Oh My Fraud

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Blake: If you'd like to earn CPE credit for listening to this episode, visit Earmark Cpcomm. Download the app, take a short quiz and get your CPE certificate. Continuing education has never been so easy. And now on to the episode.

Greg: Hello and welcome to Oh My Fraud, a true crime podcast where our criminals use laser pointers, not laser gun sights. I'm Greg Kight, And I'm Caleb Newquist. Caleb, before we get into the podcast proper, I just want to take this opportunity as we have to read a listener review real quick. Okay. The user's user's name is User Underscore Apps, and they said, My God, if you want someone who laughs at their own jokes and goes off topic more than someone with Add and laughs as is, sounds like ten people laughing. Awful. Uh.

Caleb: They forgot about the free CPE though.

Greg: Yeah, right. I think that's the but I think that they're they had a very comprehensive review. Except that was the one oversight. Yeah.

Caleb: Yeah. I mean. You are entitled to your opinion. User underscore apps.

Greg: Yeah, it's a valid opinion.

Caleb: Sure.

Greg: If you're entitled to your opinion, you're entitled to not reread your comment before you post it. It's all. It's all good. It's all fair game.

Caleb: If you like. Oh my God. At least as much as user underscore apps. Take a minute to write us a review, but make sure that you mention that our laughing makes your ears bleed and that you get free CPE if you listen on the earmark app.

Greg: Perfect. So Caleb Yes, to change subjects to get us into our podcast for today, I wanted to ask you about about other podcasts and specifically like have you met any other podcast host? And I'm not talking like, like I'm talking like a, like a, like ones that are in the, the, the, the strata that's far above us like, like super popular ones. Are there any that you've met or any that you that you like really like to meet in real life.

Caleb: Um.

Caleb: I mean, it's pretty boring if I say no, right?

Greg: Well, but that's but again, you know, I'm okay with user apps review. I'm also okay with you saying if there's if that just doesn't interest you know I'll play this interesting if that did not.

Caleb: Interest I will play this game. I've been listening to the podcast a long time. I mean if I if I met IRA Glass, that would probably be pretty nerdy and exciting. And so yeah, but like, I don't even know what I would say to IRA Glass.

Greg: Right.

Caleb: But, you know, I just am a fan. I would just be like, Hey, I'm a fan. You know, just, you know, love what you do, whatever like. And one of my favorite podcasts is and Greg was actually the person who turned me on to it is WTF with Marc Maron. I've seen Maron do comedy many, many times. He does a great I love his podcast. I know people have their their beefs with his style, but I think he's great. I don't know about meeting him though, because so.

Greg: So you've never met him even though you've been to tons of his shows? I haven't.

Caleb: No, I haven't met him.

Greg: He doesn't do like a meet and greet after the show.

Caleb: He does. He doesn't know. Okay. I haven't met him. And I mean. Yeah.

Greg: Well, here's the because.

Caleb: Do you have a Maron story? I don't know.

Greg: I do, because I did. You did meet to meet him once. Oh, you did?

Caleb: Oh, what's the story? Yeah, that's interesting.

Greg: So he was so he was. He did his show. He was just touring, did his show at Wiseguys. It was actually the same wiseguys that you were at before where we did that. That. That fraud live. Live fraud in a comedy club a hundred years ago. Yeah. So it was that venue. Maron did his show. I was not on a show. I didn't open for him. But. Yeah, but but one of the things that happens a lot of times is that if you get somebody like that who is just widely admired in the comedy community, then everybody, all the local comedians show up and just kind of slink around the back of the of the room and watch watch the show. And afterwards you're kind of going, hey, you know, I guess I'll hang out and see if I can meet him. And so I was one of those that was doing that. But no, but listen, it was the it like I bounced so quick, like after because after his show. Yeah. He ends up being in the lobby of the club and I swear there's like 10 or 12 of us just no name local comedians who are all it felt like we were sitting in this weird circle in the lobby of the comedy club and nobody was really talking that much. It was not lively conversation. It was just sitting around and I and I was part of the problem, too. I wasn't saying anything either because the problem I had is, is this is if you if you meet someone in real life whose podcast because what his podcast is twice a week, right?

Caleb: It is.

Greg: Yeah. So so I had at that point I had listened to his biweekly podcast for years. Right? And because of that I realized it was impossible for me to think of a question to ask this guy that I didn't already know the fucking answer to. So how do you how do you chit chat with someone when you already know when you've never met him, but you already know everything about him? Yeah. So that's a good. That was my. That's a nice guy. Don't have any complaints about him, but I just. It was weird to meet someone that you just knew so much about. Yeah. And and so. So the whole reason we're talking about any of this at all is because on this episode, we, we get to meet and we get to interview one of the four fathers of fraud podcasting. Yeah. Which really just means the guy who did a fraud podcast before us. That's all.

Caleb: Years ago.

Greg: Yeah, exactly. Exactly. So his name is Chris Marquette. He had a show that was on the Voice of America Radio Network. It's like an online radio thing. He did his podcast back in 2014, 2015. His you can actually still access all of his podcast episodes, which I consumed. All of them loved all of them. You can still get them through Amazon. We'll try to put a link in the show notes to to that to where you can find those. He also published an annual report on embezzlement. And and as we talked to him, we found out he also did an annual report on Ponzi schemes and a bunch of other white papers on lots of different topics related to fraud and white collar crimes and things like that. He he's worked as a fraud investigator for 40 years. And he was he was just a wonderful guest. So a guy that I listened to on a podcast a bunch that that exceeded my expectation as a guest on our show. So without wasting any more time, here is our lovely interview with Chris Marquette. Chris Marquette so excited, as you know. I'm very excited to have you on our podcast. Thanks for thanks for being with us today. We're yeah, excited. I got a million questions I want to ask you.

Chris: Absolutely. Caleb and Greg, it's an honor to be be with you guys.

Greg: So so first off, just so that the listeners know you are based just outside of Boston, correct?

Chris: That's right.

Greg: Okay, perfect. And then would you so real quick, I know will you give us just a real quick kind of like you're not your CV, but just the high points, Like what are the what are the different initials you have after your name? Because you're like, you're a detective. That's like your main your main gig, right? Yeah.

