1. NONPROFIT FRAUD: WHAT
YOU NEED TO KNOW
PART I: THE FRAUD
Lawrence J. Hoffman, CPA/CFF, CVA, CFE
Senior Partner and Director of Forensic
Accounting Services
Leslie C. Kirsch, CFE
Manager, Forensic Accounting Services
October 31, 2013

2. OBJECTIVES
NONPROFIT FRAUD: THREE-PART SERIES
PART I: THE FRAUD
•
•
•
•
•
Why it is important that you are educated in fraud
The magnitude of fraud in nonprofits
The types of frauds in nonprofits
Why does fraud occur in nonprofits
Some important fraud prevention takeaways
PART II: THE DETECTION
•
•
•
•
•
•
Who are the fraud perpetrators?
Why do people commit fraud?
How is fraud detected?
What are fraud red flags?
Fraud detection techniques
What do you do when you uncover fraud?
PART III: THE PREVENTION
•
•
•
•
What are the primary factors contributing to fraud in nonprofits?
Detective versus preventative controls
What are the best preventative measures?
The five critical takeaways!
Part I: The Fraud* Page 2

3. AGENDA
• Why you need to be educated about fraud
• What you need to know about the impact of fraud
• Common types of fraud in nonprofits
• Case study # 1
• Case study # 2
• More case studies
• Summary – the important takeaways!
• How can Raffa assist you in preventing and detecting fraud
• Resources and suggested reading
• Questions and answers
Part I: The Fraud* Page 3

4. WHY YOU NEED TO KNOW ABOUT FRAUD
THE TOP TEN REASONS!
1. Nonprofit organizations are very susceptible
to fraud and abuse
2. Don’t count on your outside auditor to uncover the fraud
3. Fraud increases when the “pressure / incentive” increases,
which increases in a poor economy1 and layoffs (fewer
employees doing more)
4. You probably have some sort of fraud in your organization
going on and you don’t know it
5. A fraud in your organization could bring unwanted outcomes,
such as adverse publicity, loss of support, lower employee
morale, and disruption of your operations
1
See article, “In Tough Economy, Employee Theft Climbs to Epidemic Proportions, Expert Says,”
Statesman.com, November 2011.
Part I: The Fraud* Page 4

5. WHY YOU NEED TO KNOW ABOUT FRAUD
THE TOP TEN REASONS! (CONTINUED)
6. The IRS requires you to disclose instances of fraud – Form 990
– more transparent to donors
7. You cannot afford the loss, cost of the investigation, and
disruption to your operations
8. Asset (cash ) misappropriations are by far the most prevalent
frauds committed against nonprofits and the most important
resource
9. The fraud perpetrator is not easily known to the organization.
In many cases, the perpetrator is “someone you know and
trust”
10. You could find yourself personally liable for damages
Part I: The Fraud* Page 5

6. WHY YOU NEED TO KNOW ABOUT FRAUD
FORM 990 RETURN OF ORGANIZATION EXEMPT FROM
INCOME TAX
Part I: The Fraud* Page 6

7. WHY YOU NEED TO KNOW ABOUT FRAUD
FORM 990 RETURN OF ORGANIZATION EXEMPT FROM
INCOME TAX
Explain (1) the nature of the diversion, (2) amounts or property involved,
corrective actions taken to address the matter, and (3) pertinent
circumstances.
A diversion of assets includes any unauthorized conversion or use of
the organization's assets other than for the organization's authorized
purposes, including but not limited to embezzlement or theft. Report
diversions by the organization's officers, directors, trustees, employees,
volunteers, independent contractors, grantees (diverting grant funds), or
any other person, even if not associated with the organization other than
by the diversion.
For this purpose, a diversion is considered significant if it exceeds the
lesser of (1) 5% of the organization's gross receipts for its tax year, (2)
5% of the organization's total assets as of the end of its tax year, or (3)
$250,000.
Part I: The Fraud* Page 7

8. WHAT YOU NEED TO KNOW ABOUT FRAUD
A WORLD WITHOUT DECEPTION
Part I: The Fraud* Page 8

9. WHAT YOU NEED TO KNOW ABOUT FRAUD
Go to http://www.acfe.com/rttn.aspx to download the report.
Part I: The Fraud* Page 9

10. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS
• Typical organization loses 5% of its annual revenue to fraud (applied to
2011 Gross World Product = $3.5 trillion)
• Median loss is $140,000
• Fraud lasted 18 months before being detected
• 87% are asset misappropriation schemes
• Most likely detected by a tip than any other means
• Small organizations are disproportionately victimized
• Most occupational fraudsters are first-time offenders with clean
employment histories. Approximately 87% of occupational fraudsters had never
been charged or convicted of a fraud-related offense, and 84% had never been
punished or terminated by an employer for fraud-related conduct
• In 81% of cases, the fraudster displayed one or more behavioral red flags
that are often associated with fraudulent conduct.
– Living beyond their means (36%)
– Experiencing financial difficulties (27%)
– Unusually close association with vendors or customers (19%)
– Excessive control issues (18%)
Part I: The Fraud* Page 10

11. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
• Perpetrators with higher levels of authority tend to cause much
larger losses. The median loss among frauds committed by owners /
executives was $573,000, the median loss caused by managers was
$180,000, and the median loss caused by employees was $60,000
• The longer a perpetrator has worked for an organization, the
higher fraud losses tend to be. Perpetrators with more than 10
years of experience at the victim organization caused a median loss of
$229,000. By comparison, the median loss caused by perpetrators
who committed fraud in their first year on the job was only $25,000
• 77% of all frauds in the study were committed by individuals
working in one of six departments: accounting, operations, sales,
executive / upper management, customer service, and publishing
• Nearly half of victim organizations do not recover any losses that
they suffer due to fraud. 49% of victims had not recovered any of
the perpetrator’s takings; this finding is consistent with previous
research, which indicates that 40-50% of victim organizations do not
recover any of their fraud-related losses
Part I: The Fraud* Page 11

12. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
• Not-for-profit organizations made up the smallest portion of the
ACFE’s dataset, accounting for more slightly more than 10% of
reported cases
Part I: The Fraud* Page 12

13. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud* Page 13

14. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
• Small organizations (those with fewer than 100 employees)
continue to be the most common victims in fraud
Part I: The Fraud* Page 14

15. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud* Page 15

16. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud* Page 16

17. WHAT YOU NEED TO KNOW ABOUT FRAUD
ACFE REPORT TO THE NATIONS
SUMMARY OF FINDINGS (CONTINUED)
Part I: The Fraud* Page 17

18. WHAT YOU NEED TO KNOW ABOUT FRAUD
CONCLUSIONS AND RECOMMENDATIONS
• Occupational fraud is a global problem
• Fraud reporting mechanisms (hotlines) are a critical component
of an effective fraud prevention and detection system
• Organizations tend to over-rely on audits
• Employee education is the foundation of preventing and detecting
fraud
• Surprise audits are an effective, yet underutilized tool
• Small businesses are particularly vulnerable to fraud
• Internal controls alone are insufficient to fully prevent fraud
• Fraudsters exhibit behavioral warning signs of their misdeeds
• Effective fraud prevention measures are critical
Part I: The Fraud* Page 18

19. WHAT YOU NEED TO KNOW ABOUT FRAUD
JP SIMS CONSULTING – CASES REPORTED IN LAST SIX
MONTHS IN THE NONPROFIT SECTOR
• “Former Employee Admits Theft from Coeur d’Alene Tribe”
• “Emory University to Pay $1.5 Million to Settle False Claims Act
Investigation - University Overbilled Medicare and Medicaid for
Patients Enrolled in Clinical Trial Research at Emory’s Winship
Cancer Institute”
• “Union County Woman Convicted of Fraud Leading to the Theft of
$7 Million in Charity HIV and Cancer Medication - Medicines Had
Been Donated to be Used for Indigent Patients”
• “Former President of Remington Volunteer Fire Department
Pleads Guilty to Embezzlement Charge”
• “Mental Health Counselor Receives Six-Year Prison Sentence for
Defrauding Medicaid of $6.1 Million - Defendant Used Proceeds to
Purchase $500,000 in Jewelry and Vehicles”
www.jpsimsconsulting.com
Part I: The Fraud* Page 19

20. WHAT YOU NEED TO KNOW ABOUT FRAUD
NONPROFIT FRAUD
• Why nonprofits face a disproportionate level of fraud:
– Lack of internal controls / segregation of duties
– Lack of tone at the top / oversight – “volunteers” vs. “the store owner”
– Lack of hiring – due diligence
– Lack of anti-fraud programs
– Too much reliance on audits to catch fraud
– More “mission” driven versus “profit” driven
– Greater culture of “trust”
Part I: The Fraud* Page 20

21. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE SIZE OF THE NONPROFIT SECTOR2
• 1,424,918 tax-exempt organizations composed of:
– 956,738 public charities
– 97,435 private foundations
– 370,745 other types of organizations (e.g., chambers of commerce, fraternal
organizations, and civic leagues)
• Nonprofits’ share of the U.S. GDP was 5.5% in 2012
• In 2011 (the most recent date in which these figures were
aggregated), public charities accounted for:
– $1.59 trillion in revenue
• Of the revenue, 22% came from contributions, gifts, and government grants; 72%
came from program services revenues, which include government fees and contracts;
and 6% came from “other” sources, including dues, rental income, special event
income, and gains or losses from goods sold
• In 2011 (the most recent date in which these figures were
aggregated), private charitable contributions, which include
giving to public charities and religious congregations, totalled
$298.4 billion
2
National Center for Charitable Statistics, “Quick Facts about Nonprofits,” http://nccs.urban.org/statistics/quickfacts.cfm.
Part I: The Fraud* Page 21

22. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE MOST IMPORTANT POINTS YOU WILL TAKE AWAY
FROM THIS SEMINAR SERIES
• Design your systems and procedures so you do not have to rely
on trust as a control!
• Any person is capable of committing fraud!
• TRUST IS NOT AN INTERNAL CONTROL!
Part I: The Fraud* Page 22

23. FAMOUS QUOTES
Part I: The Fraud* Page 23

24. FAMOUS QUOTES
“Trust, but verify.”
• 40th President of the United States Ronald W. Reagan (1911-2004)
“Verify, then verify some more.”
• Senior Partner, Raffa, P.C., Lawrence J. Hoffman, CPA/CFF, CVA,
CFE (1954-?)
Part I: The Fraud* Page 24

25. MY BOOK!
EXPECTED RELEASE
THIS WINTER!
STAY TUNED!
Part I: The Fraud* Page 25

26. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE FIVE MOST IMPORTANT TAKEAWAYS
1. Trust is not an internal control!
– Establish, to the extent possible, controls and procedures that eliminate the
element of trust
– Always segregate the custody of the asset with the recordkeeping for the asset
2. Set the tone from the top!
– “If you are stealing, your employees are stealing!”
– E.g., office supplies, expense reports, etc.
3. Know your employees!
– Background investigations and public records checks before hiring
– Meet and establish a baseline relationship
4. Institute a fraud policy
– No tolerance
– Will prosecute
5. Establish a hotline for tips
– Number one method for detecting fraud!
– Can outsource
Part I: The Fraud* Page 26

27. TYPES OF FRAUD
THREE BROAD CATEGORIES OF FRAUD
• Financial statement fraud
• Corruption
• Misappropriation of assets
Part I: The Fraud* Page 27

28. TYPES OF FRAUD
Part I: The Fraud* Page 28

29. TYPES OF FRAUD
FINANCIAL STATEMENT FRAUD
• Fraudulent financial reporting (“cooking the books”). Intentional
misstatement or omissions of amounts or disclosers in financial
statements designed to deceive financial users when the effect
causes the financial statements not to be presented, in all
material respects, in conformity with GAAP
– Examples:
• Falsification of accounting records
• Omissions of transactions or disclosures
Part I: The Fraud* Page 29

30. TYPES OF FRAUD
CORRUPTION
• Schemes that involve the employee’s use of his or her influence
in business transactions in a way that violates their duty to the
employer and obtains benefit for themselves or others:
– Conflicts of interest
– Bribery
– Illegal gratuities
– Economic extortion
Part I: The Fraud* Page 30

31. TYPES OF FRAUD
MISAPPROPRIATION OF ASSETS
Part I: The Fraud* Page 31

32. TYPES OF FRAUD
MISAPPROPRIATION OF ASSETS
• The theft of an entity’s assets where the effect of the theft causes
the financial statements not to be presented in conformity with
GAAP (sometimes referred to as “defalcation”)
• Misappropriation of assets can be accomplished in various ways,
including:
– Embezzling
– Stealing assets
– Causing an entity to pay for goods or services that have not been
received or causing an entity to overpay for goods or services actually
received
Part I: The Fraud* Page 32

33. TYPES OF FRAUD
MISAPPROPRIATION OF ASSETS
• Revenue and cash receipts (collections) schemes:
– Cash skimming / unrecorded sales / contributions
– Cash larceny
– Lapping schemes
– Write-off of accounts receivable
– Unauthorized credits
– Check tampering (stolen, altered)
Part I: The Fraud* Page 33

