know, sophisticated real estate, uh, savvy people [00:45:00] and, uh, and very interesting. And sometimes the dollar loss gets very high because they do it over, over and over and over again until they're caught.

Caleb Newquist: And it's kind of, you know, when you think about when you think about, okay, so the bookkeeper. The bookkeeper case that you mentioned earlier, you do have a person who wants, you know, to live a certain lifestyle and then maybe gets in over their head and is kind of like, gosh, [00:45:30] you know, that was a boneheaded decision. There's something about when you, when I hear you describe like real estate fraud, some of these, the, the amount of steps that are involved and the complexity that is involved like that isn't accidental. That isn't something that people just kind of like fall back backwards into. It's like, oh, I kind of, I kind of, I kind of just ended up in this situation that is not very good. It's like, well, no, there's, there's all these [00:46:00] things. They're all, it's, it's a very coordinated and, and, um, deliberate, it requires deliberate action in it. It's, it's not as simple as just like, you know, copy and paste in a fake invoice and then like collecting on the invoice. Like.

Chris Derry: That's right.

Caleb Newquist: It is, it is far more it feels far more calculated, I think is the word I was looking for. The calculation that's involved is, is just to such a greater degree that that feels like, [00:46:30] uh, the, the, the duplicity and the deception involved is cold and even just kind of it is criminal.

Chris Derry: Yeah.

Caleb Newquist: In a way that it is. Embezzlement and embezzlement is almost a sad story. It sounds like a real estate story that's like, no, that's kind of an evil story. Or that that's a, that's a, that's, that's something altogether different.

Chris Derry: Yeah. Diabolical is the word that comes to mind.

Caleb Newquist: Yeah. There you go.

Chris Derry: Yeah, yeah. It's just, uh, it's calculated, [00:47:00] it's cold and it takes place over an extended period of time. It plays out, you know, which is how a lot of these guys get caught because.

Caleb Newquist: Right.

Chris Derry: It doesn't happen right away. There's a and there's other components like innocent parties that are involved, like escrow companies and title companies. And so this, you know, a lot of them get caught because the imposter will be in the middle of the transaction. And then it comes to light. For instance, [00:47:30] the, uh, in order for a loan or a sale to go through the lender requires an appraisal. Mhm. So an appraiser has to go out and and and do an opinion of value on the property. Sometimes the true owner gets wind that an appraiser came by and we had one in specific where the the elderly man, he. It was a rental house and [00:48:00] an appraiser came by to appraise the house. The neighbor saw the appraiser and chatted him up and said, oh, I didn't know Mr. So and So was selling his house. Oh yeah, he's selling his house. So the neighbor called Mr. So and So and said, oh, you're selling your house? No, I'm not so. Well, there was an appraiser here earlier today. He said you were selling your house. So they, you know, go they make a report with us. We find out. Okay. Yeah, someone is [00:48:30] posing as this owner and they're selling the house.

Chris Derry: We start digging into the transaction. We get find the escrow company. The escrow company says, yeah, we're talking to Mr. So-and-so at this phone number. So the imposter was using a particular phone number. So we get a search warrant to do what's called a ping on the phone number, which we can, which means we can identify its location in real time. We ping the phone number while [00:49:00] it's live and we see it's pinging at a Starbucks. So we go to Starbucks and our bad guy was sitting there on his laptop with the fake ID and the, and the, what we call a burner phone. It was an untraceable, you know, prepaid phone that he was using to pretend to be this elderly guy. And we were able to arrest him there and then go back to his house with a search warrant and find more evidence implicating this guy. So, you [00:49:30] know, there's risk involved for these people because the transaction is spread out and they're they're actively doing it. And then if we get wind of it while it's happening, we can intervene and find them. You know, the perpetrator. Well, it's before the thing is over.

Caleb Newquist: Um.

Zach Frank: If. Sorry to interrupt.

Caleb Newquist: Yeah, yeah. Go ahead.

Zach Frank: If that guy been out of Los Angeles, though, then what would you have done? Right. Like if you traced that phone and it's like coming from another country or coming from another state.