Chris: So, I mean, I right out of undergraduate school, I joined Kroll Associates, which some, many anybody in the fraud industry should know is the big dog in the investigative world. And so this is back in 1983, right out of undergraduate school, I joined as an analyst associate, and I spent I stayed there for 20 years. But when I joined it, it was like 25, 20 odd, 25 employees. Small shop. Jules Kroll, who still a legend in the in the investigative fraud risk mitigation world, ran ran the shop and was my mentor essentially. And you know, I was like, oh, I got to go back to law school or I got to go to school or something. And now he was.

Greg: He was telling you that or you were.

Chris: He's telling me that. I'm saying I got to go back to school, you know, if I want to go forward, you know, he said, No, gotcha. You're getting your MBA right here. You got your law. You know, I'm like, all right, whatever. So I stayed there for 20 years and he threw me into all these different roles. I mean, you know, I was an analyst and I, you know, a writer of reports and holds stuff together and and, you know, did got involved in every kind of case you can imagine. And at Kroll, it was a lot of international work, too. Caleb, you had a question?

Caleb: I do, yeah. I was curious. So was your was your was your undergrad studies, was that criminal justice or how did you prepare and how did you just go straight into Kroll?

Chris: So I went to Dartmouth College up in New Hampshire, and I had three majors. I had physics. I was a my family was a science math family. So I was a physics major first. I finished that major by the end of my junior year. I but I didn't really want to be a scientist. So like, my father and, and my brother was a nuclear sub officer, went to a naval academy. But so I studied economics. I was thinking, oh, business. Yeah, that's kind of where want. So I was so I added economics as a double major and then I added philosophy as a third major because I wanted to go to on an overseas program in Scotland, which I did. So I did three majors. One was a science, one was social science, one was a humanities. And the philosophy piece actually was really interesting and helped me write because writing I felt, was my weakest strength because I was a science math guy, right? I was an analytical, analytical guy. Anyway, so I, I do that. And and it's 1983. There's still a recession going, trying to get a job at any of the big consulting firms in Boston and New York just not having a lot of success. Um, and went to New York hardcore looking for a job. Got two, two different job offers. One was at this little tiny Kroll Associates consulting firm that sounded really interesting, and the other one was to be a bond trader at Brown Brothers Harriman down on Wall Street. Like, okay, you know, you know, it's so boring. My wife likes to say, look, we would have had that house out in the Hamptons, you know, if we'd done right.

Caleb: Yeah. Yeah, but.

Chris: But you would have been long gone. My third wife, you know, whatever, you know. Right, right, right.

Greg: You would have had to forfeit your. You had to forfeit your soul for that.

Chris: Exactly. Anyway, so the Kroll job was fascinating, and it really it just transformed my dad's like, I sent you to Dartmouth. I went to an Ivy League school to be a private investigator anyway, So it don't really think of myself as a private investigator. You know, I'm an information gathering that helps decision making and critical situations. So, yes, I gather information all over the world. We do all kinds of very interesting things, Working a lot with lawyers, sadly. Um, but necessarily love. Hate, right? Yeah, they're my clients. Some can be very, very difficult, but we get brought in into difficult circumstances, you know, frauds cases, you name it. So. So it became a really interesting job. And Jules Kroll kept me doing different things. He had me running a unit. I did a political risk unit, a travel safety security. Unit. Again, I'm learning this stuff as I'm going. Then I ran, you know, the whole sort of we merged with a couple times and I was involved in a lot of that stuff. I went to Russia on On the Case. Big, massive case that we worked on behalf of the Russian government after, you know, Yeltsin took over. Gorbachev really stepped down. And the job the project was finding hard currency assets outside of Russia that they wanted to try to repatriate to the to to Russia, because that that was the currency of the ruble is still worth. It's nothing. Right? It's useless. So so the hard currencies that the that these Russian oligarchs, even in the Soviet era had begun amassing were over, you know, offshore, and they wanted to bring it back. So that was a fascinating project that that I was involved in and went to Russia to do that.

Greg: And did you find a bunch of stuff for them? Were they able.

Chris: Yeah, there was stuff. So I mean, it was just bizarro world where we would go. So we pulled together a team. We had ex-KGB, I'm sorry, we had we had our CIA, we had our MI6, MI5, we had our ex Mossad and Shin Bet and, you know, French German intelligence folks, very interesting group of people pulled together on our side and they had their sort of team that worked for the we were actually working for the Treasury Department for the Russian Federation.

Greg: So it sounds like sounds like that movie The Expendables, but just with nerds. Is that what it well mean?

Chris: Yeah. So so we would have these meetings in Moscow and we would have they would be on one side of the table, we'd be on the other. And it was just a collective group of the these spooks on on our side in their cases. And then we would report, yeah, we found this this in Cyprus and this, this prop real estate thing owned by this shell company over here in southern France. And then and the KGB, we'd know about that one. We know about that one. You know, I mean, it's like, okay, great. Yeah, these guys knew about all of them, but. Right, right.

Greg: That was just. But just to save face, though, right? They just didn't want to. Yeah. Or do you think they really knew about them already?

Chris: Well, the the intelligence guys knew about a lot of it. Okay. Okay. So I think it was a matter. Yes, it is a matter of saving face. And it was a matter of sort of going through a drill because they would put it out, you know, in to the people they were trying, look, we're the Soviet era is over. We're moving toward, you know, whatever democracy and new the new Russian Federation, Boris Yeltsin wanted to turn the page and and show that they were actually doing something to, you know, help the country move forward. So so it was in some respects, it was a PR kind of a thing, but it was also, I think, a legitimate exercise. Right. But it was a fascinating thing that, again, you know, I I've traveled all over the globe during those years and really learn by doing so. That's that's how I kind of got into this whole space. And, you know, I never left. So it's now it's now hard to believe 40 years. Yeah. I start I started in 1983, the summer of 1983 after I graduated from college. And wow, I'm still doing this, but it's fun. I mean, that's the thing. It's fun work.

Greg: So to follow the to to follow the thread. So you started at Kroll and then you you started your own firm. That was that was Mark International. Was that what the name of your firm?

