Category Archives: Fraud in Pop Culture

Fraud Friday: All The Queen’s Horses

It’s not too often that us auditor/fraud investigator/forensic accountant-types find ourselves in the bright light of mainstream celebrity. In a way, our entire collective professional identity is primarily as anonymous bean-counting corporate drones. We even revel in it, and use it to our advantage when trying keep an ultra-low profile during an investigation.

Really, accountants and auditors tend to only make the news when it’s BAD (here’s looking at you, Arthur Anderson). To be fair, the ACFE and their wonderfully named trade magazine, FRAUD, is full of stories of intrepid, tenacious defenders of truth, justice, and the American Way, but let’s face it: Nobody but us reads those stories.

The closest I’ve seen any frauditor-types come to mainstream celebrity is Harry Markopolous, the kick-ass CFE who unearthed the Bernie Madoff Ponzi scheme, which remains the largest confirmed Ponzi/Pyramid-type fraud scheme in world history, with estimates of up to $100-billion dollars stolen (although Mr. Markopolous insists that at least $35 billion of that figure consists of fictional profits that Madoff reported, but that never really existed). Regardless, I highly recommend Mr. Markopolous’ fantastic book about the Madoff scandal, No One Would Listen.

But now we’ve got a new contender for fraud-world celebrity, such as it is: Kelly Richmond Pope, PhD., CPA:

KRPope
Source: https://www.allthequeenshorsesfilm.com/filmmakers/

Dr. Pope, in addition to being a professor of forensic accounting, ethics and leadership, and managerial accounting at DePaul University, is a self-described “Left-handed CPA who uses filmmaking to teach people about decision-making.” I recently had a chance to attend a private showing, of her latest documentary film, All The Queen’s Horsesand it is remarkable. It may be the single best documentation of the complex psycho-social web that surrounds every fraud scheme.

You may remember the surreal headlines coming out of the sleepy small-town of Dixon, Illinois in 2012:
Crundwell Indictment Press Release
Source: FBI press release, 5/1/12

“Financial controls in Dixon were the ‘perfect storm of embezzlement,’ an expert says”
Chicago Tribune

“Woman accused of bilking $53 million from Reagan’s boyhood hometown”
Reuters

The story seems utterly banal: Small-town has poor-to-non-existent internal controls in its municipal government operations, and a long-time employee sees an opportunity for malfeasance and takes it. But this case is really something else – Rita A. Crundwell, the long-time town controller, stole AT LEAST $53 million over a period of twenty years. This from a small farming community of less than 16,000 people.

Dr. Pope began working on the film shortly after Ms. Crundwell’s arrest in 2012. Recognizing that there was a compelling story beyond just the dollar amount in this case, Pope and her production team took six years to ensure that the entire tale was told – from Rita Crundwell’s humble and quasi-idyllic childhood, all the way through arrest, indictment, and sentencing and the subsequent human, political, and economic aftermath.

I think what I found so compelling about All The Queen’s Horses was how well the film captures the emotional roller-coaster that whistleblowers find themselves on, and the ripples of fallout that affect people far beyond the primary participants in the saga.

Narrated by Dr. Pope in a crisp, entertaining style, the film intersperses dozens of interviews with experts and laypeople, politicians and taxpayers, academics and activists, while also taking an educational approach, with numerous animated info-graphics and concurrent storylines.

A key theme that emerges is that Rita Crundwell could never have pulled off the largest municipal fraud in U.S history without a number of unwitting assistants. It’s a textbook case of failure of multiple lines of defense against fraud: A bank that fails to adhere to anti-money-laundering procedures. A good-ol-boy city council that was asleep at the wheel. Dozens of colleagues, friends, and family members that never seriously questioned Rita’s expertly delivered but suspicious cover stories. And a global audit firm that failed their fiduciary duty to their client (the City of Dixon), that their shame (and liability) should be infinite. It’s all quite a tale, told in a fast-moving and entertaining 1 hour, 10-minute film that is very well-produced.

Most of all, All The Queen’s Horses serves as a vivid reminder that every entity involving humans is susceptible to fraud in all its forms. The thing I keep going back to when thinking about the film is the fundamental decency of virtually everyone in Dixon. Hard-working, honest, charitable, polite folks. The proverbial salt-of-the-earth-midwesterners that I’ve come to know and love after living in Kansas for nearly a decade. These folks trusted Rita Crundwell with their tax dollars. She stole nearly all of it, and roads, sidewalks, buildings, and other public infrastructure in Dixon steadily decayed. Kelly Richmond Pope captures the pain and betrayal that these folks feel, and their confusion and angst at realizing that it was “one of their own” that did it.

