Tag Archives: testifying as an expert witness

Another Sold Out Event!

Our Chapter wants to extend its formal thanks to our partners, national ACFE and the Virginia State Police, but especially to our event attendees who made this year’s May training event a resounding, sold-out success! As the rave attendee evaluations revealed, How to Testify, was one of our best received sessions ever!

Our presenter, Hugo Holland, CFE, JDD, brought his vast courtroom experience as a prosecutor and nationally recognized litigator to bear in communicating every aspect of a complex practice area in a down-to-earth comprehensible manner with no sacrifice of vital detail.

As Hugo made clear, there are two basic kinds of testimony. The first is lay testimony (sometimes called factual testimony), where witnesses testify about what they have experienced firsthand and their factual observations. The second kind is expert testimony, where a person who, by reason of education, training, skill, or experience, is qualified to render an expert opinion regarding certain issues at hand. Typically, a fraud examiner who worked on a case will be capable of providing both lay, and potentially, expert testimony based on observations made during the investigation.

Certified Fraud Examiners (CFEs) and forensic accountants serve two primary roles as experts in forensic matters: expert consultants and expert witnesses. The fraud investigator must always be prepared to serve as an expert witness in court and learning how best to do so is critical for the training of the rounded professional. The expert consultant is an independent fraud examiner/accounting contractor who provides expert opinions in a wide array of cases, such as those relating to fraud investigations, divorces, mergers and acquisitions, employee-employer disputes, insurance disputes, and so on. In a fraud case, the CFE could identify and document all fraudulent transactions. This in turn could lead to reaching a plea bargain with a guilty employee. Therefore, the CFE helps solve a problem before any expert trial testimony is needed.

In addition, CFEs and forensic accountants are called upon to provide expert consultation services involving testimony in such areas as:

• Fraud investigations and management.
• Business valuation calculations.
• Economic damage calculations.
• Lost profits and wages.
• Disability income analysis.
• Economic analyses and valuations in matrimonial (prenuptial, postnuptial, and divorce) accounting.
• Adequacy of life insurance.
• Analysis of contract proposals.

Hugo emphasized that the most important considerations at trial for experts are credibility, demeanor, understandability, and accuracy. Credibility is not something that can be controlled in and of itself but is a result of the factors that are under the control of the expert witness. Hugo expounded in greater detail on these and other general guidelines:

• The answering of questions in plain language. Judges, juries, arbitrators, and others tend to believe expert testimony more when they truly understand what the expert says. It is best, therefore, to reduce complicated, technical arguments to plain language.

• The answering of only what is asked. Expert witnesses should not volunteer more than what is asked even when not volunteering more testimony could suggest that the expert’s testimony is giving the wrong impression. It is up to employing counsel to clear up any misimpressions through follow-up questions. That is, it is up to counsel to “rehabilitate” his or her expert witness who appears to have been impeached. That said, however, experienced expert witnesses sometimes volunteer information to protect their testimony from being twisted. Experience is needed to know when and how to do this and Hugo supplied it. Our presenter emphasized repeatedly that the best thing for an inexperienced expert witness to do is to work with experienced employing attorneys who know how to rehabilitate witnesses.

• The maintenance of a steady demeanor. It is important for the expert witness to maintain a steady, smooth demeanor regardless of which questions are asked and which side’s attorney asks them. It is especially undesirable to do something such as assume defensive body language when being questioned by the opposing side.

• Attendees learned how to be friendly and smile at appropriate times. Judges and juries are just people, and it helps to appear as relaxed but professional.

• To remain silent when there is an objection by one of the attorneys. Continue speaking only when instructed to do so.

• Attendees learned how best to state the facts. The expert witness should tell the truth plainly and simply. Attendees learned how the expert’s testimony should not become more complicated or strained when it appears to be harmful to the client the expert represents. The expert witness should not try to answer questions to which s/he does not know the answer but should simply say that s/he does not know or does not have enough information to form an opinion.