Chris: Yeah, actually, there was an interregnum. There was a, a group of us left Kroll and we started a company called Citygate Global Intelligence that was owned by a British company. Or we rolled out we got acquired immediately by a British company that had a whole bunch of different companies. And that firm lasted about, I want to say, four years or so. It was a bunch of Crowley's and others that we pulled together. So it was a mini Kroll. And, you know, it was kind of I told Jewels, I said, look, I got to I got to go do this. Just, you know, if I don't do this now, I'm never going to do it, you know? And he understood. So we're still, you know, friends today. But yeah, um, he did look like it didn't look happily about to some of the other folks who did this. You don't never burn your bridges, people, right? Absolutely. Always, always keep that line going. And anyway, so it was a it was a mini crawl. Um, and so I was one of the founders of that that lasted about four years. The parent company blew up. Oh. And it put us in a very difficult position. We couldn't hold it together. We tried to do an MBA that didn't work. So so then I worked for a year for Vance International Decision Strategies, about a year or so for them before I started Marché International in 2000 and at the beginning of.

Chris: Six, I think it was, yeah. So Mark International is basically me as at the helm and the my little team and lots of people out in the field that I could pull in as I needed them so that that, that still that entity still exists. Okay. Although I use it really only as sort of my personal vehicle, my personal corporate vehicle, my current business is called Veritas Assurance Partners, very Veritas as in truth Assurance Assurance Partners. And so I'm one of three partners in this, this new newer enterprise, one of whom and this is one of whom is a forensic accountant by training who I knew at back in the cruel days, a terrific guy named Billy Marlin. The other is a retired Full Bird colonel, JAG Corps, US Army fellow named Manny Superville, who's down in Miami. So it's a really interesting group, the three between the three of us. And again, we're doing a lot of international work. We get brought into difficult projects. And, you know, depending on the project, you know, we've got the forensic accounting piece. We we've we have the capabilities and the computer forensics and what have you and the traditional investigative stuff. Et cetera. Et cetera. So it's we're a small boutique shop, nimble and can move quickly, so we compete against the big boys and girls. Guess I should. So.

Greg: So. So here's my next question is like, even from some of the stuff you've already said, you're like going, I'm going to I'm going to Moscow to do this international thing with these Russian oligarchs. I assume you've also been to like Johannesburg and probably Banff, Canada, just the sexiest places on Earth. And but but because I've I've had I've had like, you know, every now and then the idea of becoming a fraud examiner doing work similar crossed my mind because it seems super sexy but then I've always wondered is like the day to day stuff just the most like is that does it does the sex appeal of being Chris Marquette, does that does that fall off when you actually are like just going through an endless pile of receipts, trying to tie these out? What's the how? I want to know, how sexy is your job? How sexy is your life?

Chris: It's not so sexy. So, I mean, in the old days, yes. So I've been to Australia on work, I've been to Asia, I've been to Alaska. Banff. No. Was there as a kid? No, not in Banff but and Joburg. We had a big case out of South Africa, but we, I didn't, I wasn't part of that project back in the days. So in the old days you would go to these places, you know, and, and because the internet was nascent and the amount of information was not as available, so you would go you'd have local folks that would support you, local investigators, ex RCMP up in Canada, whatever. And you would pull it together there. I mean, you know, I'd go to Miami and do a bunch of interviews or whatever, yet you have to do that kind of thing face to face. Um, less so these days where, you know, even in the forensic accounting, all the documents get dumped and sent. So you got to back office of accounts that are cranking through stuff, sitting somewhere else. They don't have to be on site. You really do have to have people in a complex fraud case. It's better to have people on site that can at least direct things, do some select interviews, make sure they gathering the right documents and getting those to the people who are doing the analysis of those documents and that sort of thing. So it's less travel today than it once was. And yeah, in the nitty gritty of any given case is not so sexy because you really are you're going through information, whatever. It's public records, it's real estate transactions. It's, you know, you know, it could be whatever expense reports. It's simple stuff that you're looking at and pulling together for the client. So the travel not as much as it once was. I mean, literally one trip went around the globe, started in new York, San Francisco, l.a. Tokyo, hong Kong, Singapore, Sydney back.

Greg: Which, again, sounds so sexy, but then after you get your first blood clot from sitting for that long and then it's just, you know, you got.

Chris: To move around, you got a.

Greg: Daily blood thinner, just not sexy at all.

Chris: You got to move around. Now. Yeah, go ahead.

Greg: Okay. So tying back kind of going back into Caleb's question about like how do you get your your business. I know you know this. I know of you. You're you're I have admired you from afar for years because of your podcast called Fraud Talk, which, by the way, have you sued the for taking your title of your podcast?

Chris: No. Okay.

Greg: But then you also reported was it an it was an annual report, the market report on embezzlement. That was an annual report, right?

Chris: Yeah. So I, I started I wrote this white paper essentially for, I think six or 7 or 8 years in a row on embezzlement. I just called it the market report on embezzlement. And that was sort of a labor of love. It was, you know, because I'd gotten involved in a lot of one of one of the specialties I think I have is employee misconduct, executive misconduct investigations. Okay. And that runs actually a fairly wide gamut from harassment and abuse and assaults and physical whatever to stealing intellectual property to stealing actual money. So looking at the money cases, the the embezzlement cases, I thought, hey, you know, this is something we really haven't examined too closely and nobody's ever really done that. So I decided I'm going to sort of really try to dig deep into it and try to figure out some things, you know, who are the perpetrators? Well, who are the victims? What are the normal victims in these kinds of cases? What are the you know, what are the characteristics of the you know, how they do it? What are the methods that they use? How does it get found out? You know, those kinds of analytical questions that have really never been delved into very deep. So I took I would just take one year and say, okay, and I would identify the cases that that became public during that year of Major Embezzlements anything over 100,000. I didn't look at anything less because it would be too much. You die right before you got them all.

Greg: Which is crazy too, because based on the ACF's report, the report, their bi annual report to the nation's I. I don't have this locked in, but I'm pretty sure the median loss due to asset misappropriation which is our embezzlement cases is typically the the median loss is typically under $100,000 for that. So if you're looking so the cases you were looking at were not even half of the cases for the entire year.

Chris: Oh, yeah. So think of an iceberg, right? You got a little tiny bit showing the the most of it's underwater so you're not really seeing. Right. Right. Fraud. Fraud happens every day. Right. You're never going to stop it all. It's it's just a matter of how much you can tamp it down within a given organization. So underneath the water you got every day fraud, people are taking the pencils and the petty cash or every day, all day. Right. That happens all the time. So then you work your way up to more sophisticated stealing of things, monies and to. So I said, all right, well, let's look at these cases where really large amounts of large sums have been absconded from an organization and and dig into that because obviously they went for a period of time. And I can't there's no way to really identify a lot of these little cases. Here's the other factor is that law enforcement, typically the feds, if it's not 100 well, it used to be 100 grand. It's probably like 250. Now, if it's not that much, they don't care. So and then the state bar, bar level that bar for them. Okay. That's lower than the Fed level, but it's still a level of, you know, if it's less than ten grand or 20 or 25, they don't care because the amount of resources they got to pull and devote to get into it. So I'd say, all right, let's take the big cases and let's dig into them, which I did. And some very interesting things came out of that, which were number one. That women were more often than not, the ones doing the stealing.