Chris Derry: Yeah. Well, we [00:50:00] would call that agency and ask for them to help us out. But, uh, we found that it's usually local because they, the, the properties are local. And then the escrow companies are local. And so our bad guys are, are usually local, usually in that one that, that I just described, we linked the suspect to other frauds. But the way he was, he, the way he was laundering his proceeds was [00:50:30] that he would instruct the escrow company to send the, sales or loan proceeds to gold companies that were in other states, and he would purchase, you know, gold coins with the proceeds, and then they would ship the gold coins to a mail drop, you know, here in Southern California. And then and an impersonator would go to the mail drop and pick up the coins. [00:51:00] Um, but yeah, we, we found that the, our real estate fraudsters are usually right here near the properties that they're, they're targeting.

Caleb Newquist: Um, Chris, this has been really great. Uh, I've learned a ton. Zach, do you have any questions?

Zach Frank: I have random questions. So like when you were talking about, um, you know, how you get a case and stuff, do you ever deal with issues where basically once you get a case, is it out of the complaints like hands in terms of you file charges? Because a lot of times what we [00:51:30] talk about and like there's even statistics about this is like a company realizes that someone doing fraud, they like have someone investigate it, and then they're like, oh, we're embarrassed. We won't. It's going to look bad for us. It was our accountant. It was whatever. We don't want to file charges. How often does that happen? Or is it not? Is it out of their hand? Once you guys get the case, if you find the evidence, the Da is going to bring the charges to them, no matter, even if the company doesn't want to deal with that.

Chris Derry: You know, we we have had cases where the company will file a report with us and then we start the investigation. But [00:52:00] before we can put it together, the bad guy pays the company back. Yep. And then the company comes to us and says, look, we're not we're not interested in going forward. There's further. So that kind of thing has happened.

Zach Frank: Or I guess, have you ever dealt with one where maybe it's like a family member? Right? I know that happens a lot where like a mom even opens up something for like for a son or daughter for like, you know, in there to get credit. And then like, they don't want to file charges. Is that ever happen or anything like that?

Chris Derry: Yeah, yeah, yeah, [00:52:30] that that's happened. Yeah.

Zach Frank: And then I guess another question I had is you talked about, you know, you bring the case to the D a and then, you know, the case might still be getting put together. How often do you ever have to testify at a trial? Do they have experts who have to testify? How does that go around to explain the crime to like a jury?

Chris Derry: Yeah. Well, the the the vast majority of cases settle before trial because, you know, you want to put together a case that's so strong that, uh, [00:53:00] you know, there's no there's no way out. Like, think of a wild stallion in a field and you build a fence over here, and then you build a fence over here and you build it. You know, when we're doing the investigation, we're building the fences, we're anticipating the defense, and then we're trying to cut them off so that by the time the Da files the charge, there's no way, no way for them to go. So the vast majority of them settle. But, uh, yeah, we do go to trial sometimes if, uh, uh, you [00:53:30] know, the defendant might, you know, try to, you know, see an out and, and try to point the finger at somebody else and think that he can get out of it. Or maybe the the penalty they're looking at is so severe that it's like, hey, we'll take it to trial and take our chances. So, um, yeah, but when it, when it comes to going to trial, uh, yeah, you have to bring the victims up on the stand. You know, they explain their side [00:54:00] of it, then you have to bring, uh, the custodians of record for all these companies, banks, uh, internet service providers, phone companies, they, they get up and take the stand and, and explain what the records show.

Chris Derry: And then, uh, investigators will take the stand in real estate cases. Uh, the real estate has a language of its own. So, uh, you, you do need an expert to get up there and explain to the jury, [00:54:30] you know what all of these terms mean. You know what? What's a chain of title? You know, what's a security instrument? What you know, what is priority in and the recordation of the documents? I mean, you know, these kinds of things that are esoteric to real estate. Someone's got to get up there and explain to, uh, explain to the jury we in real estate cases, if we can get, uh, a licensed [00:55:00] real estate person in the jury pool, that's always very helpful because they can explain, you know, to the others what all this stuff means, you know, uh, and that has happened. I mean, a lot of people have real estate license. So when you go through the jury selection, you know, we like to get somebody on there that's got the training, but, uh, yeah, that's, you know, that's, that's the sequence, you know, testifying, uh, custodians of record. Investigators taking the stand. And then sometimes [00:55:30] the defendants will take the stand and try and, you know, tell their side of the story to the jury, too.

