When most people hear the word “forensic,” they think of popular televisions shows, such as “CSI” and “Bones.” The word “forensic” comes from the Latin and means anything pertaining to or used in a court of law. Law-related forensics encompass a wide range of specialties, including forensic accounting. What is forensic accounting? And, how did a forensic accountant bring down one of the most infamous criminals in the history of the United States?
What Forensic Accountants Do
Forensic accountants are employed by a wide range of sectors, including law offices, insurance companies, government agencies, banks, law enforcement divisions and consulting firms. They use their investigative and accounting skills to look for evidence of malfeasance and fraud. Forensic accountants frequently testify in court as expert witnesses to provide and explain information in an easily understandable way. Growing fraud activity has led to an increased demand for forensic accountants.
Forensic accountants participate in criminal investigations, insurance claim cases, personal injury cases, business fraud investigations, divorce proceedings, professional negligence investigations and corporate disputes.
How a Forensic Accountant Brought Down Al Capone
“Scarface” Al Capone was the crime lord of Chicago in 1929. His illegal activities included prostitution and gambling, but Prohibition opened the door to his largest revenue stream, bootlegging. By 1927, Capone had a personal wealth of nearly $100 million and was bringing in over $60 million per year.
Capone was always one step ahead of law enforcement. Arrested several times, he was never prosecuted for his criminal activities. He maintained a public image of helping the downtrodden by providing soup kitchens for Chicago’s hungry. It wasn’t until the St. Valentine’s Day Massacre that public opinion turned. Always willing to eliminate rivals, Capone allegedly ordered the massacre of “Bugs” Moran and his gang in a Chicago garage. Moran escaped but several of his gang members were murdered. Capone was never charged, but the public and press demanded action.
Capone was a master at hiding his ill-gotten gains. Enter Frank Wilson, the man who is often called the first forensic accountant. Wilson was a special agent in the Internal Revenue Service Intelligence Unit. Wilson and his team carried out an exhaustive investigation of Capone and his financial dealings with associates.
The breakthrough came when Wilson, after scrutinizing over 200 documents, discovered ledgers with payment notations. Wilson traced them back to Capone who had not reported the payments as income. Wilson compiled enough evidence to bring Capone to trial despite death threats to himself and his family. Capone’s October 1931 trial became an international sensation. Capone managed to bribe the first jury but Judge James H. Wilkerson changed the jury panel. Found guilty on five of the 23 counts against him, Capone was sentenced to 11 years in prison and ordered to pay $80,000 in fines. He went to Atlanta’s penitentiary, was transferred to Alcatraz for a short time and was released to a Baltimore hospital in 1939. He died a recluse in 1947.