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Students, IRS team conduct mock fraud investigations


April 15, 2008

Bad guys and bad gals – folks like fraudsters Frank Abagnale, Jr., James Paul Lewis, Jr., Cassie Chadwick, and Kenneth Lay – wouldn’t stand a chance against a group of Arizona State University students that will team with the IRS Criminal Investigation Division (CID) on April 25 to conduct a series of mock fraud investigations. The exercise is designed to showcase career opportunities available through CID, a unit of the IRS that investigates potential criminal violations of the Internal Revenue Code and related financial crimes – crimes similar to the Ponzi schemes, forgery, money laundering, and tax-evasion that have landed many a crook in the hoosegow.

“Project Adrian” – named after Adrian College (Adrian, MI) where the pilot program was first offered in 2002 – will include 55 students and faculty from ASU’s School of Global Management and Leadership and 18 special agents from the IRS. It will take place on the university’s West campus from noon to 6 p.m.

“Our students have been eagerly anticipating Project Adrian for the chance to put into action some of the concepts and skills they have learned about this semester,” says Barbara Muller, a senior lecturer in the school’s accounting department who is a member of the Association of Certified Fraud Examiners. “Especially for those who have already expressed an interest in federal law enforcement or some other type of fraud investigation, this is a unique chance to catch a glimpse of the day-to-day workings of a fraud investigation.

“Rather than just reading about fraud in a textbook, this exercise gives students the opportunity to get ‘real-life’ experience as a fraud investigator.”

The participants – students in Muller’s ACC 494/Fraud Accounting course – will be divided into seven groups, each conducting a different investigation. The program was created by Detroit-based IRS Special Agent Stephen Moore in 2001, after he was asked by a retired agent to help design a college course. The program enlists college accounting majors and makes them special agents for the day, assigned to solve hypothetical financial crimes. Some of the hypothetical investigations involve business owners skimming from their company, a bar owner who operates two sets of financial books, a multi-filer scheme, and a drug trafficker. Each group has an experienced special agent or retiree who serves as a coach and provides experienced insights during the investigation.

“The student response has been enthusiastic,” says Moore. “The honorary agents will receive support, but it will be up to them to follow the paper trail.

“Their five-hour investigation may start with an anonymous informant, a meeting with local law enforcement, or a bag of garbage. The students select their next steps in gathering evidence. Some will utilize the tools available to federal law enforcement officers, including the use of undercover, surveillance, subpoena, and search warrants. At the end of their scenarios, the students meet as a group to talk about their investigation, while receiving an evaluation from their coaches.”

Michael Fleischmann, the special agent coordinating Project Adrian, says this is the first time the exercise has been staged in Arizona and is the result of a request by ASU’s Muller. The senior lecturer was alerted to the program by CID Special Agent Scott Fischer, who had visited her classroom to discuss fraud investigation interviewing techniques with her students. Looking for an opportunity to expand her students’ experience, she turned to Fleishmann.

The project, notes Fleischmann, serves a variety of purposes.

“The IRS uses Project Adrian as a recruiting tool and to inform students that there is another side to the IRS,” he says. “This is an interactive presentation that shows the main duties of IRS special agents. Most people know the IRS civil side, but few people know about the criminal function.

“There is a lot more to accounting than sitting at a desk, and you can only learn so much from a book. This project affords the students an opportunity to put their accounting skills to the test. A number of students have applied to become special agents after participating in the program,” says Fleischmann, who notes that forensic accounting is a growing career field.

While other federal agencies have similar investigative jurisdiction for money laundering and some bank secrecy act violations, the IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code. The CID oversees a worldwide staff of approximately 4,400 employees, including some 2,800 special agents who investigate and assist in the prosecution of criminal tax-, money laundering-, and narcotics-related financial crime cases.

“The CID is toted as the best financial investigators in the world, but very few people actually get to take a peek into our world until now,” says Moore. “The students we have worked with appreciate the hands-on interaction and the life-like situations we present. There is a sense of accomplishment when they crack the case.”