34. TYPES OF FRAUD
PURCHASING AND CASH DISBURSEMENT SCHEMES
• Fictitious invoices and vendors (shell company)
• Check tampering
– Forged maker (check signer)
– Forged endorsement
– Altered payee
• Bank wire transfers
From “Disputed Handwriting” by Jerome B. Lavay
Part I: The Fraud* Page 34

35. TYPES OF FRAUD
PAYROLL AND EMPLOYEE EXPENSE REPORTING
SCHEMES
• Payroll schemes
– Ghost employees
– Falsified hours and wages
– Overtime abuses
• Expense reimbursement schemes
– Mischaracterized expenses
– Overstated expenses (altered receipts)
– Fictitious expenses (bogus receipts)
– Multiple reimbursements
Part I: The Fraud* Page 35

36. TYPES OF FRAUD
NONCASH ASSET MISAPPROPRIATIONS
• Misuse of assets for personal use
• Inventory
Part I: The Fraud* Page 36

37. CASE STUDY # 1
The Washington Post, Wednesday, June 3, 2009.
Part I: The Fraud* Page 37

38. CASE STUDY # 1
WHAT WENT WRONG?
• Position of perpetrator: Controller
• Length of time employed: 3 years, 11 months
• Length of time fraud lasted: 3 years, 6 months
• Schemes involved in fraud:
– Fraudulent checks and wire transfers
– Used electronic signatures and signature stamps
– Falsified accounting of transactions in books and records
– Provided forged documents, including bank statements, to independent
auditors
• How was the fraud discovered?: Executive Director found checks
written to perpetrator and an unknown bank account statement in his
office after he was terminated for poor performance
Part I: The Fraud* Page 38

39. CASE STUDY # 1
HOW MUCH DID IT COST?
• Organization’s annual budget: $2.7 million
• Total fraud loss to the organization: $425,558 (fidelity bond was
only $30,000 with $5,000 deduction)
• Other losses to the organization: Disruption to operations and legal
and forensic consulting fees
• Where did all the money go?: New 2006 BMW 325i car, furniture,
vacations
• What happened to the perpetrator?:
– Criminal prosecution
– Conviction
– 41 months in Allenwood, a low-security correctional institution in White Deer,
PA
– Ordered to pay restitution of $470,990.59
Part I: The Fraud* Page 39

40. CASE STUDY # 1
LESSONS LEARNED
• Lack of segregation of duties – a “one-man show”!
– Segregate the custody of the asset with the recordkeeping!
• Lack of oversight controls and financial reviews, including review
of financial statements, reconciliations
• Use of signature stamp
• Inadequate fidelity bond coverage
• Too much trust and not enough verification!
Part I: The Fraud* Page 40

41. CASE STUDY # 2
ORGANIZATION CURRENTLY UNDISCLOSED
Part I: The Fraud* Page 41

42. CASE STUDY # 2
WHAT WENT WRONG?
• Position of perpetrator: Director of Information Technology
• Length of time employed: 7 years, 7 months – voluntarily left
employment and left country
• Length of time fraud lasted: 7 years, 5 months
• Schemes involved in fraud:
– Billing scheme – shell company – billed for IT equipment that was never
received by the organization or was received, but the price was inflated
• How was the fraud discovered?:
– Whistleblower – person who replaced perpetrator notices discrepancies and
anomalies in past IT inventory and procedures
Part I: The Fraud* Page 42

43. CASE STUDY # 2
HOW MUCH DID IT COST?
• Total fraud loss to the organization: $3.5 million ($1.3 million
recovered from insurance)
• Other losses to the organization: Disruption to operations and
forensic consulting fees and unwanted negative publicity
• Where did all the money go?: Amusement park in foreign country
• What happened to the perpetrator?: Fled the country
Part I: The Fraud* Page 43

44. CASE STUDY # 2
LESSONS LEARNED
• Lack of internal controls / segregation of duties
– No separation of custody of asset with recordkeeping
• Lack of a packing and receiving reports match
• One person controlled the procurement, receipt, and deployment
of the assets
• Lack of inventory controls – “The wolf watching over the hen
house”
• Too much trust and not enough verification!
Part I: The Fraud* Page 44

