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Examining the FBI: How Investigations
Get Started
By Frederick M. Bennett, CPA, and John W.
McSwain, CPA – (July 16, 2015) – Most people
have seen the FBI only on television or in the
movies where special agents of the FBI are
comically displayed either as bumbling fools
or as superheroes. Neither portrait is accurate.
In reality, FBI agents are a cadre of hardworking,
highly-educated men and women who take
seriously their responsibility and oath of office.
Being the subject of an ongoing FBI investigation
certainly is not a comfortable position.
The potential liabilities
(be they criminal or civil)
are cause for sleepless
nights, and the distraction
of a federal investigation
can be disruptive to a
person’s personal and
business life. This article
delves into how FBI
investigations get started,
Frederick M. Bennett,
examines what to expect
CPA
during the investigative
process and offers insight into the prosecution
or conclusion of the matter after an indictment
is handed down.
Coming Under Investigation
Every step of an investigation – from opening a
case through prosecution – is closely monitored
by attorney general guidelines, the federal
prosecutors that special agents work with and the
direct supervisors of the special agents. In fact,
the working relationship between a special agent
and a federal prosecutor drives investigations.
A passionate special agent paired with an
aggressive federal prosecutor and solid evidence
make for a formidable team.
Individuals and companies can learn that
they are the subject of or a witness in a federal
investigation in several ways. An FBI special agent
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might knock at the door to ask a few questions,
an office might be served with a federal grand
jury subpoena for records or a co-worker or
associate might notify an individual that the FBI
has asked some questions about that individual
or his or her company. Becoming aware that a
federal investigation is ongoing likely does not
mean that the investigation
is new. Many investigations
are ongoing for months
or even years before they
become public or become
known to the individuals
under
investigation.
It is what happens behind
the scenes in those prior
months that determines
John W. McSwain,
the next steps for those
CPA
under investigation.
How Investigations Get Initiated
The opening of an FBI investigation is somewhat
subjective and requires collaboration and
input from both the local U.S. attorney’s office
and the local FBI office. Information used in
investigations often comes from the victims
themselves. If the victim is a financial institution,
it would file a suspicious activity report.
If the victim is a civilian, he or she would file
a complaint.
Since the events of Sept. 11, 2001, the FBI has
been deeply involved in developing its cases by
recruiting reliable sources or informants. Source
development, whether it is for counterterrorism
or white-collar-crime matters, is crucial to all
special agents working on investigations.
In general, there are five main ways cases become
known to the FBI:
1.Victim reports
2.FBI source or informant information >
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3.Investigative journalism (especially for
investigations involving elected officials)
4.Data mining by FBI intelligence analysts
5.Intelligence developed during prior
investigations
Certain matters automatically get assigned to a
control file (or “zero file” as special agents call it),
which serves as a repository for those allegations
that are not opened and assigned for investigation.
Cases where minimum prosecutorial guidelines
are not met or where the matter is not a priority
for the FBI often end up in a zero file. When
prosecutorial guidelines involve a minimum loss
amount, the matter can be declined by federal
prosecutors and likely will be referred to the
local district attorney’s office. When a matter is
declined, the subjects likely will never even know
it was considered. But just because a case is not
opened and assigned does not mean the FBI
discards the information. All information that
finds its way into an FBI office regardless of the
source is indexed and saved for future retrieval.
The addition of new information at a later date
might create the necessary foundation for an
FBI investigation.
Consider, for example, a complaint that is
received in which the victim alleges a loss
amount below prosecutorial guidelines and the
information is indexed to a zero file. If, a few
months later, additional information comes
in from a different victim that brings the loss
amount to a level within prosecutorial guidelines
when coupled with the prior complaint, the case
might come under federal scrutiny after all.
A complaint that initially is indexed to a zero
file also can come back to life if additional
information is developed on the subjects
themselves. For example, elected officials who
are named as subjects of fraud complaints might
come under increased scrutiny because of their
position or title regardless of the loss amount.
Public corruption matters always have been a
top priority, and when a public official is the
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subject of a complaint, loss amounts alone are
not the determining factor for whether a matter
is opened. Similarly, in some cases, the subject
of a complaint could be a person in whom the
FBI has an interest, and a separate criminal
fraud complaint provides the basis to open
an investigation.
Proactive Investigations
One of the FBI’s main goals is to be proactive
regarding investigations. To demonstrate how
intelligence is used to help drive investigative
matters, including white-collar-crime matters,
the FBI started the financial intelligence
center (FIC) in 2009. The FIC is staffed with
intelligence analysts assigned the task of using
advanced data analytic techniques and evolving
technology to generate targeting packages for
white-collar-crime fraud matters. The analysts
develop a package of information that they
forward to the appropriate FBI field office for
further investigation.
Establishing the FIC to gather investigative
intelligence is a direct result of today’s
environment. The availability of massive
amounts of electronically stored information
and the ability to analyze this data using
advanced techniques can help connect the dots
on financial crime investigations. White-collarcrime investigations relating to health care fraud
and insider trading are prime opportunities to
use data analytics to identify fraud. Data analytics
now plays a significant role in uncovering fraud
– especially in governmental fraud matters
where the federal government holds much of the
relevant electronically stored information.
Data analytics drive many new investigations,
including health care fraud investigations.
The Centers for Medicare & Medicaid Services
(CMS) has been using predictive analytics
since 2011. CMS’ fraud prevention system is a
state-of-the-art predictive analytics platform.
The information it generates is shared with
investigative agencies, including the FBI, >
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to bring criminal prosecutions to providers who
have defrauded the system. For instance, data
mining Medicare claims for providers who bill
patients whose zip code is outside their service
area for services or whose billing time per day
exceeds 10 to 12 hours is one of the analytic
scripts that can identify fraud.
Data analytic tools also are used to monitor
stock trading to identify criminal prosecution
patterns of fraudulent or insider trading
activity. Data analytics will continue to play an
increasingly important role in generating cases.
Looking Ahead
Today’s special agents have an abundance of tools
and sources available to them when investigating
cases. Though the cases might take different
routes to land on their desks, they each undergo
increased scrutiny as a result of data analytics
and better-developed informants or sources.
Fred Bennett served 23 years with the FBI and
is a retired assistant special agent in charge.
Fred worked in the San Antonio, Dallas, and
Chicago field offices assigned to white-collar
crime, organized crime, drug, and violent crime
investigations. Fred also was assigned to FBI
headquarters in the violent crime and organized
crime sections of the criminal division. Fred now
is a director with Crowe Horwath LLP in the
Dallas office. He can be reached at 214.777.5252
or [email protected].
John McSwain served 22 years with the FBI
and is a retired supervisory special agent.
John worked in the Dallas field office assigned
to white-collar crime and counterterrorism
investigations and at FBI headquarters in the
laboratory division. John now is a director with
Crowe in the Dallas office. He can be reached at
469.801.4313 or john.mcswain@crowehorwath.
com.
Please visit www.texaslawbook.net for more articles
on business law in Texas.
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