To Catch a Liar

Reprinted from Internal Auditor, October 2002

Professional interrogators share their insights into gathering the truth from those who know what it is but don’t want to share.

By Lynn Koller

CONFESSION MAY BE GOOD FOR THE SOUL, but try selling that to a liar facing hefty financial penalties or even jail time for such a cleansing. In many organizations, the responsibility for detecting lies and obtaining confessions falls on the internal auditor, who is usually more used to analyzing columns of numbers than the indecipherable human mind. Nevertheless, there are ways that auditors can encourage tight-lipped suspects to free their conscience with the truth about workplace transgressions.

In a fraud investigation, auditors must identify, interview, and interrogate employees suspected of committing illicit behavior. Because most suspects aren’t eager to confess, auditors may have to detect their lies through verbal and nonverbal clues, piecing them together one by one with the ultimate goal being a confession. However, because interrogation laws vary from country to country, auditors will have to ensure that they are in compliance before beginning any questioning. The Human Rights Act of 1998, established by the European Convention on Human Rights, sets the tone overall, but procedures and suspects’ rights should be reviewed as a breach of the laws could leave the interviewer open to prosecution. Benchmarks, for example, which all European Union members are expected to assimilate into their national legislation, specify that at least two interrogators be present during questioning, along with a “friend” or legal representative of the subject’s choosing, according to Neil Cowan, former director general of the European Confederation of Institutes of Internal Auditing, the European representative body of the internal audit profession.

Also, in Europe, interrogators must refrain from threatening or intimidating behavior. Accusing the suspect with a leading statement, such as “You stole the money,” is unacceptable.

Although no two experts agree on one specific technique or set of rules, analyzing speech patterns, reading body language, and following some time-proven methods from the experts can help differentiate the liars from those who have nothing to hide.

Plan from the Start

It should first be noted that there are important distinctions between interviewing an employee while investigating a fraud and interrogating an employee suspected of wrongdoing. An auditor may interview many employees — who may or may not be plausible suspects — to shed light on a case. Experts recommend that the interrogation take place in a neutral environment with no physical barriers, such as a desk, between the suspect and interrogator. Most recommend an observer in the room, such as a representative from the human resources department, to safeguard against claims of badgering or coercion.

One method of interrogation popular with investigators and law enforcement professionals, the Reid Technique, begins with a non-accusatory interview of the suspect and follows with a carefully choreographed, theme-centered interrogation. To start, says Richard Vivola, the manager of internal audit and fraud investigations for Fulton Financial Corp., a $7.5 billion bank holding company headquartered in Pennsylvania, “You interview the people least involved but still familiar with the situation, and work your way up to the people you most suspect.”

“An interrogation,” says Joseph Buckley, president of Chicago-based John E. Reid & Associates Inc., “is reserved for those situations in which the evidence clearly identifies the offender.” Consequently, the auditor conducts the interrogation on the basis that the subject's “guilt” is known. For example, he continues, “In an interview, I would ask, ‘Did you take the missing money?’ In an interrogation, however, I would say, ‘I know you took the missing money.’”

Last summer, Vivola used the Reid Technique to convince “Kelly,” one of Fulton’s tellers, to bare her soul. Kelly had issued four cashier’s checks totaling $17,254. Soon afterward, several credit card companies returned those checks to Fulton for payment, and the accounting department became aware that there were no funds to cover them. When Kelly was asked about the circumstances, she said that a customer had failed to pay her for the checks and that she would contact him to obtain payment. After several weeks of no response, the accounting department initiated an investigation, headed by Vivola.

Through personnel records and interviews of Kelly’s co-workers, Vivola learned that Kelly was 29 years old, pregnant, and had a joint marital income of about $40,000. In addition to thousands of dollars in consumer debt, the couple also had a $100,000 mortgage. A credit report on file revealed that Kelly had accounts at the credit card companies where the fraudulent cashier’s checks were remitted.

Although the culprit in this case may seem obvious, Vivola still needed more proof, and preferably a confession, to help him recover the bank’s loss. During Kelly’s interview, Vivola noted that she spoke quietly, remained unusually still, and failed to make eye contact with him. She avoided directly answering several key questions, and repeatedly denied her involvement in the cashier-check fraud.

“In this case, the denials were very weak, which — accompanied by several other factors — is a strong clue to guilt,” says Vivola. He adds that an interviewee’s closed posture, such as crossed arms and legs, is another indicator of deception.

Once Vivola had asked all the questions he felt relevant, he left the interview room and returned with an evidence file. This is the defining moment when the interview turns into an interrogation. “The suspect doesn’t know what’s contained in the file,” he says. “A guilty suspect may feel that I have overwhelming evidence in the file and be less likely to offer denials when confronted with an accusation that he or she may not be telling the truth.”