Chris: Yeah, but they also showed that more often than not, somebody in a fiduciary role, a bookkeeper. Et cetera, was doing the taking. So some of that might be explained that, you know, a lot of women in the bookkeeping department. Right? So so maybe that's part of that. What what accounts for that? But then on the other side, men tended to steal a lot more than the women did. So so if and if you're smart, you start taking just little increments, little bits, you know, every month or whatever. And over time it adds up and you don't get caught over a long period of time. Right, Right. But sometimes it collapses under its own weight, like as in a Ponzi scheme situation. But so so women often more frequently the perpetrators. Men, though, stole more than the women on average. The most common victim was a financial type of an institution. Oh, really? It makes sense, you know. Why did you. Why did you steal? Why did you rob the bank? Well, that's where the money is, right? Right? Yeah, that's right. Famous lie. Yeah. And then government entities were the second most frequent victim. Right. Um, then you get into, you know, other, other categories. Nonprofits and and religious organizations, oftentimes for victims because you just the controls were nonexistent or very, very weak. Yeah. And so it was a very it was a cool way of sort of breaking it down and looking at it. I also looked at it geographically where there are some states that were more likely than others. Vermont, for for some crazy ass reason, became a.

Greg: Lots of lots of stealing in Vermont.

Chris: Lots of stealing in Vermont. Well, Vermont has the highest per capita nonprofits, and they're like third category. Right. Yeah. Lots of lots of little mom and pop family run businesses. Okay. Category and lots of little municipalities which are, you know, thinly controlled. So so I think for that reason and you got this sort of trusting environment. So maybe that's why Vermont became was always at the top of the list.

Caleb: I want. So you mentioned trusting environments, and Greg and I have talked about this on a lot of episodes, especially as it relates to, as you point out, like we did a whole episode on religion and fraud, for example. But we've also talked about small businesses and, you know, the overall kind of takeaway or the big takeaway that we talk about every time is like people just want to trust each other in these kind of small organizations. And that's what leaves them so vulnerable. Like over the course of your career, has that changed at all? It just feels like this is something that our human our human characteristics just won't let us be kind of objective and sober about it. Like if we're doing business with family or if we're doing business with friends, or if we're in a small community and a tight knit community, We don't want to trouble people with internal controls and really elaborate kind of bureaucracy when it's not needed. And that is what leaves people vulnerable and exposed. I mean, has that over the course of your career, have you seen that change at all?

Chris: Not really. Yeah. No, I mean, you're exactly correct. It is We I think it is. And there's also a certain amount of it's it's societal sort of wanting to get along and go along and not ruffle feathers or create a ways, but also sort of, you know, a little bit of laziness, you know, I don't want to yeah, I'm dealing with my brother in law, you know, whatever. He would never steal or write, it's in a church. I mean, look, you know, Madoff abused basically. You know, it was a Jewish community that he was in. And he almost he created this sort of aura that, oh, I'm investing with, you know, Bernie Madoff. And, you know, oh, well, he only takes certain clients and he made it. It was both, you know, getting the Louis Vuitton bag bag. But, you know, at the same time, he really focused in on a community, a lot of Ponzi schemers, you know, And and you you're in Utah, right? Yeah. Yeah. We got Mormon Church and other groups where they focused in a religious order. And there's an immediate trust factor that goes along with that. And as a result, so your guard is down. They're never going to abuse the trust, but they do. So unfortunately, you have this element in in human nature also. So on one hand, you've got we I want to trust I want to believe people that I've come to know and, you know, and things are going to be okay. On the other hand, you have people who are willing to step over the line.

Chris: And under the right circumstances, sometimes it's like, okay, I got caught up in gambling and now I got to steal from my employer to keep that habit going. They're not thinking that rationally, obviously, or it's a drug addiction or it's got a divorce situation. And now I got to pay for the kid's college because my ex is a jerk and he's not paying, blah, blah, blah, you know? So they justify these things to do the bad thing that they wouldn't necessarily do. Yeah. And then what I found, at least in the embezzlement situation, was that over time and that first of all, they see how easy it is, you're sitting in the accounting department or whatever, and you're writing checks to an entity you created. You know, it's only it's it's $972 a month. You know, it adds up and then they start doing something else. But but, but but they come to believe there's a whole psychology here that I think also is yet to really been delved into the psychology of fraudsters and what's really going on there. But but I think they come to believe either, A, if they're disgruntled, you know, that they they earn or that somehow they are deserving of the monies. They didn't get the raise they thought they were supposed to get. And I'm just taking what's really owed to me. And those guys are walking away. They're in their beach house this weekend and I'm pissed. I'm going to steal. I'm going to take this money and I'm going to build my own pool, which they do.

Greg: Or it's or it's almost even like what you were saying. It's like I. I chose to come and work at this little investigation shop instead of working on Wall Street where I could have a home in the Hamptons. So my sacrifice deserves this bonus that I'm giving. I mean, it can be something as stupid as that. That they could. They could.

Chris: Yeah. Well, I did it because it was more fun. Right?

Greg: Right, exactly. Well, I'm not. And I'm not accusing you of embezzlement. Don't get me wrong. That's not what I'm saying here. But. But so along with the trust stuff, here's the other thing, because and I'm and I'm sort of looking just for your permission to continue saying this on our podcast because something. That stuck with me from your podcast. You interviewed a guy I'm pretty sure his name was Steven E Taylor, who was a district attorney in California. And at the very end of your podcast, you were asking him, you're like, Oh, so what can people do to not to not be victims of fraud so much? And he and he says and the guy so intelligent, had so much to say, did not seem to me to have too much of a sense of humor and said very, very matter of factly, It's like you need to make sure everybody in the in the in the accounting department doesn't like each other. And and I really listened to that episode and you started laughing because you thought it was a joke and you just continued going. Absolutely. Make sure he didn't get this hyperbolic. But it's like they got to hate each other. Make sure that you've got, you know, one Republican, one Democrat, one anarchist and an a hippie, and then they're all, you know, that kind of that kind of thing. It's like they all want to throw each other under the bus as soon as they possibly can. So. A do you remember that? B Do you agree with that?

