Forensic Accountants in White-Collar Criminal Defense

White-collar criminal charges may not sound serious when compared with violent crimes, but they often lead to major consequences, ranging from lost careers and relationships to time in prison with lifelong financial restitution obligations. Financial crimes harm organizations and consumers, and they often come with unintended collateral damage.

White-collar criminal o@enses, such as fraud, often involve investigation from agencies like the FBI, the U.S. Postal Inspection Service and the IRS and, therefore, the potential of prosecution as well. Individuals who believe they’re the focus of a financial crime investigation can often reach more positive outcomes by proactively addressing the matter instead of waiting for the situation to escalate. Forensic accountants can play a critical role for those individuals facing investigations or criminal charges related to financial crimes.

What do forensic accountants do?

In the context of white-collar crime, forensic accountants combine accounting, auditing and investigative skills to analyze financial records and information to look for evidence that a crime did or did not occur and the extent of losses. They often work for regulatory and law enforcement agencies and with prosecutors, but forensic accountants can also play a crucial role on a defense team, where they can serve as behind-the-scenes consultants or expert witnesses called to testify by criminal defense counsel.

Prosecutors must give the defense team access to the evidence they’ll present in court, which allows for a professional evaluation. Forensic accountants may be able to identify oversights and errors that call into question the credibility of an investigation, report, witness or a witness’ testimony. They may also find evidence not pointed out by the prosecution that raises doubt that a person engaged in criminal activity.

The U.S. Supreme Court decided the case of Brady v. Maryland in 1962, whichestablished what became known as the Brady doctrine, wherein a prosecutor has a “due process” a@irmative duty to disclose to a charged criminal defendant all “material evidence” that would prove the innocence of the defendant or would enable the defense to impeach the credibility of government witnesses more e@ectively. Evidence that would reduce the defendant’s sentence must also be disclosed.

While in most cases known information is shared, voluntary sharing of this type of information by prosecutors does not always occur and may be discovered by a forensic accountant.

Why include a forensic accountant as part of a white-collar criminal defense team?

An experienced forensic accountant can be a valuable asset to a white-collar criminal defense team. The cost associated with employing such an expert may cause some defendants and defense counsel to hesitate before making such a decision, and they might instead opt to allocate that part of the defense budget to other professionals to perform the forensic accounting work, including attorneys, paralegals or accountants who specialize in traditional bookkeeping, tax or audit services. While these professionals may be experts in their discipline, their expertise does not lie in the specialized field of forensic accounting. No one would go to their primary care physician, for instance, to perform delicate surgery; the same idea could be applied to employing a traditional accountant in a high-stakes trial.

Defense team members without the requisite experience in forensic accounting may end up with problems like:

• Overlooking key evidence

• Inclusion of excludable items

• Evidence contamination

• Ineffective cross-examination of prosecution witnesses

• Confusing schedules and exhibits

• Inability to effectively explain analysis

In such scenarios, clients may incur substantial expenses only to receive a deficient work product that could potentially lead to ineffective criminal defense strategy or might be entirely unusable. The client may be compelled to spend even more by engaging a forensic accountant to address the shortcomings of the original work or when the need arises for an expert witness to testify.

Having the right team of professionals assist with white-collar criminal defense strategy and due diligence can greatly increase the chance of a positive outcome. Partnering with a forensic accountant can help identify when government prosecutors, investigators or forensic accountants have made oversights and/or errors that can be leveraged as part of a broader criminal defense strategy.

If you believe a forensic accountant might be able to a good addition to your criminal defense team, contact myself in Columbus. OH or Tom Pratt or Brian Webster in Pittsburgh, PA.

James Rumph, CPA, CFE, CAMS, CIA

James Rumph is a financial forensics and litigation support Director within the CPA firm Schneider Downs & Co., Inc., whose overall bench includes over 550 employees and eight Certified Fraud Examiners. He is a former FBI forensic accountant and insurance company investigator and fraud risk management executive with white-collar criminal trial testimony experience.

Mr. Rumph has investigated and analyzed hundreds of allegations of white-collar crimes in areas like employee embezzlement; bank, loan, mortgage, insurance and investment fraud; and theft of trade secrets.

Schneider Downs is a proud supporter of this non-profit organization and its White-Collar Support Group™ groundbreaking White Collar Conference 2024 event, helping foster a community where individuals who have a desire to take responsibility for their actions and the wreckage they caused can move from isolation into community where they can begin to rebuild their lives, contribute to victim restitution, and move forward in new way of life centered on hope, care, kindness, compassion, tolerance and empathy.