45. MORE CASE STUDIES
The Washington Post, May 31, 1997.
Part I: The Fraud* Page 45

46. MORE CASE STUDIES
The Washington Post, August 17, 2011.
Part I: The Fraud* Page 46

47. MORE CASE STUDIES
The Blog of Legal Times, September 26, 2012.
Part I: The Fraud* Page 47

48. MORE CASE STUDIES
The Washington Post, May 1, 2010.
Part I: The Fraud* Page 48

49. MORE CASE STUDIES
The Associated Press, January 14, 2013.
Part I: The Fraud* Page 49

50. MORE CASE STUDIES
The National Law Journal, January 14, 2013.
Part I: The Fraud* Page 50

51. MORE CASE STUDIES
The Associated Press, September 24, 2008
Part I: The Fraud* Page 51

52. MORE CASE STUDIES
The Washington Examiner, July 1, 2010.
Part I: The Fraud* Page 52

53. MORE CASE STUDIES
Part I: The Fraud* Page 53

54. WHAT YOU NEED TO KNOW ABOUT FRAUD
THE FIVE MOST IMPORTANT TAKEAWAYS – AGAIN!
1. Trust is not an internal control!
– Establish, to the extent possible, controls and procedures that eliminate the
element of trust
– Always segregate the custody of the asset with the recordkeeping for the asset
2. Set the tone from the top!
– “If you are stealing, your employees are stealing!”
– E.g., office supplies, expense reports, etc.
3. Know your employees!
– Background investigations and public records checks before hiring
– Meet and establish a baseline relationship
4. Institute a fraud policy
– No tolerance
– Will prosecute
5. Establish a hotline for tips
– Number one method for detecting fraud!
– Can outsource
Part I: The Fraud* Page 54

55. HOW CAN RAFFA ASSIST YOU IN
PREVENTING AND DETECTING FRAUD?
FRAUD INVESTIGATIONS AND PREVENTION
• Fraud examinations and internal investigations
• Fraud risk assessments
• Review of internal controls and management practices
• Financial statement misrepresentations
• Background and workplace investigations
• Computer forensic analysis, imaging, data mining and recovery
• Asset tracing and recovery
• Reconstruction of accounting records
• Continuous audit services
• Anti-fraud consulting and training
Part I: The Fraud* Page 55

56. HOW CAN RAFFA ASSIST YOU IN
PREVENTING AND DETECTING FRAUD?
COMING SOON!!
A resource for the nonprofit community to help
organizations effectively manage risk and better ensure the
prevention and detection of fraud.
Part I: The Fraud* Page 56

57. SOME AREAS WE WILL BE GOING OVER IN
OUR OTHER PRESENTATIONS
PART II: THE DETECTION – NOV. 19, 2013, 12:00-2:00 P.M.
•
•
•
•
•
Who are these people that commit fraud?
Why do they commit fraud?
How are most frauds really detected?
Specific things you should have in place to help detect fraud
What should you do when you uncover fraud?
PART III: THE PREVENTION – DEC. 12, 2013, 12:00-2:00 P.M.
•
•
•
•
What are the primary factors contributing to fraud in nonprofits?
Detective versus preventative measures and controls
The best preventative controls and practices
The critical takeaways and how to implement them
Part I: The Fraud* Page 57

58. RESOURCES AND SUGGESTED READING
• 2012 Report to the Nations on Occupational Fraud and Abuse,
Association of Certified Fraud Examiners,
http://www.acfe.com/rttn.aspx
• “The American Fraud Report,” www.jpsimsconsulting.com
• The CPA’s Handbook of Fraud and Commercial Crime Prevention,
AICPA
• Managing the Business Risk of Fraud: A Practical Guide; AICPA,
ITA, and ACFE; https://na.theiia.org/standardsguidance/Public%20Documents/fraud%20paper.pdf
Part I: The Fraud* Page 58