• Attendees learned to control the pace. The opposing attorney can sometimes attempt to crush a witness by rapid fire questions. The expert witness should avoid firing back answers at the same pace. This can avoid giving the appearance that s/he is arguing with the examining attorney. It also helps prevent her from being rushed and overwhelmed to the point of making mistakes.

• Most importantly, Hugo imparted invaluable techniques to survive cross examination. Attendees learned how to testify effectively on both direct and cross examination, basic courtroom procedures, and tricks for general survival on the witness stand. Attendees were told how to improve their techniques on how to offer testimony about damages and restitution while learning to know when to draw the line between aggressive testimony and improper advocacy. All our attendees walked away with more effective report writing and presentation skills as well as benefiting from a solid exploration of the different types of evidence and related legal remedies.

Again, thanks to all, attendees and partners, for making our May 2019 training event such a resounding success!

RVACFES May 2017 Event Sold-Out!

On May 17th and 18th the Central Virginia ACFE Chapter and our partners, the Virginia State Police and the Association of Certified Fraud Examiners (ACFE) were joined by an over-flow crowd of audit and assurance professionals for the ACFE’s training course ‘Conducting Internal Investigations’. The sold-out May 2017 seminar was the ninth that our Chapter has hosted over the years with the Virginia State Police utilizing a distinguished list of certified ACFE instructor-practitioners.

Our internationally acclaimed instructor for the May seminar was Gerard Zack, CFE, CPA, CIA, CCEP. Gerry has provided fraud prevention and investigation, forensic accounting, and internal and external audit services for more than 30 years. He has worked with commercial businesses, not-for-profit organizations, and government agencies throughout North America and Europe. Prior to starting his own practice in 1990, Gerry was an audit manager with a large international public accounting firm. As founder and president of Zack, P.C., he has led numerous fraud investigations and designed customized fraud risk management programs for a diverse client base. Through Zack, P.C., he also provides outsourced internal audit services, compliance and ethics programs, enterprise risk management, fraud risk assessments, and internal control consulting services.

Gerry is a Certified Fraud Examiner (CFE) and Certified Public Accountant (CPA) and has focused most of his career on audit and fraud-related services. Gerry serves on the faculty of the Association of Certified Fraud Examiners (ACFE) and is the 2009 recipient of the ACFE’s James Baker Speaker of the Year Award. He is also a Certified Internal Auditor (CIA) and a Certified Compliance and Ethics Professional (CCEP).

Gerry is the author of Financial Statement Fraud: Strategies for Detection and Investigation (published 2013 by John Wiley & Sons), Fair Value Accounting Fraud: New Global Risks and Detection Techniques (2009 by John Wiley & Sons), and Fraud and Abuse in Nonprofit Organizations: A Guide to Prevention and Detection (2003 by John Wiley & Sons). He is also the author of numerous articles on fraud and teaches seminars on fraud prevention and detection for businesses, government agencies, and nonprofit organizations. He has provided customized internal staff training on specialized auditing issues, including fraud detection in audits, for more than 50 CPA firms.

Gerry is also the founder of the Nonprofit Resource Center, through which he provides antifraud training and consulting and online financial management tools specifically geared toward the unique internal control and financial management needs of nonprofit organizations. Gerry earned his M.B.A at Loyola University in Maryland and his B.S.B.A at Shippensburg University of Pennsylvania.

To some degree, organizations of every size, in every industry, and in every city, experience internal fraud. No entity is immune. Furthermore, any member of an organization can carry out fraud, whether it is committed by the newest customer service employee or by an experienced and highly respected member of upper management. The fundamental reason for this is that fraud is a human problem, not an accounting problem. As long as organizations are employing individuals to perform business functions, the risk of fraud exists.

