Monday, May 30, 2011
Monday, May 30, 2011
“About 93 per cent of the victims of white collar crimes–fraud, money laundering, electronic crimes, Ponzi schemes–never get their money back,” says John S Bain, managing director of John S Bain Chartered Forensic Accountants, a firm specializing in forensic and investigative reporting, fraud investigations, asset recovery, insolvency and bankruptcy proceedings.
A Ponzi scheme pays returns to old investors from money injected by new ones, rather than from any actual profit earned. Essentially, it takes from Peter to pay Paul. Consequently, the scheme’s investment fund lasts only as long as the flow of new money can sustain the high rates of return paid out to existing investors. When the numbers of new investors dwindle, the scheme collapses, just as Bernard Madoff’s $65-billion investment fund did in December 2008.
“Very little attention is paid to the victims of these crimes,” says Bain, who holds a double MBA in finance from the Manchester Business School and the University of Wales.
“After the fraud has been discovered, after the Ponzi scheme has been unraveled, after the money launderer has been identified, the asset recovery specialist goes to work to recover the assets that no one else had legal rights to in the first place,” he says.
“There is a demand for the service. Asset recovery is the endgame.”
Last year, Bain was among the first of 33 candidates worldwide to obtain a Certified Specialist in Asset Recovery (CSAR)?designation from the International Association for Asset Recovery (IAAR), an organization for professionals who work to recover assets wrongfully held by others. In 2007 he received the UK-based Association of Chartered Certified Accountants (ACCA) Lifetime Achievement Award for the Americas.
Experts liken asset recovery to a jigsaw puzzle. It is complex and challenging. Forensic accounts must follow the paper trail in order to identify, trace, locate and recover assets for their clients.
The criminal, says Bain, will try to stay one step ahead. He has the money and guile to hide the assets well and will use any means to protect his ill-gotten gains.
Knowledgeable forensic accountants have a better chance than most in not only penetrating these hiding places, but also locating assets and uncovering ownership, says Bain. It is because they have been trained to know what to look for in unwinding fraudulent dealings. Financial investigators on asset recovery cases must gather, analyze, interpret and preserve vast amounts of data.
“I go after the criminal’s bank accounts. I follow the trail. If he’s transferred money to the US, to England, to another jurisdiction, I follow the money and try to recover the money for the victim,” says Bain. “It’s not just putting the crook in jail. The endgame is getting the people who lost money back to where they were before the crime.”
“People forget about the victim. They put the fraudster, the money launderer, in jail, but where’s the money? They go to jail and when released their lifestyle returns to normal. I go after that money.”