The investigation of fraud is a logical inquiry which requires some training but is not as difficult as one might imagine. Common sense is the most important tool for any investigator. Certain attitudes and approaches on the part of the investigator are necessary to accomplish a professional and thorough investigation. One must have a focused sense of direction, patience, and determination to properly gather all the evidence needed.
Fraud is defined as a false representation or the concealment of a material fact with the intent and result that it be acted upon by another to his loss or detriment. It is making a false statement of a past or existing fact with knowledge of its falsity or with reckless indifference as to its truth with the intent to cause another to rely upon it, resulting in his injury.
Three main reasons for fraud investigations are to recover funds, to prevent repetition and deter others, and to clear innocent people. Three important rules of fraud investigators are:
1. Whenever possible, inquiries should be concentrated around the central issue or hub of the fraud.
2. Investigators should not seek the most complex solution to the case.
3. If concealment is difficult to unravel, investigators should "follow the money" - determine who benefited at the end of the fraud and work backwards.
It is not possible to provide a planned outline applicable to all investigations of fraud. However, these are the steps that would generally be followed:
1. Selection of statutory violations, that is, which laws have been broken.
2. Carefully identify the elements of proof for each statute and the method required to obtain the evidence desired; that is, documents, witnesses, and so on.
3. Identification of the documentation required to prove fraud. The best evidence rules require that original documents be submitted when available.
4. Identification of witnesses who can authenticate records and define actions taken by the suspect that constitute fraud.
5. Identification of the appropriate investigative techniques to be used to obtain the desired evidence.
6. Determination of the desired outcome for the client early in the investigation.
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