This document discusses methods for investigating how perpetrators convert and spend stolen funds during a fraud examination. It explains that conversion searches are important to determine the extent of embezzlement and gather evidence that can be used to obtain confessions. Public records, private sources, online databases, and internet searches can be used to find information about suspects' lifestyles and expenditures. Net worth calculations compare suspects' assets and income over time and can reveal funds from unknown sources.

1. Chapter Nine
Fraud Examination
Presented by Kirsty Peterson
5th August 2013
Conversion Investigation Methods

2. Learning Objectives
 Explain why it is important to find out how perpetrators
convert and spend their stolen funds
 Understand how public records can assist in following
the financial “tracks” of suspected perpetrators
 Access information from the internet to assist in an
investigation
 Perform net worth calculations on suspected
perpetrators and understand how they are effective in
court and in obtaining confessions

3. Spending Stolen Funds
 “With few exceptions, perpetrators spend what they
steal. Because of this, looking at spending patterns is a
primary investigation technique”
(Albrecht, Albrecht, Albrecht, & Zimbelman, 2012)
 “Whether driving his Lamborghini, cruising on his luxury
boat in Fiji, or relaxing in his antique-furnished historic
homestead, Michael Swann made no secret of his high-
flying lifestyle”
(“How Mr Money Bags got rich”, 2008)

4. Fraud Motivation

5. Conversion Searches
Conversion searches are performed for two reasons:
1. To determine the extent of the embezzlement, and
2. To gather evidence that can be used in interrogations
to obtain a confession
 The most common technique used to investigate and
resolve fraud is by interviewing. By providing evidence of
lifestyle and expenditures that cannot be supported by
earned income, cornered suspects may breakdown and
confess.

6. Conversion Searches
Information can be gathered from:
1. Government, council and other public organisations
2. Private sources of information
3. Online sources of information
4. Using the net worth method of analysing information

7. Conversion Searches
Public Records
Government
Central
Local
Private Sources
Acquaintances
Trash cover
Credit agencies
Online Database
Subscription
Per-search fee
Free
Internet Searches
Google
Yahoo! etc

8. Government and Public Sources
 Electoral Roll Post Office or Library
 Companies Office www.business.govt.nz/companies
 Local Councils e.g. www.rdc.govt.nz
 Land Info NZ www.linz.govt.nz
 Min. Economic Dev. www.insolvency.govt.nz
 Personal Property www.ppsr.govt.nz
Securities Register
While some information can be obtained by anyone who requests it, other
information is covered by privacy laws (such as the Privacy Act 1993) and
requires authorisation

9. Online Sources
Examples:
 www.veda.co.nz
 www.dnb.co.nz
 www.carjam.co.nz
 www.terranet.co.nz
 www.lexisnexis.com

10. Private Sources
 Private acquaintances
 “Trashing”
 Shredded documents
 Original files on computers
Be sure you have the legal rights to gather and use the information

11. Internet Searches
 Google
 Search by phrase
 Minus search terms
 Domain restrictions
 Google Groups
 Cached Results
 Google Images
 Google Earth
 Yahoo!

12. Net Worth Calculations
1. Assets – Liabilities
= Net Worth
2. Net Worth
– Prior Years Net Worth
= Net Worth Increase
3. Net Worth Increase
+ Living Expenses
= Income
4. Income
– Funds from Known Sources
= Funds from Unknown Sources

13. Net Worth Example
Financial Data for Joe Blogs 2012 2013 Financial Data for Joe Blogs 2011 2012 2013
Income Assets
Salary 39,000 41,000 Dwelling 250,000 250,000 250,000
Vehicle 20,000 20,000 60,000
Expenses Cash at bank 1,000 5,000 15,000
Mortgage repayments 10,000 10,000 Total Assets 271,000 275,000 325,000
Vehicle loan repayments 3,000 3,000
Living expenses 15,000 16,000 Liabilities
28,000 29,000 Mortgage 200,000 195,000 141,000
Vehicle loan 10,000 8,000 -
Total Liabilities 210,000 203,000 141,000
Net Worth 61,000 72,000 184,000
Change in net worth 11,000 112,000
Plus living expenses 28,000 29,000
Total income 39,000 141,000
Less known Income 39,000 41,000
Income from unknown sources - 100,000

14. Summary
 Discovering how perpetrators convert and spend their
funds is an important investigation technique
 Government and other public records are important
sources of information about the financial “tracks” of
suspected perpetrators
 Private and online sources of information are important
sources of information during an investigation
 Net worth calculations are effective in court and in
obtaining confessions from suspected perpetrators

15. Questions

16. References
1. Albrecht, W.S., Albrecht, C.O., Albrecht, C.C., & Zimbelman, M.F. (2012).
Fraud Examination (4th Ed.). Mason, OH: South-Western.
2. Akuhatawhare, W. (2011, October 6). Te Puia ticket seller was stealing
more than $1000 a day. The New Zealand Herald. Retrieved from
http://www.nzherald.co.nz.
3. Granny avoids jail term for Te Puia theft. (2012, June 22). 3 News.
Retrieved from http://www.3news.co.nz.
4. Hartevelt, A. (2011, November 11). Jail term for theft at Te Puia.
Rotorua Daily Post. Retrieved from http://www.rotoruadailypost.co.nz.
5. How Mr Money Bags got rich by robbing the sick. (2008, December 13).
Otago Daily Times. Retrieved from http://www.nzherald.co.nz.
6. KPMG. (2013). A survey of fraud, bribery and corruption in Australia &
New Zealand 2012. Retrieved from http://www.kpmg.com/au.