Fraud Interview
Introduction
Bernard Ebbers was a convicted fraudster, the cofounder and CEO of WorldCom. The company conceded to accounting misrepresentation of around four billion US dollars and filed for bankruptcy in July 2002 (Cernusca, 2007). The figure increased to eleven billion resulting in a series of investigations and litigations. Fraud examiners need excellent interviewing skills to obtain concessions and disclosures, mainly when dealing with difficult situations such as a defensive suspect such as Bernard Ebbers. He was on several occasions observed to pass the blame on to the subordinates. This paper will outline how I would prepare for the fraud interview with Bernard Ebbers and how I would begin.
Preparation for the Fraud Interview
The first phase in preparing for the interview is to make a list of objectives (Vinluan, 2015). Setting targets helps you shape your investigative interviews and puts things into perspective. These objectives may include collecting information about the facts, such as the duration of the fraud perpetrated, parties implicated, and their respective role in the company. The interview’s goals include establishing the allegation’s validity, adhering to legal requirements, and ensuring as much confidentiality as possible. Other objectives include protecting the reputation of Bernard Ebbers and WorldCom.
Fraud Interview. The first step in risk assessment is to identify the company’s primary concern. The company’s main issues are often related to its compliance program’s circumstances and elements (Albrecht et al., 2015). To keep the more thorough assessments in line, one must be aware of the company’s overall compliance concerns. Before the interview, I would obtain all the necessary information I know about Bernard Ebbers and his involvement in WorldCom’s day-to-day management as part of my homework in preparing for the interview. It would involve taking time to find out what happened, the uncovered facts about the fraud, privacy laws, and WorldCom’s concerns. For instance, I realized that WorldCom, a globally successful telecommunications corporation, tried to falsify approximately four billion US dollars in revenues on its earnings report in 2001 (Kennon, 2020). It accomplished this by tampering with its financial records, which affected its comprehensive income statement, statement of financial position, Form 10-K filing, and annual report.
Additionally, I would look into what the board of directors and the managers think of Bernard Ebbers. I realized that the company’s deceitful accounting results from the executives’ collaborated manipulations from my investigations. In summary, The CFO of WorldCom, Scott Sullivan, defrauded the company by spreading its operational expenses using a form of capital expense account called property accounts (Cernusca, 2007). By treating capital expenditures under the accrual accounting method, it supported the company to report the expenses in minor increments over time rather than disclosing them all at once to shareholders. According to Kennon (2020), WorldCom overstated earnings by three billion US dollars in 2001, reporting one and half billion US dollars profit rather than a loss. Various interviewing techniques are adopted for multiple tactics such as applying pressure legally, qualifying evidence, taking the notes without making the accused tense, and securing a written and undersigned admission (Albrecht et al., 2015). As observed in various fraud cases, evidence alone is not always conclusive for taking action against a crime. On several occasions, a confession is the only way to solve a financial crime.
Fraud Interview. Adopting the fraud triangle is a good technique for understanding the reasons behind an individual’s decision to commit fraud (Homer, 2019). It consists of rationalization, incentive, and opportunity, and it depicts the incidents that occur in the mind of a fraud examiner as they determine risk and make recommendations. Opportunity refers to the factors that make it possible to commit fraud. In WorldCom, avenues for committing fraud were many with ineffective internal controls, an unfavorable atmosphere by the company leadership, and deficient accounting standards. The term impetus is the pressure related to an individual’s attitude toward fraud (Homer, 2019). The weight to attain or exceed analysts and shareholder expectations in retaining or surging share prices led to Bernard Ebbers and WorldCom committing fraud. Major shareholders for the company are retirees who have invested in the dividend-paying stock.
As a fraud examiner, I would consider the possible motivations when examining proof of workplace fraud. The motive is the driving force behind an individual’s actions (Albrecht et al., 2015). However, the purpose should not be confused with intent, which refers to the suspect’s mental state when the act was committed. In contrast to intent, motive is not a required part of committing a crime. In most cases, the law disregards an individual’s motivation when determining guilt or innocence. In WorldCom and Bernard Ebbers’s case, the motive was to misrepresent facts so that investors get an appealing picture of the company’s financial health and economic reality (Cernusca, 2007). Notably, the motive is relevant for other reasons: it can help identify the perpetrator; it can also guide the interviewer to the correct rationalization; it can also implicate the suspect, and it can help ensure a successful prosecution.