All The Queen’s Horses is available on all major streaming platforms, and has been one of the most-watched documentary films of the past two years on Netflix, iTunes, Amazon Prime Video, and Google Play.  I highly recommend taking the time to watch it and research the story and the film!


Music Recommendation: Nathaniel Rateliff & The Night Sweats, Live at Red Rocks A tasty stew of blue-eyed soul, greasy garage-band rock-n-roll, and classic R&B, along with an assist from the amazing Preservation Hall Jazz Band of New Orleans. A new favorite – highly recommended!

Food Recommendation: The short-rib griller sandwich at Q39, Kansas City Pitmaster Rob Magee’s incredible restaurants in Kansas City and Overland Park, Kansas. This thing is worth getting on an airplane for – trust me. Truly sublime. Magee’s Q39 has rapidly ascended the ultra-competitive KC BBQ ladder.

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Fraud Friday: Catch Me If You Can, or How I Learned the Value of Hard Work From The Best Confidence Man Of All Time

CatchMe

Greetings, fellow fraud-nerds! Today, as it is midsummer, and ’tis the season for travel, family vacations, and stolen tourists credit cards, I thought that rather than highlight current news in the fraud investigation and audit universe, we could take a fun look back at one of the true characters in the long and storied dance between the perpetrators and the investigators who doggedly pursue them.

Most of you are at least passingly familiar with the remarkable story of Frank Abagnale, Jr., aka “The Catch Me If You Can Guy,” aka the highly successful business fraud consultant, aka the greatest check washer of all time. For those of you who are unfamiliar, or if you want to do a deeper dive and read a great book, we highly recommend Frank’s autobiography (with co-author Stan Redding). It’s an entertaining and revealing read, if a bit dated in terms of fraud scheme logistics, but the social engineering principles remain as relevant as ever. They don’t call them “Confidence Men” for nothing!

Of course, Abagnale’s big break into pop culture came when Steven Speilberg and Tom Hanks adapted the autobiography into the hit film of the same name. It’s a highly stylized, gauzy retrospective look back at the idealized jet set of the 1960’s. Leonardo DiCaprio plays our antihero with relish, and Tom Hanks is perfectly cast as the stereotypical tireless gumshoe investigator, playing a human game of cat-and-mouse across the globe. It’s worth owning the blu-ray for the extras – including additional background and some cool FBI investigative documentary footage. But the book and movie are not what I want to focus on today. Rather, I want to highlight the value of persistence, determination, and plain old hard work.

I’ve attended a couple of lectures with Abagnale. These talks are Abagnale’s bread-and-butter, and you can video of many of them online. His “Talks at Google” episode is particuarly good. What’s interesting about Abagnale, and what makes him so different from a lot of the “reformed fraudster” lecture set is that he openly admits that he’s not “reformed” or “cured” in any way. He’ll straight-up tell you that he’s not necessarily a changed person, he just chooses not to use his talents for illegal activities. It’s remarkable when you see him tell a room full of fraud investigators, attorneys, and law enforcement that he’s still the same con man he always was.

But what is also remarkable, and sets Frank Abagnale, Jr. apart is his sheer work ethic. When he was washing checks, it was all he did. Nothing else. He set out to become the best check-washer in the world, and by most accounts he was. He was obsessive about learning and mastering the details of his craft, illegal though it might have been. This is one of the things that the movie gets correct, in my opinion. DiCaprio’s Abagnale is obsessive to the point of madness, which, though it may not be mentally healthy, did create a form of excellence in him.

That’s one of the key takeaways of Abagnale’s talks – if you work incredibly hard at something, you WILL get good at it. You may not be the best, but you’ll eventually become competent. He said that the only reason the FBI caught him was that he was finally pitted against an agent who was as obssessed with catching his man as Abagnale was in staying on the lam and living large. (Note: Carl Shea – Hanks’ version of Shea in the film is Carl Hanratty – is the real life FBI agent, and him and Abagnale are now friends and sometimes do seminars/speeches together).

There’s no shortcut: If you want to master anything, you have to be a bit obsessive about it. That may not go over well in the era of “work/life balance” and the foreign (to me) concept of “self-care.” If you put in the hard work and the long-term effort, nobody will be able to catch YOU.

Have a great weekend!

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