While some organizations aggressively adopt strong zero tolerance anti-fraud policies, others simply view fraud as a cost of doing business. Despite varying views on the prevalence of, or susceptibility to, fraud within a given organization, all must be prepared to conduct a thorough internal investigation once fraud is suspected. Our ‘Conducting Internal Investigations’ event was structured around the process of investigating any suspected fraud from inception to final disposition and beyond.

What constitutes an act that warrants an examination can vary from one organization to another and from jurisdiction to jurisdiction. It is often resolved based on a definition of fraud adopted by an employer or by a government agency. There are numerous definitions of fraud, but a popular example comes from the joint ACFE-COSO publication, Fraud Risk Management Guide:

Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain.

However, many law enforcement agencies have developed their own definitions, which might be more appropriate for organizations operating in their jurisdictions. Consequently, fraud examiners should determine the appropriate legal definition in the jurisdiction in which the suspected offense was committed.

Fraud examination is a methodology for resolving fraud allegations from inception to disposition. More specifically, fraud examination involves:

–Assisting in the detection and prevention of fraud;
–Initiating the internal investigation;
–Obtaining evidence and taking statements;
–Writing reports;
–Testifying to findings.

A well run internal investigation can enhance a company’s overall well-being and can help detect the source of lost funds, identify responsible parties and recover losses. It can also provide a defense to legal charges by terminated or disgruntled employees. But perhaps, most importantly, an internal investigation can signal to every company employee that the company will not tolerate fraud.

Our two-day seminar agenda included Gerry’s in depth look at the following topics:

–Assessment of the risk of fraud within an organization and responding when it is identified;
–Detection and investigation of internal frauds with the use of data analytics;
–The collection of documents and electronic evidence needed during an investigation;
–The performance of effective information gathering and admission seeking interviews;
–The wide variety of legal and regulatory concerns related to internal investigations.

Gerry did his usual tremendous job in preparing the professionals in attendance to deal with every step in an internal fraud investigation, from receiving the initial allegation to testifying as a witness. The participants learned to lead an internal investigation with accuracy and confidence by gaining knowledge about topics such as the relevant legal aspects impacting internal investigations, the use of computers and analytics during the investigation, collecting and analyzing internal and external information, and interviewing witnesses and the writing of effective reports.

Not for Sale

expert-witness_2by Rumbi Petrozzello
2016 Vice President – Central Virginia ACFE Chapter

As soon as John Turturro flashed onto the screen, in an ad for the HBO limited series “The Night Of”, I knew that we would be watching the show, even if it turned out to be an eight hour ad for dish detergent. My husband is a huge John Turturro fan, and misses nothing in which the actor appears. Fortunately, “The Night Of” turned out to be a very engaging crime procedural that had us hooked from the first episode.  The show was great in that it got us thinking about the criminal justice system. They even had a CPA who was not a stereotype – where you start feeling sleepy just at the sight of him – and he even came with a few surprises too. What really caught my attention on “The Night Of”, however, was not the portrayal of the CPA but of the expert witnesses.

During the investigation, the prosecutor deals with two forensic experts she expects to put on the stand during the trial. In both cases, she speaks with them to find out if the evidence that they have analyzed will help her convict the accused, Nazir Khan, of murder. In one case, she speaks with the medical examiner about how the suspect injured his hand. She then not only suggests a scenario (that works in her favor) which is different from his analysis but also coaches him until he sounds convincing. She also consults an expert about the possible effects of certain drugs and, again, pushes for an opinion that will help her case. In both instances, the experts seem to have no problem changing their narratives to suit the prosecutor, their client.

I was both horrified and disappointed by the ease with which this happened. When I scoured various recaps of the episodes, the critics either skipped over those moments on the show or wrote about them as though they were just par for the course when dealing with expert witnesses. Even when I read articles about the show that consulted and interviewed legal experts, the conversation was centered mainly around the lawyers’ behavior in the court room and on life in prison. Not a single legal expert (all lawyers in the pieces that I read) discussed what actually happens in their reality with expert witnesses.