Zach Frank: Yep. Makes sense. Yeah. Um, a couple other ones, I guess in the same vein, is that, uh, have you ever been so invested in a case that, like, you've been very disappointed in the outcome? Like, either someone gets off of it or like, you know, they found innocent from a jury or a low sentence where we talk about a lot on this show about what is justice. Exactly. Right. Like for financial crimes, depending on what the victim, if there is a victim, like, you know, who is the victim? Like [00:56:00] it's two years, enough is four years. Enough is, you know, six years, who knows what it is. So how often does that happen with you? You kind of like separate yourself once the investigation is done. Is it more like you separate yourself mentally to be like, my job is done? Whatever the jury and the prosecutors decide, that's on them.

Chris Derry: Yeah, that's a hard thing to do, but that's something you have to learn to do. Like I, I have seen a jury trials where with my own eyes, I had seen this person do what they're being [00:56:30] accused of doing, and the jury let them off. So I, you know, you you have to separate your personal feelings from the outcome. And, uh, uh, in fraud cases in particular, uh, it can be particularly frustrating because if someone goes into a liquor store and they point a gun at the clerk and steal $100. In California, if they get caught, they're going to they're [00:57:00] probably going to go to state prison. But if you're a fraudster and you and you put together an elaborate fraud and you take grandma's last $100,000, there's a good chance you're going to get probation. And that can be pretty disheartening.

Caleb Newquist: There's an asymmetry there that is pretty you know, there's that.

Chris Derry: Is.

Caleb Newquist: It's devoid of justice, for sure.

Chris Derry: Yeah. I mean, you hear the term [00:57:30] it's only money, you know. Well, is it only money to grandma who's gonna, you know, have to eat cat food for the rest of her life? I mean, it wasn't it was not only money to her. So, uh, you know, I've heard that term over and over. It's only money. Uh, so. No, it means that means a lot to to some, uh, victims, but I, I did, uh, early in the game, I [00:58:00] next to my computer monitor. I put up the serenity prayer.

Caleb Newquist: Mhm.

Chris Derry: And, you know, I would see it every day. And you cannot, you know, you have to be able to understand what you control and what you don't control and have the wisdom to know what the difference is. So yeah, as an investigator, you do the best job you can. You hand it off to [00:58:30] the prosecutor and then you assist them in the prosecution. But it's really it's out of your hands at that point. Yeah. And you can't you can't let it bother you or it will it will drive you nuts.

Caleb Newquist: All right. There you go. Chris Deery, nice guy. I enjoyed that. We kind of glossed over it, I think. But Chris retired from the sheriff's department in 2024. And these [00:59:00] days he is a portfolio manager for a real estate firm. So, you know, as far as second acts go, it's probably a little less exciting, although there's probably moments. Okay. And that's it for this episode. And remember, if you investigate fraud, you won't get phone calls at 2 a.m., but you will have to look at spreadsheets. Guaranteed. Email us. Comments, complaints, story ideas, whatever you got. Send it to my fraud at earmark. Cpe.com. This [00:59:30] episode of Oh My Fraud was written by Zack Frank and me. Oh My fraud is created, produced and hosted by me, Caleb Newquist. Zack Frank is my co-producer, audio engineer, music supervisor. Laura Hobbs designed the logo. Rate, review and subscribe to the show wherever you listen to podcasts. If you listen, on your mark, get some CPE and you know, don't go to AI just because it'll save you time. What's the point? There won't be any laughing. There won't be any good stories. The stories are getting better, but it's, you know, it'll [01:00:00] be missing something. The human element. Yeah, it won't have it. Join us next time for more average swindlers and scams from stories that will make you say, oh, my fraud.