Famous Forensic Accounting Cases
On its face, the field of accounting may seem anything but glamorous. Compared to the famous fictional sleuthing of forensic specialists like Sherlock Holmes and "CSI"'s Horatio Cane, the bespectacled accountant seems drab and boring. But as high profile cases of white collar crime, bank fraud, terrorist funding and computer scams become more publicized, the intrigue and aura of the forensic accountant may find a place among the big-name crime investigators, prompting their own set of novels and television series.
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Al Capone
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Shooting his way through the mean streets of Chicago, Al Capone was able to avoid prosecution by some of the best detectives and FBI agents of the day. It was the accountants who eventually brought down this famous gangster in 1931 with a solid case of tax evasion. IRS agents were able to track the earnings Capone made from all his illicit activities and nail him when he didn't report them on his tax return.
O.J. Simpson
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Following the innocent verdict at the O.J. Simpson criminal trial, prosecutors in the civil case against Simpson hired a forensic accountant to weed out his actual net worth. At the time, Simpson was pleading poverty and refused to cooperate. The accountants found millions stashed away by Simpson and won a $33 million settlement for the plaintiffs.
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Divorce
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Attorneys in divorce cases are making good use of forensic accountants to get all they can for their clients. Richard Friedman, a New York forensic accountant, is developing a real following as he puts his skills to work for clients in divorce proceedings. Friedman can take apart a family's financials and find hidden assets that a spouse thought was well protected. In one case, Friedman uncovered a $2 million funds transfer made by a husband to his girlfriend just by reading and analyzing the paperwork.
Stock Traders
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Ivan Boesky was brought down by forensically trained investigators at the Securities and Exchange Commission who found a trail of insider trades that brought the securities trader a prison term and $100 million in fines. In turn, Boesky turned on his pal Michael Milkin in 1990. After forensic accountants presented him with the evidence, Milkin pleaded guilty to securities fraud and received a 10 year prison sentence and $1 billion in fines.
Robert Maxwell
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When European publishing giant Robert Maxwell died in 1991, his entire company fell like a house of cards because of the financial games that Maxwell was able to play with bank loans and investors' funding. Forensic accountants spent 14 years unraveling the more than $1 billion that Maxwell embezzled from clients and shareholders.
Corporate Crimes
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Following the major scandals of Enron, Tyco and WorldCom where chief executives were found with their hands in the pots of investors' funds, new laws were enacted to provide more government oversight of accounting practices. The Sarbanes-Oxley legislation paved the way for financial criminals to receive much higher penalties for their crimes. It created reporting procedures for public companies that forensic accountants have long found to be missing in big business.
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- Photo Credit Darren Shaw
