Tim Reddick is an expert in working with whistleblowers and confidential informants. His presentation discusses defining whistleblowers and cooperating witnesses, the importance of finding and vetting them, developing policies to protect them, and handling potential issues that may arise. He emphasizes independently verifying information from sources and documenting all communications to maintain credibility and protect from pitfalls. Reddick also notes that incentives like payments and qui tam laws have been shown to reduce fraud losses and duration by encouraging whistleblowers to come forward.
2. Tim Reddick, CPP, PCI, CFE
25+ years of investigative experience
Extensive education background including
Masters in Criminology and FBI National
Academy
Certified Fraud Examiner of the Year, 2011
ASIS International Professional Certification
Board International Award of Excellence,
2007
ASIS International Investigations Council
Member
Life Member, International Association of
Chief of Police
4. Definitions
• Whistleblower
– Numerous laws and definitions
– Expansion under Lawson v FMR LLC
– Dept of Homeland Security v. MacLean
• Cooperating Witness
• Confidential Informant
5. Initial Detection of Occupational Frauds
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
6. Median Loss and Median Duration
by Detection Method
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
7. Impact of Hotlines
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
8. Frequency of Anti-Fraud Controls
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
9. Detection Method by Size of Victim
Organization
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
10. Frequency of Anti-Fraud Controls
by Size of Victim Organization
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
12. Policy
• Fully vetted PRIOR to needed
• Include How to document
– Maintain Whistleblower protections
– CI credibility
• Know and Follow Policy
• Fully Document Exceptions
• Include Legal issues in policy (criminal activity of WB/CI,
false info from CI, etc.)
13. Policy Issues
• Other policies that may apply (FBI FCPA Example-not
recording all conversations between CI and defendant)
• Other Agency, no policy on working with CI’s,
Whistleblowers or recording of conversations but
comprehensive policy on what you can or can’t wear on
casual Fridays
• Note on recording (Controversial, Legal Issues, Include
in Policy)
14. Finding WB/CI/CW
• Encouraging Reporting
– Cultural obstacles
• Hotlines
– 24 hour access
– Live operator
– Follow-up Mechanism
• Who could be a WB/CI/CW?
15. Source of Tips
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
16. Others to Consider
“Any person an investigator comes into contact with during the course of an
examination is a potential informant”*
Administrative Assistants
Bookkeepers
Ex-spouses, Ex-girlfriends/boyfriends
Doorman
Mail carriers
Janitors
Security Guards
Servers
Merchants
*Informants & Whistleblowers, The good, the bad and the ugly. Martin T.
Biegelman, CFE, ACFE Fellow, CCEP, Fraud Magazine, March/April 2014
17. Vetting and Assessment
• Background
• Previous experience
• In a position to know or have access?
• Expertise
• Motivations
18. Common Motivations
Doing what is right
Honest Person
Repentance
Elimination of Competition
Money or reward
Police/Investigation Buffs
Trust Relationship with
Investigator
Eccentrics
Revenge
Jealousy
Fear of Jail
Resolution of Criminal Charge
Working off a case
Good Citizenship
Ordinary Citizen
Doing civic duty
20. Independent Verification
Use independent sources of
information
Complete honesty
Look for intentional withholding of
information
Primary purpose is to assess
truthfulness and reliability
22. Some Pitfalls
Making promises you can’t keep
Lying to the WB/CI
Allowing WB/CI to do illegal acts
Not maintaining professional
relationship
Personal entanglements with
WB/CI
Everything you say is subject to
Review
Document, Document, Document
Loss of Objectivity
WB/CI’s may say anything
Failure to test information
Not delineating specific CI latitude
(what they can and can’t do)
Continuing to use an unreliable
WB/CI
Allowing WB/CI to control
investigation
Disclosing other cases or witnesses
23. What Makes a Story?
PEOPLE
ACTIVITIES
OBJECTS
LOCATIONS
TIME
25. Protecting Sources
• Can they remain anonymous?
• Team discussions and outside agencies
• During investigation and interviews
• Methods of communication
• Tasking and collecting information
• Reports
• Follow-on legal proceedings
28. Incentives
“Having a hotline, having fraud training for employees and, to some
extent, having rewards for whistleblowers, are critical aspects of an
anti-fraud program.”
- John Warren, J.D., CFE, ACFE Vice President and General Counsel
•Payments to WB/CI’s
– 26% reduction in median loss and
– 33% reduction in median duration
•Qui Tam incentives
29. Frequency of Anti-Fraud
Controls
2014 Report to the Nations on Occupational Fraud and Abuse. Copyright 2014 by the Association of Certified Fraud Examiners, Inc.
31. Thank-you for participating
If you have any questions, please feel free
to contact:
Tim Reddick, CPP, PCI, CFE
Managing Director, Desert Thunder Investigations
Phone: 602-341-5121 dti@usa.net
Joe Gerard, Vice President Marketing and Sales
j.gerard@i-sight.com