Chris: Yeah, and he's a great guy. I got to know him over the course of that time frame. But yeah, I mean, the one of the basic rules, of course, too, and again, go back. You're never going to get rid of it all. You can only dissuade people and and tamp it down and hopefully catch things when they start happening earlier in the time frame and don't let it go for 20 years. So but the problem becomes when it's it's at the church and you've got one bookkeeper, that's it. There's no other. Right. You've got a you got some trustees or whatever overseeing, but not really, you know, she puts together the numbers and submits it so there's no check and balance. So yeah, in a in a bigger organization, absolutely. You want to have those checks and balances, You want a different people handling different aspects of the cash flow and limits on how much things you know, how much, how big a wire can so you know, how big a check can be cut, etcetera. And having dual or multiple signatories, those those kinds of checks and balances are very important. The other thing that I think is really important is. The at least the appearance of. Of oversight. Actual oversight. Meaning, okay, we're going to be in here. We're going to audit every quarter or whatever, every three years. But then, you know, it's coming. So having these random audits and having it really go and very, you know, without warning.

Chris: And at least having that threat over the over the top. And and actually, you have to in order to have that threat exist. The appearance of oversight, you have to actually do it in so you might have a random audit and whatever purchasing, then you're going to go over here and and some other department sales, whatever. And just so, so that the work comes on down from on high that this organization takes fraud seriously. We we don't you know and you're going to get prosecuted and thrown you know, thrown out on your ass, which is a whole nother thing. It used to be in the old days, companies were loath to. Turn it over to prosecutors because they didn't want to be embarrassed. But think of nonprofit where you're asking for monies from your donors and then all of a sudden you're, you know, somebody stole $3 million over the course of the last 12 years in their in your bookkeeping group. You know what that does to your whole fundraising and the whole reputation? It's devastating. Absolutely. So so but again, very light on the controls. Right. It's a nonprofit. It's almost by definition, you just, you know, and you got board members who are believers in the cause, whatever that might be. Not not moguls in in accounting and finance. Right. Yeah. So, um. So the oversight tends to be light. They tend to be victims. I wrote articles about nonprofit embezzlement cases, and it's just legion. So anyway, go.

Greg: Well, another thing I got to ask you about while I got you, because you because you really put this on my radar and it's missing from other from other sources about fraud, because you you really emphasized regularly the impact of gambling as as a pressure for people to embezzle. And and and so I looked into that. I think I want to say at one point and again, it might have been on your podcast, so I think you were just kind of off the hip going that in your experience and again, please correct me if I'm wrong, but you said something like in your experience, like a third of the people that that you caught embezzling had some kind of gambling history. Does that sound right or am I?

Chris: That sounds a little high. Okay. I can't remember the exact, but. But the answer is yes. I mean, that was one of the factors I. I didn't do it initially. I kept adding these little factors was was gambling. You know, I put a gambling category in the last few years. I was doing this analysis and it was it surprised the hell out of me. But, you know, it's logical that, you know, a fair percentage and I can't remember maybe it was 10 or 12 or whatever. It was a lot. It seemed to me a big percentage. Yeah, a high percentage of people who are embezzling had gambling problems and they get over their skis, right? They get over their skis. They've already mortgaged the house and double mortgage. Et cetera. And then they start stealing. Right. And and this. This I saw as a I saw what I thought was a direct link. There was a there was some cause and effect in in the gambling issue. So you were talking before, Greg, about, you know, whether or not, you know, companies outlaw or not outlaw. You know, I think it would be really difficult to say, you know, no gambling rule at this company. You know, how do you enforce it and how do you catch it and whatnot? It's it's tough. But I think more recently, you know, I mean, it's recognized as a as an addiction.

Chris: You know, you can become addicted to this to gambling and it can really have devastating effects on families and companies that that fall victim to that and and looking for those signs, looking for the warning signs when somebody gets into trouble and trying to help them before it becomes a real problem for them. And you is what I think is important. You know, when you think about that also with people, when you have other traumatic incidents that happen, you want the company should take some have some role in trying to help that employee. Even when you're doing a mass layoff, you know, help help these people rather than having a bunch of disgruntled people that might take you know, they're going to steal your technology, they're going to do something whatever nefarious against the company or they're going to post nasty thing, nasty grams all over the place. You know, do do the right thing here. You're going to some of these people will work for you for a long time. You're going to they're laying off these people or one person you're laying off. Even if they did bad things and you're laying them off for cause you want you don't want them to be fixated on you as the enemy, somebody that's they would come back and do harm. You see this in workplace violence situations, right? So so it's a little counterintuitive because yeah, okay, we're helping this person that just stole from us or whatever, right? Okay, let's work out a restitution plan.

Chris: Let's figure, you know, let's figure it out. And they can't pay you back or whatever, you know, if, you know, it's it's a tough situation. So I was just saying earlier, the point was, in the old days, people didn't report these things to law enforcement nearly as much as they do now. And I tell every client or anytime in this situation, you got to you got to prosecute because a lot of the work we do is vetting executives in key roles, whether it's in mergers and, you know, you're buying a company, you're vet the top five people or you're financing a company, you're going to vet the whole company and the key officers and directors in those circumstances. You know, if I don't if if, if if it's not reflected in the public record or we can't we're not allowed to interview and talk to people, you're not going to find out necessarily if it was something that got swept under the rug. So somebody in finance that steals, they swept under the rug and oh, you know, we're not going to report this. We're not going to prosecute. They go on and do it again, right? Yeah. At the next company. So.

Greg: Absolutely.

Caleb: So I want to ask you about something because you just said. In the old days, a lot of this stuff didn't get reported, didn't become prosecuted. It's kind of in that same spirit of that is how important are whistleblowers and how integral are they to discovering fraud versus, say, early in your career? Has has that changed over time?

