Litigation

On working with felons

By Tracy Coenen

I have been criticized on many occasions for working with felons in my fraud investigation practice. Specifically, I have been working with Barry Minkow and Sam Antar for over three years on a variety of fraud investigations. Both are convicted felons for their participation in large-scale financial frauds in the 1980s. I work with others convicted of misdemeanors and felonies as well, and I have done my fair share of criminal defense cases.

Why would I risk my own reputation by working with criminals or accused criminals? On the criminal defense side, I believe that people accused of crimes are entitled to a defense. I take those cases only with the understanding that I will report the truth, whatever that may be. There are plenty of criminal cases that involve complex financial issues, and without an expert like myself willing to take these cases, the accused would not be able to mount a defense.

Regarding working on fraud investigations with people like Sam Antar and Barry Minkow, when asked why I do it, my response is WHY NOT? There is a lot to learn from those who engaged in long-running financial crimes. I have learned a lot from both Sam and Barry, and there is a special dynamic to the cases we work together. I approach the fraud investigation from the viewpoint of a law-abiding citizen who is looking for fraud. They approach a fraud investigation from the viewpoint of a former criminal, and they are constantly asking themselves “how would I have committed this fraud.”

What better way could there be for us to collectively uncover fraud?

I have been asked whether I’m concerned about my personal and professional reputation, and how those could be affected by working with ex-cons. Of course I’m concerned. I’m concerned no matter who I’m working with. My career depends on my integrity and my reputation, and I’m not going to compromise either for anyone or any investigation.

Every time I do my job, I do so with the utmost integrity and professional responsibility. There is no price that can be paid to get me to lie, and there is no way that I am going to participate in any sort of dishonest or improper scheme. It’s just not worth it.

There are times when I disagree with my clients on the approach to a matter or with conclusions being drawn. And no matter who the client is or what the project is, I will never sell out on those matters. If I am signing my name to a report or participating in an investigation, it will only be done on my terms.

My work with Barry and Sam is no different than my work with any other client. If I disagree, I say so. If I don’t want to participate in an investigation, I don’t.

One of the criticisms of Barry’s work is that he investigates public companies, takes a short position in their stock (so he will profit if the stock price falls), and then releases our findings to the public. I have never taken a position in the stock of any company we have investigated because I simply don’t want to. I don’t believe that Barry is doing anything wrong by taking short positions in the stock of companies we investigate, but I know that it raises questions for some people about the results of our investigations. I’d rather not invest in these companies and add a perceived bias to my work.

I know that great care is taken by Barry to publish only truthful facts and substantiated allegations against the companies we investigate. After all, who would ever listen to him again if he were caught lying about these companies? That would not be a very good business strategy for the long-term.

On several occasions, the companies we have investigated have publicly stated that we’ve lied about them, yet have failed to produce anything substantive to refute any specific allegations. If our findings are not true, why aren’t the target companies coming forward and proving that? Barry has been sued by some of the companies we’ve investigated (and now, so have I), but he hasn’t lost one of those battles yet.

Sam and Barry may be convicted felons, but they are also guilty of doing some great fraud investigations. Over a year ago I put together a tally of the frauds Barry helped law enforcement uncover. The total then was $1.8 billion, and that didn’t include all the investigations Barry has done. And Sam is responsible for some excellent forensic accounting work on Overstock.com (for which the company has gone to great lengths to smear him), and he is currently being vindicated as Overstock restates their financials and admits to improper disclosures in SEC filings.

Yes, I’ll continue to work with clients who bring me interesting and rewarding fraud investigations. I realize that I will be criticized for working with criminals, but I can hold my head high knowing that I am doing so with the utmost professionalism and integrity.

Full post as published by The FRAUDfiles Blog on April 03, 2010 (boomark / email).