For the interrogation, Vivola developed themes about how hard it was for Kelly to work around money all day when her family needed funds. He told her that she was not alone in this situation; that he has seen others submit to the same temptations. He pointed out her opportunity and motive to commit the crime, centering his questions and statements on that theme.

“In financial services, you’re not dealing with the hardened criminal,” says Vivola. “The biggest barrier they face is embarrassment.”

After she continued to deny the theft, Vivola presented Kelly with an alternative question: “Did you take the checks to pay bills for your family or are you angry with the bank and wanted to get them?” Reminiscent of the old joke, “Have you quit beating your wife?” this type of questioning encourages the suspect to implicate herself.

Vivola continued to present the question to Kelly until she finally admitted that she took the money to help her family — with plans to pay it back. Kelly wrote out an admission of guilt and agreed to pay restitution. Although interviews and interrogations can last much longer, this time, the interrogation lasted a mere 20 minutes.

Prepare to be Friendly

Earl Basse of Basse & Associates located in Waterloo, Ontario, is a corporate security and forensic audit specialist. He formerly ran the audit unit for the Vancouver Stock Exchange, worked in the forensic accounting unit of accounting firm KPMG International, and served in the Canadian Mounties. He says that preparation is the key to every interview or interrogation. Basse recommends using open-ended questions requiring more than a “yes” or “no” answer and keeping the suspect talking.

“Once they start talking, don’t interrupt,” Basse says. He suggests nodding and leaning forward to show interest and attention, but staying out of the suspect’s personal space — about two or three feet. He uses a less confrontational stance compared to other experts, and does not recommend accusing suspects from the outset.

“Gain their trust,” Basse says. “They should know where you’re coming from. Don’t bring them in under false pretenses. If they did it, they know they’re a suspect.”

Internal auditors have status in the company, he continues, and are required to look into discrepancies and asset losses, so most employees understand that they’re not in a position to refuse to talk to them.

During questioning, Basse recommends comparing known information to the suspect’s answers and noting discrepancies. In other words, an auditor should ask questions to which he or she already knows the answer. Courtenay Thompson of Dallas-based Courtenay M. Thompson & Associates, an expert on fraud investigations and an experienced auditor, agrees.

“The key is to do your homework first,” says Thompson. For example, he uses a simple example question one might ask in a workplace theft situation where an employee has had dealings with a vendor: “Are you familiar with this vendor?” A negative response would be an immediate warning signal that the employee may have something to hide. Auditors can also ask key questions more than once to verify the consistency of responses.

One of Thompson’s clients, a financial institution, uses a distinctive method of detecting fraud. During branch audits, the auditor conducts one-on-one interviews with employees followed by having them sign statements verifying that they are not aware of any fraud taking place at the bank. By removing the opportunity for employees to disclaim knowledge, the technique has helped the bank detect fraud, according to Thompson.

“The bank keeps doing it because it works,” says Thompson, adding that the bank has promoted the procedure in a positive way with its employees.

The privacy of an interview is critical. Another of Thompson’s clients had an experience where eight managers denied any knowledge of workplace fraud. During one-on-one interviews, five of those eight gave verbal and written statements to the contrary, revealing definite instances of fraud.

Keep the Heat High

Barry Logan, the senior partner of investigations at King-Reed & Associates Ltd., Canada’s largest investigative firm, and a member of Certified Fraud Examiners, often has to convince suspects that the truth will set them free, when, in fact, it might do quite the opposite.

One of Logan’s recent clients was a meat packing plant in Canada. Management had become aware that many of the beef loins seemed to be disappearing out the back door. At $250 per loin, the thefts were making a significant impact on the company bottom line. Fortunately, one evening, an observant snowplow operator witnessed four young employees cramming tenderloins into the trunk of an automobile. Logan was then called in to interview and interrogate the suspects.

Finding the culprits wasn’t difficult; the challenge was learning the extent of the crimes and the number of employees involved. To accomplish this, Logan and his investigators met with the four meat thieves briefly and then selected the one — “Andy” — they thought was the most vulnerable, based on his character and demeanor, for further questioning.

“Going into an interview, we want a stressful situation. We don’t want the interviewee to feel relaxed, like it’s not serious,” Logan says. “During the interview, we continue to make it stressful.”

After Logan told Andy that everyone knew he had stolen the beef, Andy admitted the crime and pointed to a coworker as the ringleader. They had been stealing 12 to 15 loins a shift for five months and selling the meat to taverns and restaurants around the area. When Logan grilled Andy further, he learned that there were 12 others throughout the company operating two theft rings. The ringleader was interviewed last, and Logan only had to lay out the 11 preceding witness statements before him. The interviews and interrogations ran over three days, with each session running about four hours.

Interviews and interrogations can run a long time; Logan says that he has seen interrogations last up to eight hours. But, it’s not the time that breaks down the suspect, it’s the emotional rollercoaster. He says that in one interrogation, he watched an investigator go through the entire range of human emotions in an attempt to ferret out a confession.