Chris: I think it has, yes. And I think it's critical. Whistleblowers are key. And now I mean, we see in the news today. So what could be the most massive political fraud situation going on, if if true. Right. But but and there's also potential abuse of whistleblowers. And then you've got a whole cadre of lawyers who are focused on these qui tam whistleblower statutes that they use to get companies to respond to mostly, I think, by and large, for positive results, positive reason, companies doing something wrong whenever there was a problem with the the gas get on the vehicle and, you know, these issues cropped and everybody needs to be made whole or something bad was going on in the company and now they need to fix it. And there's ultimately, you know, maybe there's a some trustee that gets brought in monitor that gets that's brought in to oversee for the next five years, and they got to pay monies to the victims, etcetera. So yeah, having this the whistleblower statutes and protecting those whistleblowers from retaliation against critical so that they can come forward and again you know always been an advocate. I wrote an article back in the early or the late 80s about hotlines. This is a long time ago. Yeah. That how important they were in the overall sort of HR and employee thing. We want to be able to report anonymously, you know, bad things that are going on because if you don't hear about it, then it just it just continues to fester and get worse. Somebody's abusive in the workplace. Sexual harassment is going on or whatever out in the branch office, stealing's happening, etcetera.

Chris: So those things need to be need to come to the fore as quickly as possible. So it's a company in my generally in the companies best interest to encourage that to come forward and they've most large companies have, you know, have well defined whistleblower process. Hopefully you get it before it becomes a litigated whistleblower case where people are where it really becomes serious. So yeah, Foreign Corrupt Practices Act situations which are being prosecuted a lot more these days than they once were. All of these things are important to bring to the fore. So Caleb, I think it's you're right, it's important that you you allow people to come forward with information. You then you got to run it down. You've got to do an internal investigation and figure out how, you know, is this true? Are there elements to this true? And if they are, you've got to make corrective action and demonstrate those corrective actions and so that the organization as a whole you operate positively upbeat, treat your people right. All constituents, whether not just customers, not just your shareholders, but the employees are a whole constituency that if you're not treating them right and I've seen cases time after again, you know, where you got big high turnover employees you're going to have you just going to have massive problems with people doing stuff that are not in the company's best interests. So treat your treat the employees right and give them some outlets is a critical role in keeping the company clean, as it were. Yeah.

Greg: Yeah. Okay. So we're I want to make sure we got enough time to cover this because I this is this is maybe my the thing I want to ask you more than anything else. And really, this goes back even to the to your to the market reports on embezzlement. What just thinking back through your career, through all the research that you've done on frauds, just in general, you're a fraud aficionado. We like to consider ourselves fraud enthusiasts. What what are some of like the like, what are some of the like maybe 2 or 3 tops of the cases in your mind that were like these were some of the most interesting frauds that were perpetrated that I that are on your radar? What would you do you have anything that to to throw out like juicy ones.

Chris: Well they're the obvious ones. I mean today in the news, you've got Elizabeth Holmes going to jail finally. I think that was an interesting case. And here you had this phenom female executive that everybody. But he was willing to go along with and again, nobody really willing to come forward. I mean, there were a few voices, but nobody really willing to buck the trend and say, hey, there's nothing there's nothing here. Right. And it gets to the point where, you know, you know, it becomes a whatever publicly traded company and all these investors are defrauded in this day and age, Right? No less. Yeah.

Greg: So was that something when you do like the vetting of executives, is that part of like, I don't know if there was much to vet with Elizabeth Holmes, but that's part of what you're talking about is you're trying to make sure that people aren't getting into those positions, that that would be, you know, where there's red flags already that this might end up end poorly.

Chris: Correct. So so the best predictor of the future is the past. But it's not always, you know, even if the past isn't predicting anything, that doesn't mean something can't happen in the future. So if you're seeing somebody if you if we put her under a microscope back in 2000 and whatever, 4 or 5, whenever she you know, she drops out of Stanford and, you know, there were there were little indicators of of somebody who liked to fluff things up, perhaps. But it depends on how deep you're going. So obviously, if there's cases, litigation disputes with prior business partners, et cetera. Those are the things that you want to pull out. Maybe a bankruptcy of a company or there's a dispute with the, you know, your old business partner that would might have direct bearing on how you advise. Certainly. Obviously, criminal stuff. It doesn't come up. You know, if I'm vetting a new director of a publicly traded company. There's not going to be generally there's not going to be a criminal situation in there. Right. Other than traffic, maybe a DUI. Right. Yeah. Yeah, yeah. So it's the other elements of your how how well do you work well and play well with others. You know, the companies that you were involved in in the past, how did they fare? You know, did you you know, were you seen as somebody that was objective and etcetera, all the all those sort of less tangible elements that might show, you know, this is this is a good candidate to sit on our board or this to be the new CFO. You know, they got their licensing, never had a complaint, etcetera. All these things that you want to dig into and try to give the client a better feel for better comfort level as to who they're getting into bed with, whether they're it's a hiring situation or it's an acquiring situation or whatever. So, yes. And with the Elizabeth Holmes there, I think there were things. But she was a youngster, right? I call her. Yeah. Right out of you know, she didn't finish college, so she's, whatever, 20, 21 years old. Yeah.

Greg: She didn't she didn't have time to make up a fake product prior to this.

Chris: Yeah. So. So, you know, are you interviewing people but as time so she starts the company whatever and things go along and there are I think there were some turnover there. So these are the kind of people you want to identify. If you know, down the road you're you're going to acquire this company, let's say, and you want to try to identify these people. Why did you you know, so why did you leave? You know, some people are aren't going to be willing to talk either for legal reasons or they just they don't want to get involved. Others will or they'll talk anonymously. Okay, fine. So you're going to be a source and we're not going to attribute this to anything, but so that I can then advise the client, okay, this is what happened in this circumstance, whatever. So and then I'm going to try to advise the client you know, best from what I'm seeing and hopefully they'll make a decision that's helpful. It's good for them and for everybody. Yeah. So, yeah, so that that's a case where you want to vet people deeply, trust but verify, right? People say stuff all the time. You look at a resume. I wrote another article that's been out there for decades. The top ten resume Lies.

Greg: Oh, nice.

Chris: Which keeps bubbling back. You know, people lie about their their education all the time. They lie about their, you know, their credentials, their certifications and all this stuff. You know, they leave. They'll fill in a gap, you know, where they were sitting at home in the basement, you know, So they expand the dates of employment, you know, all kinds of stuff that you want to try to you know, we try to suss that out when we're doing digging deep into an executive, Right. And bringing those issues forward. So why'd you leave? Well, they actually spent two years in jail that during that time I had actually had a case like that where the where a senior executive company was being acquired, you know, very successful company. But back in his college days, it was dealing large sums of drugs and went to jail for a short period of time. Okay. But that came out. Yeah. And they lied about it.

