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Internal Fraud: Detection, Investigation, Prosecution, and Prevention, Part Two -- Investigation

NCJ Number
White Paper Volume: 3 Issue: 3 Dated: (Fall 1989) Pages: 8-10
W M Kramer
Date Published
3 pages
Before embarking on an internal fraud examination, the organization must weigh the legal and practical considerations, consult all appropriate parties, and clearly define the objectives.
The examination should be staffed with legal counsel, audit personnel, security department personnel and outside investigators, and law enforcement agencies. The law counsel can be internal or external, but should be familiar with internal investigations and fraud litigation and be able to establish attorney-client privilege and "work-product" protection. Auditors alone may be able to uncover certain types of fraud such as embezzlement and false financial reporting. In cases of kickbacks or other illegal payments, auditors can collect and analyze business records or calculate damages. Security personnel and investigators conduct the traditional work including witness interviews, document collection, and public record searches. While police and prosecutors usually put a low priority on white-collar cases, referral of a fraud case for criminal prosecution may allow the use of subpoenas and other law enforcement resources. A well organized internal fraud investigation has the support and commitment of the organization's top management and generates evidence through lawful means, puts pressure on one or more of the targets to cooperate, and provides the foundation for follow-up legal action.


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