Logan believes that interviewing is crucial and should not be performed haphazardly. “Oftentimes, if you have one shot, you don’t want to lose it.”

Read Subtle Clues

Some liars are tough to crack, and auditors may find it difficult to even detect that they’re lying. Paul Ekman, professor of psychology at the University of California, San Francisco, has studied lying extensively. He says that people typically give off involuntary clues. Ekman’s study shows that facial movements included more masking smiles when the subjects lied and more enjoyment smiles when they told the truth about their feelings. Vocal measurement also distinguished the liar by a fundamental increase in pitch. Ekman concluded that when both the vocal measure and the facial measures were combined, it was possible to classify 86 percent of the subjects correctly as either lying or honest. However, warns Ekman, these clues and others are not easily detectable, even by most professionals.

Ekman also points out that over friendliness, complaints about the environment, or unsolicited character references often indicate stress in a subject. But, auditors should not consider these signals in isolation. Although the lack of eye contact, for example, may be a clue, it could also mean that the suspect has macular degeneration. Crossed legs might mean the suspect needs a bathroom break or a quiver in the voice could mean the suspect is cold.

On the other side of the coin, Logan, has little faith in nonverbal cues. Having interviewed and interrogated hundreds of suspects, he “prefers to rely on the written word or the spoken word,” often using a technique known as Scientific Content Analysis (SCAn).

Developed by Avinoam Sapir of lsi Laboratory for Scientific Interrogation Inc., SCAn is the examination of a subject’s written and verbal communications. To ascertain the suspect’s truthfulness, Logan analyzes his or her sentence structure and choice of nouns and pronouns. For example, someone who says, “My wife and I went on vacation” is relaying a different message than someone who says “I went on vacation with my wife.” The former is the more natural pattern, while the latter instance indicates a distance between the subject and his wife.

Pronouns consistently said in the same place in the sentence are also an indication of anxiety, according to SCAn. For example, “And, I’m, I’m confused by the police chief’s comment immediately after we took the polygraph test.” When a suspect changes pronouns, this may also indicate a point of sensitivity: “But I, but we have shared all that with law enforcement.”

Buckley points out that there are often unnatural speech patterns in answers liars provide their inquisitors. “We have seen consistently that most truthful people answer questions one way and deceptive people answer them another way,” Buckley says. For instance, he explains, the way a suspect answers the punishment question, frequently included in an interview, is one clue to guilt. When asked what he or she thinks should happen to the person or people responsible for the fraud, “most truthful people pass harsh punishment,” Buckley says. “Most bad guys don’t hang themselves.”

Buckley also looks to language minutiae for information. For example, when a suspect responds, “I did not do anything wrong,” the lack of a contraction — didn’t — may be interpreted as slightly unnatural — certainly not enough to convict anyone, but a clue nonetheless. “We listen to the content of the answer as well as the choice of words,” Buckley says. Although linguistic analysis can’t convict a criminal alone, it certainly can help an auditor get to the truth.

Go for the Top

Fraud at the top levels of an organization is particularly challenging to investigate. “Very few organizations are equipped to handle executive-level fraud,” says Thompson. He finds that some internal auditors forced to question their superiors can be too timid and ultimately want to avoid conflict. But, an effective auditor cannot be afraid to broach difficult topics. “Really good auditing asks hard questions,” Thompson says.

Basse investigated a case where $500,000 worth of high-tech equipment was missing from a company’s inventory. He suspected and interviewed the organization’s vice president, but got little information from him. The reticent executive went back to work for the next week.

At that point, Basse scheduled interviews of the vice president’s assistant, followed by another interview of the vice president. The assistant offered almost no relevant information, but Basse continued to talk to him in the closed office for over 90 minutes, while the executive cooled his heels in the reception area. As the assistant walked past his boss on the way out, Basse shook his hand and thanked him effusively for all of the information that he provided. The vice president was then invited back for questioning where he ended up making a full confession.

Basse recommends that auditors anticipate whether legal proceedings will follow a confession, so that prerequisites can be fulfilled. Will the company want to turn the perpetrator over to police, proceed criminally or civilly, or seek restitution? For example, in Canada, if an incriminating statement is to be used in criminal court, the law requires any person of authority, such as an auditor interrogating a suspect, to issue an official warning, similar to that of the Miranda warning used by U.S. law enforcement officials. The United States does not require that auditors give suspects such a warning.

Know Your Tools

Effective interviewing and interrogation takes practice and is certainly psychologically challenging for the internal auditor. Numbers don’t lie, but people certainly do, giving some auditing assignments a taste of intrigue and mystery. Although not foolproof, studying interrogative techniques, deception, and linguistic analysis, and paying close attention to pronoun placement and body language, are definite ways to become more in tune with people. And, that can only help ferret out wrongdoers.

LYNN KOLLER is a free-lance writer based in Ormond Beach, Florida.