Greg: Right? Hobbies and interests. When people are like, I love reading Dostoyevsky bullshit. Nobody likes reading Dostoyevsky, that kind of stuff too well.

Chris: So we're not, you know, we're not psychologists there.

Greg: Right. Okay.

Chris: There are firms that do these questionnaires for prospective employees and they try to get a profile and. Right. Right.

Greg: Had to take one of those ones. Yeah, yeah, yeah. So they felt very I was very nervous. I didn't know what they were going to find. Yeah, you're crazy.

Chris: Was answering this one. I think they should.

Greg: Right.

Chris: They think they should do it. Or am I answering you? I really feel right. Yeah. So am I going to.

Greg: Am I going to not get this job and somebody's going to diagnose me as bipolar? What's happening here? I don't know. Don't understand the purpose of this. That's right. So so can you dig back to the to the market report days and think of an embezzlement case that was like a real like one that you went, Wow, that was a that was juicy. That was a good one.

Chris: Well, actually. So there's a gazillion of those. Yeah. You know, most interesting. And Embezzlements is usually solo solo perpetrator. It's not a conspiracy of people getting together and that that does happen where somebody in purchasing is got somebody on the outside, they're cutting checks and they're sharing them proceeds. But more often than not, it's a single person within the organization that's taking advantage of their position and. So the conspiracy cases just aren't as frequent. I was thinking of actually a case I got involved in back in my crawl days. I was down in South Florida. It was a rental car company that was being acquired by a Japanese large Japanese company. And and so this rental car company is not not a big name or anything, but it was down regional in Florida. They it was a family run business and. They basically treated it as their own little personal piggy bank and they defrauded. They did a lot. A number of people ended up going to jail. But this is a case we were doing the there was a post facto situation. Japanese company had acquired them. And now things started coming out and the numbers weren't right and this and that. And so they like, what the hell is going on down there. So we we got brought in to do this, essentially an internal investigation. And it was just one thing after the next that these guys were doing. I mean, they inflated the they would inflate the the, you know, the repairs on vehicles or the gas price of the gasoline that for people that bring it in.

Chris: Oh, it's instead of, you know, $7.25, it's $9.32. And they would keep the you know, one thing after that, they were they cooked the books. And again, this this goes back to that earlier situation where they had six employees as legion throughout South Florida. And I interviewed tons of them. And everyone would say every time I go to do an interview, they'll, yeah, want to talk? I hate that company. Yeah, I would talk they would bring up some other issue that they that was going on harassment in the work violence threats discriminating in employment situation you name it they were doing it and the biggest thing being that they had defrauded the the acquirer on you know how much reserves they had. So so we had the the forensic accountants were involved. And I got tipped off on this by somebody who was in the finance department who an ex-employee. So we knew to look for it. And sure enough, they were they had inflated the reserves so that it looked like the value of the company was more than it actually was. Yeah, yeah, yeah. So people went to jail. These, these this family, this group of family folks, you know, a bunch of them went to jail and there was a lot of crazy other stuff that happened there. Uh, yeah.

Greg: Florida, am I right?

Chris: Well, Florida, man. Friday, right? Yeah. Yeah, this is back in the day, so. But this case was so fast, it just keep morphing. It kept growing every. Yeah, I probably did 100 interviews of different former employees down in South Florida. And it just was I was just like, you know, come back in. I'd come in at the end of the day. We got the forensic accountants in this corner and the other, you know, investigators. What do you got, Chris? You're not going to believe this, but they said so-and-so was doing this in the workplace, you know, brandished a gun and did you know, Jeez, I mean, just.

Greg: Yeah, it's amazing. Yeah, That.

Chris: Was that was one of the funnest, weirdest cases. Yeah.

Greg: Ever where your wife is like, please tell me about your day at work. That kind of that kind of stuff.

Chris: Back in was in California. We were I was based in California at the time I went down there. So I'm calling. I'm like, You're not.

Greg: Right. Right.

Chris: There's a lot there were a lot of cases, like a lot of interesting things that have happened to me over these years. You know, death threats, you know, contracts.

Greg: People threatened your life.

Chris: Oh, yeah. Yeah.

Greg: Really?

Chris: Like public corruption cases. Internet cases where. Gotcha. American, whatever.

Greg: Yeah. The Yakuza crime syndicate was like, Hey, you need to back off of a of our of our car dealership in Florida or else there's gonna be.

Chris: It was a mob case in New Jersey.

Greg: Yeah.

Chris: New Jersey casino business case. Yeah. Oof!

Caleb: So again, Chris.

Greg: It sounds pretty sexy. I'm just saying, this all sounds pretty silly.

Chris: I mean, the. The facts are sexy. Yes. Yeah. Yeah. You know, the acts are digging in and can sometimes be a little monotonous.

Caleb: All right, You're in the basement. You're in the basement of a dusty courthouse looking at.

Greg: Right.

Chris: That was the old days.

Caleb: Yeah, right. Of course. Of course. Yeah. Yeah. So looking back, I'm just curious. I'm going to ask you to go deep here a little bit, but do you think like was there anything about your worldview before you started this work that suited you well to do it and has over the course of your career? Has your worldview changed because of the work? So those are a couple of hard questions.

Chris: That's a good. Those are good questions, Caleb. I would say, you know, I think, you know, I was always kind of an analytical person just for my math science head, but I also think was an inquisitive person and always, you know, you know, willing to look out outward. And that was a I think that's a critical factor. And being an investigator writ large, you know, a large definition investigator, you really have to be somebody that's you know, you get a hold of the bone and you keep you don't let go and you keep working it. And so so that sort of inquisitiveness is is, I think, a prerequisite and willing to dig deep into a given case. And even when things look normal, it's got to be because your tummy tells you something's wrong here. They're right. Usually when your tummy tells you something, it's you got to listen to that tummy. And this is for everybody. Not everybody has that tummy feeling sometimes, Uh, and I say, listen to it because it's you're often correct in your field. This person just rubbed me the wrong way. You know, something weird here, So you got to you got to dig into cases. And so oftentimes those are the linchpins that turn. You know, you find something that really turns the case. And over time, so over time, did it turn, turn me? Have I gotten more jaded and humanity and, you know, people steal all the time? A little. Yeah, I think a little bit, Yeah. You know, you see, because I was shocked. You know, you look at the Ponzi schemes, these how brazen these people were, by the way, Ponzi schemers, 90% male. Yep. Right. Whereas the embezzlers two thirds were female anyway, so.