It’s sad that the defense didn’t appear to make any great attempt at challenging the prosecution experts. They did put forth their own witness who, when testifying, did spend time putting forth information that seemed based on science, and not feelings. I was actually surprised that the defense, with its very limited budget, was able to hire their own expert, who came with a very impressive resume that was highlighted when he took the stand. The casual attitude that critics and reviewers have taken, when writing about these experts, hints at how many view the expert witness as a hired gun or shill, out to say whatever their client wants, not as an objective professional, advocating for the truth and, as such, a potentially critical component of the trail process.

When attending continuing education session on being an expert witness, the question invariably comes up – how do I make sure that I am taken seriously as a neutral witness and not simply as someone giving an opinion for pay? There are several steps that you, and the lawyer that you are working with, can take to clarify your position as a credible expert.

  • Money, money, money! It’ss very important to make it clear that you are being paid for your time and not your testimony. Your fee should be based on the time that you spend on the case and should never be a fee contingent on the outcome of the case. Let the judge and jury know that you will be paid, regardless on how the case turns out.
  • In order to maintain credibility and also avoid a possible Daubert motion (raised before or during trial, to exclude the presentation of unqualified evidence to the jury), your work should be based solely on the “reliable application” of “reliable principles and methods”.
  • Of course, you should be able to take the judge and jury through the steps of your investigation, from start to finish. They should be able to see and understand clearly how you came to the conclusions that you have reached.
  • Are you qualified to give the opinions you are giving? Share your qualifications and experience, so that people know that you have received all the relevant training required to support your investigation as well as the conclusions and the facts on which you are opining. Professional credentials, such as the CFE, CFF and CPA, are all viewed with respect, the possession of any of which goes a long way to support your being viewed as a qualified expert.
  • Know your work. When you’re on the stand, be sure that you know the relevant subject matter and all the issues you are testifying about backwards and forwards so that you won’t ever be caught slack-jawed, unable to answer some important question about your work.

It’s a lamentable fact that the current general view of the expert witness, as portrayed on television and in the movies, is that of someone who will say whatever the client pays them to say and that the experts who base their work on facts are viewed as the rare heroes. Taking the steps to establish ourselves as credible and objective will go a long way to building a positive view of all expert witnesses. That and, perhaps, getting a few friends in the film business!

Make it Clear

drowning_paper“We are again honored to have another guest post from our friend and Richmond Chapter 2015 Vice-President, Rumbi Bwerinofa, CFE/CPA/CFF. Rumbi is a Director of the Queens/Brooklyn Chapter of the New York State Society of CPAs and a member of the NYSSCPA Litigation Services Committee. She is the editor of TheFStudent.com, where she discusses financial forensic issues.

Our Chapter members and other professional readers of this blog are encouraged to submit blog posts for publication here … in addition to publication credit, you establish yourself as an expert in the field of fraud examination and help other practitioners by sharing your valuable expertise!” – Charles Lawver-2015 RVACFES Chapter

Fourteen months after being indicted for criminal fraud in the 2012 collapse of the New York law firm Dewey & LeBoeuf, former firm chair Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders all went on trial before Acting Manhattan Supreme Court Justice Robert Stolz.  The trio allegedly falsified audits and records to make the firm appear financially healthy from 2008 to 2011.  In the process, they lied to lenders and investors, stealing nearly $200 million from insurers and banks.   According to prosecutors, rather than tell the truth about the financial realities that faced the firm, the evidence demonstrated that the three defendants used fraud and deceit to intentionally falsify the true nature of Dewey & LeBoeuf’s financial position.  The trio met at Del Frisco’s steakhouse where they hatched a plan to cook their books and make it look like the firm was profitable when it was actually teetering on insolvency.  Despite the dire situation, the executives continued to richly compensate themselves with packages of more than $2 million a year until the firm’s 2012 bankruptcy.  But Davis’ defense lawyer insisted from the start that his client did nothing wrong. He blamed the woes of the firm, which once employed 3,000 lawyers, on the financial meltdown, and greedy partners who bailed after learning they wouldn’t get the extravagant bonuses they had in the past.