Fraud Interview. Rationalization allows the interviewer to communicate to the offender as an adult, enabling the interviewer to use communication skills to establish rapport. Rationalizations imply the existence of a mentality, attitude, or collection of moral values that would allow executives to commit fraud (Albrecht et al., 2015). One might argue that learning a fraudster mindset is critical in playing mind games with them during an admissions interview. However, understanding how rationalization perpetuates deception as a fraud interviewer teaches you that you can’t judge people based on your guidelines because they don’t have them. Since white-collar fraudsters often do not believe they have committed any crime, it is essential to tailor interviews to their rationalizations (Vinluan, 2015). Refusal of decisions and responsibility is a crucial sign in a fraud investigation as the suspect usually projects rationalization outcomes, as was the case with Bernard Ebbers. The latter passed the blame on his subordinates.
Some of the questions I would ask Bernard Ebbers would include WorldCom model principles and financial interests and his feelings about the company’s stock valuation or WorldCom’s economic success, as these issues are likely to display frustration. Such frustration provides an incentive to probe for details, ultimately leading to Bernard Ebbers venting. As the interviewer, I would realize that I have the chance to change strategies to make the Bernard Ebbers feel justified for his conduct to obtain truthful responses and eventually a countersigned statement from him. The recommendation is that a fraud examiner uses non-consecutive questions about the fraud’s particulars to see if the answer is consistent (Vinluan, 2015). Similarly, the details involved in a fraud case can be confusing at times. To counteract this, I intend always to seek clarification from Bernard Ebbers. I’ll be able to tell whether I’ve heard his narrative by recalling statements and reiterating details. Notably, misinterpreting or misunderstanding what an interviewee is trying to say could jeopardize the investigation. The interview should be lengthy and in-depth enough to reveal relevant details.
How to Begin the Interview
Before the interview, it is always ideal to select a conducive environment for conducting the exercise. The perfect interview room should be small and without windows, with only two chairs for the suspect and the interviewer (Vinluan, 2015). It should not encompass any distractions such as outside noises, wall paintings, among other things. Once I meet Bernard Ebbers, I would be friendly and begin by shaking hands and engage in small talk on the way to the interview room. When questioning Bernard Ebbers about alleged fraud, I will start with some simple context questions to get a sense of his reactions. Regardless of how friendly I make the interview atmosphere, Bernard Ebbers will most likely feel uneasy. I plan to better understand his reactions and natural behavior by asking Bernard Ebbers questions about his experience at WorldCom and the obligations of his job (Albrecht et al., 2015). Potential background questions include: how long have you been with the firm? What is the title of your position? What does a typical day in the office look like for you? What is the scope of your responsibilities?
Being harsh, criticizing, or demeaning a suspect only makes the interview or interrogation a failure as it shuts them down, preventing disclosure opportunity. One can rely on their instincts to get confessions as we always tell when telling the truth or lying in our social contexts (Vinluan, 2015). Before beginning the interview with Bernard Ebbers, I would try to relate with him to understand what motivated him to commit the fraud by using my life encounters as emotional tools. A good example would be utilizing my background in Accounting or Auditing as a fraud investigator. I will also be sincere with the suspect and try to empathize with him to gauge whether I relate to him or get through him. I would also use body language to connect with Bernard Ebbers since it’s the unspoken part of communication that allows us to express our true thoughts and feelings. As a form of communication and relationship building, people unconsciously mimic each other’s nonverbal cues (Vinluan, 2015). As a fraud examiner, I can help Bernard Ebbers relax by indirectly expressing my body language. Furthermore, body language offers the interviewer the chance to assess the degree of rapport established by switching posture and monitoring the interviewee’s response. This information will help determine whether to enter delicate interrogation areas or continue to build a rapport with Bernard Ebbers.
Conclusion
As observed, setting targets helps you shape your investigative interviews and puts things into perspective (Vinluan, 2015). Before beginning the interview with Bernard Ebbers, I would try to relate with him to understand what motivated him and his company to commit fraud. I would also interview in a conducive environment for obtaining the best results. It is recommended that a fraud examiner uses non-consecutive questions about the fraud’s particulars to see if the answer is consistent. The interview should be lengthy and in-depth enough to reveal relevant details. Use APA referencing style.Fraud Interview.
References
Albrecht, W. S., Albrecht, C. O., Albrecht, C. C., & Zimbelman, M. F. (2015). Fraud examination. Cengage Learning.
Cernusca, L. (2007). Ethics in accounting: The WorldCom Inc. scandal. Lex ET Scientia Int’l J., 14, 239.
Homer, E. M. (2019). Testing the fraud triangle: a systematic review. Journal of Financial Crime.
Kennon, J. (2020). The WorldCom Scandal Explained | How One of the World’s Largest Companies Made $3.8 Billion Disappear. The Balance. https://www.thebalance.com/worldcom-s-magic-trick-356121.
Vinluan, F. (2015). Tips for conducting a forensic interview. Journal of Accountancy, 219(2), 22.