Greg: Well, and I got to say.

Chris: Like, okay, you know, I've seen this before. Yeah, this happens. Um, a little shocking how often it happens, I guess.

Greg: Yeah, I feel like. I mean, again, so I it had been years since I had listened to your podcast, but I really listened to that Stephanie Taylor episode before it to prep for this podcast. And, and at the beginning of the podcast, I can't remember exactly what you said, but it was something like, Just remember our motto here on fraud talk at all times, everywhere, every business, somebody is trying to screw you over something like that and go, And now this. Now this guy is saying he's not jaded bullshit. This guy is. He doesn't realize how jaded he is. All right.

Chris: Okay. All right. So, yeah, and at any given time in any organization, there's always somebody who's up to no good.

Greg: That's it. That's the one. I was so glad.

Caleb: I heard that, too.

Greg: Yeah.

Chris: Yeah. So.

Caleb: Yeah, I guess my only my last, my last question and I don't know. Sorry. If you kind of said something, if you already kind of touched on this, but like, is there anything about your work that still surprises you? Hm.

Chris: Well, it sort of seems cyclical, right? Meaning the same characters keep popping up even though they're different names, right? And so like, I'll, I'll, I'll be examined. We'll examine an executive and he'll have certain characteristics and say, I've seen this person before. Not really, but I can then tell, I can tell the client, did they do this and that and ba ba ba ba. Yes, yes, yes, yes. Really? Yes. I've seen this before. So it's sort of this thing that, you know, that just keeps coming around. And you can you can you can predict based on certain characteristics, you know, what people are like and you know their behaviors based on on characteristics. So yeah, that's and I guess I guess I shouldn't be surprised by it, But, but it's an interesting and fun thing that and I think a value that I bring to the clients is, yeah, I can tell that, you know, this, this industry in real estate, we got to be careful this type of person, whatever. Right? You know, I've seen this before. Yeah. So yeah it's now it's 40 years this summer.

Greg: Yeah. Nice. Wow.

Chris: Hard to believe. I'm not quitting. I'm not quitting either, man. Good.

Greg: Nice. So what is the Planck constant? That's my. That's my last question.

Chris: Planck's constant. Yeah. Forget.

Greg: Okay good. I Yeah. And I also looked that up and it's actually incomprehensible just what Google sent back. So, uh, awesome. Um, like I said.

Chris: Have for now, right?

Greg: That's exactly. Yeah. We don't need physics.

Chris: White paper is on. Oh, I fraud. What's what what of the risks to what are the fraud risks from AI from like ChatGPT or whatever. Yeah. Awesome.

Greg: Well and that that leads me to to just this how like, how can people like if people are interested in your past white papers and your future white papers, what how can people follow you and how what's the best way for people if they have needs of a fraud investigator to to get a hold of your company? So I'd say.

Chris: Go to Veritas, Veritas, App.com, that's our firm. And I still have a Twitter handle, a fraud talk is my Twitter handle, which I put out stuff on embezzlement still to this day. Nice big cases on my fraud. Generally speaking, I do a little commentary on other things, but mostly the fraud stuff. So Veritas App.com is where I can be reached.

Greg: Excellent. And then and is Twitter the best place for people to go to to find white papers and other things you published.

Chris: Or LinkedIn actually have them on my LinkedIn profile. Yeah. So you can look up Chris Marquette Veritas and LinkedIn and Perfect. I've got a whole bunch of white papers that have been published on my LinkedIn profile. Yeah, Thank.

Greg: You. Awesome. Okay, Very good, Chris. Thank you.

Caleb: Thanks for. Thanks, Chris.

Chris: Thanks for having me on. It was a lot of fun.

Greg: Yeah. For us to. All right. That's it for this episode. Remember, if you don't hate everyone else in your department, then you're not really committed to preventing fraud. And also.

Caleb: Remember earning three degrees in physics, economics and philosophy is great preparation for a career, either as a fraud investigator or as a cashier at Barnes and Noble.

Greg: If you want to drop us a line, please do. We'd love to hear from you. Send us an email at Omi Fraud at Earmark Cpcomm. And Caleb, if people want to get a hold of you, where can they find you? Out there in the internet.

Caleb: On Twitter at C Newquist and LinkedIn. Backslash, backslash, backslash. Caleb Newquist not three Backslashes. I was just practicing saying the word, right.

Greg: It's a tough one.

Caleb: It is.

Greg: Yeah.

Caleb: Yeah. Greg, you still own the internet or did you give it up?

Greg: Gosh, jeez. You know, social media is just falling off from me. So. So, I mean, feel free Twitter at Greg Kite LinkedIn. I'm backslash. Greg Kite. If you just search me, I'm Greg Kite CPA. But also if you know, just send me an email Greg at Greg Wkyt.com that'll get to my inbox. I'll see that pretty dang quick. So old school, Greg Old school. Let's cut out the middle, man. Just get just come into my inbox.

Caleb: Oh, my frat is written by Greg Kite and myself. Our producer is Zach Frank. If you like the show, leave us a review. Share it with a friend. That's how people find the podcast. All right.

Greg: Yeah.

Caleb: Leave us a review. Do it. Write a review. Rate the show. And subscribe wherever you get podcasts. It's everywhere. If you listen to podcasts, wherever you listen to them, get the podcast at that place. It's there. It's there.

Greg: Do you do you listen to Marc Maron? Same place. Same place.

Caleb: We're there. Same place. And for the accountants, earmark, CPA, super duper.

Greg: It's so good. It's so good. So easy. Yeah, I'm. I'm racking them up this year.

Caleb: Yeah, You got 100. You got 100 hours of.

Greg: Nope. No, but I'm. I'm. If I continue this pace by the end of my two year reporting period, I think I will have, uh, what would it be? It'd be 120. Between 180 and 160 hours of CPE. Damn.

Caleb: Yeah. Well done.

Greg: Yep. Not bad.

Caleb: Join us next time for more avarice, swindlers and scams from stories that will make you say, Oh my.

Greg: Oh my fraud.