Dewey & LeBoeuf was formed in 2007 through the merger of the prestigious firm of Dewey Ballantine — founded by one-time New York Gov. Thomas E. Dewey — and LeBoeuf, Lamb, Greene & MacRae.

White-collar criminal experts at the ACFE say this case may be among the first to accuse law firm executives of accounting-related misconduct targeted primarily at lenders, misconduct, which in this case, directly contributed to the firm’s own demise.  While much of the testimony in the trial was less than riveting, the proceedings were closely watched in the legal community because it’s one of the rare times the top executives of a major law firm have been charged criminally with grand larceny and with a scheme to defraud. Over the course of the trial, several former Dewey partners, many of them well known within the legal profession, were called by the prosecution as witnesses.  In all, seven lower-level employees at Dewey pleaded guilty to lesser charges in hopes of receiving little or no jail time.

In reading about this complex, criminal fraud trial, I’ve been struck by what a long and complex ordeal it was for all those involved, but especially for the jurors who were expected to render judgment. Dewey LeBoeuf filed for bankruptcy in 2012, accused of creating falsified financial records in order to obtain financing from lenders and investors. There were more than 151 charges levelled against the three former executives of the law firm; after a trial that lasted four months, the jury deliberated for almost another month before finally acquitting the three defendants on dozens of the original charges.  A mistrial was declared on 93 of the remaining counts. Several of the defense attorneys said Manhattan District Attorney Cyrus Vance would likely retry the three Dewey & LeBoeuf executives; they and some jurors strongly suggested that Vance pare down the indictment, present fewer witnesses and, most importantly, call in some accounting experts to decrease the level of juror confusion regarding the multitude of complex accounting issues.

The extensive trail publicity brought to mind the overwhelming importance to the prosecution of the type of effective communication, outlined in a recent InnerAuditor post.  During the months-long trial, many witnesses were called to testify and the jury did received a lot of data. Several members of the firm’s finance department testified for the prosecution and detailed ways in which they manipulated financial records in order to make Dewey & LeBoeuf appear more profitable than it actually was. Jurors were asked to sit patiently through a long trial during which reams of complex financial information were presented to them non-stop. Opening statements were long affairs where lawyers for both sides spent hours trying to explain complex concepts like disbursement write-offs. At the end of it all, jurors reported that they wished they had received less data and more useful information on the accounting and financial issues themselves; information that  they could have used to more confidently come to a conclusion on the facts. For all its crowd of witnesses, the prosecution did not choose to include even one accounting expert. No one was on the stand to specifically frame all the allegations and accusations in a way that the jury could clearly understand. One juror stated that, as he had minored in accounting, he had tried to explain some basic accounting concepts to his fellow jurors, so they could, at least,  try to get a better handle of what exactly had happened at Dewey LeBoeuf and why it might be criminal.

The inconclusive outcome of this trial underscores the importance of having forensic accountants and fraud examiners prepare our reports and courtroom presentations in a way really useful to their intended users, whether those user be corporate managers or juries. I’m sure the witnesses were competent and sounded knowledgeable on the stand but, how effective were they if their testimony served only to fry the brains of the jury?  We don’t want any jury to be so bogged down by numbers and complicated, unfamiliar accounting terms that it misses what the real story is all about.

So, next time, if there is a next time, the prosecutor assigned this case should seriously consider engaging the services of a financial accounting/forensic accounting expert. Why?  Because I think the mistrial sufficiently illustrates the importance to the prosecution, and to the defense, of at least one witness who can explain complicated concepts and financial reporting requirements in a sufficiently straightforward manner to be understood by the layman citizens who make up our juries. Clearly it’s not just the quantity of the proof, it’s the quality.