In loss recovery process. Firstly, the engagement

In order to figure out who, what,
when, where, how and why in term of the fraud activity, fraud investigation
should be implemented.  Before that,
there should have an investigation framework compromise of the appropriate
authorisation to conduct the investigation, terms of reference which establish
a focus and set limits on the investigation and the investigation plan.  The fraud investigation includes
systematically gathering and reviewing evidence for purpose of documenting the
presence or absence of fraud. The fraud investigation generally start as a
result of some indication that fraud may have happened, from the anonymous tips
to anomalous data in the accounting system. There are four series of steps
included in the investigation process, begin with the engagement process, the
evidence process, the reporting process, and the loss recovery process.

Firstly, the engagement process is a
series of steps which starts with the investigator’s first contact with the
case and ends with a complete agreement regarding the fraud investigation. In
this movie of the Wolf of Wall Street, we are the fraud investigator.  We provide the engagement letter which
consist of services to be provided, objectives and scope of the investigation,
methods to be used, resources required, responsibilities of the respective
parties, the basis and methods used for charging professional fees, and last
the means for resolving disputes. The services that we provided are gathering
the evidences of the existence of fraud, the amount of the loss and the actions
of the suspects.  The method that we use
are reviewing the documents and computer record as well as interviewing all
related parties. While on the professional fees, we are charged on an hourly
basis and the provisions of expenses like copying costs, telephone charges and
travelling expenses.

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Secondly, we gather the evidence as
much as possible. We collect original documentary evidence in the beginning stage
of gathering evidence in order to provide a basis know what to observe, and
what question to ask in interview.  We
make copies of the original documents and keep them in a secure location so
that access is restricted.  We check and
compare the bank statements of the company and all possible perpetrators.  We go through the tax return by using the
electronic filing such as Form 1040 US Individual Income Tax Return and Form
1120 US Corporation Income Tax Return.  We also check the property ownership of the
perpetrators such as house, car, yacht and helicopter.  We view the company’s financial statement,
Stratton Oakmont and the trading transaction file involve the date, customer,
trading volume and share price.  We also
check over the position of each perpetrators in the firm to determine their
duties, customer list to figure out the investor who suffer loss and the call
log as well as the employee’s contract. We read through the commercial database
of all possible perpetrators in established perpetrators’ profile and
history.  Lastly, we check the
prospectors of company that use by the broker in order to understand the
background of company that perpetrators propose, whether it possible to become
“blue-chip” company in the future.

Next, the collection of the
observational evidence is also part of the sources.  We observe the activities that are unusual
and suspicious in the past.  We discover
that the expenditure of wedding is too high as one of the possible perpetrators
gave his wife a yacht as a wedding gift. Besides that, there was a $22million
to company account within 3 hours and a huge amount of deposit into Swiss Bank.

Moreover, we conduct multiple
interviews. The interviews start with individuals who are not suspects and then
proceed to those who are least culpable, and finally end with the most
culpable.  Five kinds of questions are
asked consists of introductory, informational, assessment, admission seeking,
and concluding.  We formulate an
interview plan, maintain professional scepticism and prevent tunnel vision. The
most suspect is Jordan Belfort who has been interviewed at the last. We ask
about the huge deposits in his bank account, the luxury goods that he owned and
the sources of money he obtained for drug addict in order to know the true
source of illicit gains. We also ask why there is an increase of $22million of
trading within 3hours. We structured the questions so that the answer is a
general admission of guilt.  The same
questions has been asked to the Donnie Azoff, Brad Bodnick, Chester Ming and
others possible fraudsters. Jean Jacques Sorel who is a French Swiss banker has
been interviewed based on why and how the bank account of Emma suddenly have a
huge amount of deposit and what is his action. Furthermore, the lawyer Max
Belfort, we has structured the questions to know whether he has committed the
fraud or has helped Jordan to hide the security fraud and money laundering.
After that, we designed the informational questions to Naomi Lapaglia (Jordan’s
2nd wife) and Teresa Petrillo (Jordan’s 1st wife) to collect information
regarding Jordan daily actions and whether they have knowledge or awareness
about their husband’s involvement in security fraud and money laundering. Last
but not least, we also try to establish rapport with Jordan’s father, Alden in
order to know others details related to the security fraud. Lastly, we try to
form the introductory questions to gain more information from the employees and
the person who help in the process of money laundering.  We also question them whether they aware of
the fraud.

The third process is reporting
process. We keep a unified investigation file, which is a complete record of
the investigation, documenting every step such as all discussions, phone calls,
interviews, decisions and conclusions made during the course of the
investigation. We prepare the fraud report with expert opinion and testimony
which support the resolution. The elements of the fraud report contain address
section, background information, investigation summary, scope and objectives,
approach, findings and recommendations.

The last process is loss mitigation
and recovery.  We apply immediate loss
mitigation option by giving permission to the possible perpetrators to continue
in his/her current position, normally the possible perpetrators will continue
the fraud, thus giving us the possibility of catching his/her in act.  However, this way is quite expensive, so we
weighted between the benefit and cost to determine whether choosing particular
method.