59. QUESTIONS AND ANSWERS
Part I: The Fraud* Page 59

60. BIOGRAPHY
•
•
Started career with a Big-Four international accounting firm in Washington, DC.
•
Founded a regional certified public accounting and consulting firm in 1982 and grew it to
on of the Washington, DC’s largest firms in seven years. Merged his practice with Raffa
P.C. in 2008.
•
Managed and conducted audit and accounting engagements ranging from small privately
held to large publicly held businesses in various industries, including multi-national
businesses, nonprofit organizations, and governmental entities and agencies.
•
Performed economic and financial analysis, including projections and forecasts, in support
of litigation and claims for lost earnings and profits, business interruption, shareholder
disputes, patent and trademark infringements, bankruptcy and restructuring, and structural
settlements; assistance with interrogatories, document requests and depositions; and
serving as an expert and consulting witness.
•
LAWRENCE J. HOFFMAN,
CPA/CFF, CVA, CFE
35 years of consulting, audit, accounting and tax experience in the public and private
sectors.
Performed and supervised business valuations for both public and closely held companies
in a variety of industries, individuals and estates, family limited partnerships and limited
liability companies, including valuations for business combinations (SFAS 141R), mergers,
acquisitions, and divestitures, estate and gift taxes, marital dissolution proceedings, buysell agreements, intangible assets and intellectual property, purchase price allocations,
goodwill (SFAS 142) and long-lived asset (SFAS 144) impairment, fair value accounting
(SFAS 157), cheap stock (IRC 409A), stock-based compensation (SFAS 123R), phantom
stock and employee stock ownership plans.
•
Conducted and led teams of forensic accountants on fraud audits and investigations,
including fraudulent financial statements, misappropriations of assets and embezzlements;
money laundering, kickbacks, bribery and conflicts of interest; insurance claims;
bankruptcy; financial institutions and loan fraud.
Also has conducted fraud risk
assessments, anti-fraud programs, and fraud training and education.
SENIOR PARTNER
RAFFA, P.C.
1899 L STREET, NW
WASHINGTON, DC 20036
TEL. 202-822-5408
FAX 202-822-0669
LHOFFMAN@RAFFA.COM
Part I: The Fraud* Page 60

61. BIOGRAPHY
•
•
Formulated strategic short- and long-term business and financial planning for various
business organizations and served as interim “C” level positions, including for a major
North American sports league, European and U.S. aircraft manufacturer, aviation charter
airline and travel company, and a multi-chain quick service food chain.
•
Formulated syndication strategies and prepared business plans and private placement
offerings, including financial forecasts, market research and analysis, due diligence,
securities pricing and structuring for various public and private securities offerings,
including SEC filing.
•
Founded and developed a regional NASD licensed broker dealer investment banking firm.
Placed over $150 million in debt and equity and represented over $200 million in merger
and acquisition transactions.
•
LAWRENCE J. HOFFMAN,
CPA/CFF, CVA, CFE
Assisted companies and nonprofits with restructuring and turnaround situations, including
recapitalizations, reorganizations and liquidations. Advised entities on Chapters 11 and 7,
bankruptcy filings and proceedings and non-judicial workouts. Developed and
administered crisis management plans, cash flows, liquidation and turnaround analysis,
debt restructuring and creditor negotiations, and turnaround plans.
Founded and developed two private equity funds in excess of $10 million, including
investments in early stage and mature emerging companies in the form of debt and equity.
Portfolio investments included aviation, food and hospitality, software and technology,
telecommunications, sports and entertainment, banking and financial institutions,
healthcare, and wholesale and retail.
•
Co-founded and managed various real estate acquisition, ownership, and operating
entities, including commercial office buildings, shopping centers, flex warehouses,
residential housing and developed land.
•
Performed tax and financial consulting services for individuals and closely held
businesses.
•
Instructor in audit, accounting, finance, and forensic accounting.
SENIOR PARTNER
Part I: The Fraud* Page 61

62. BIOGRAPHY
EDUCATION & CERTIFICATIONS
Bachelor of Science, Accounting – Mount St. Mary’s University
Certified Public Accountant (CPA)
Certified Fraud Examiner (CFE)
•
Certified in Financial Forensics (CFF)
•
•
•
•
•
LAWRENCE J. HOFFMAN,
CPA/CFF, CVA, CFE
•
•
•
Certified Valuation Analyst (CVA)
Private Investigator (PI), Virginia
Series 7 General Securities Representative (not active)
Series 24 General Securities Principal (not active)
Series 63 Uniform Securities Agent (not active)
PROFESSIONAL ASSOCIATIONS & AFFILIATIONS
•
SENIOR PARTNER
American Institute of Certified Public Accountants, Member
•
•
•
•
Virginia Society of Certified Public Accountants
Association of Certified Fraud Examiners
National Association of Certified Valuation Analysts
Institute of Business Appraisers
PERSONAL INTERESTS
•
•
•
Private pilot with instrument, multi-engine, high performance complex and aircraft ratings
Golf and fishing
Reading and politics
Part I: The Fraud* Page 62

63. BIOGRAPHY
Leslie C Kirsch, CFE
Manager
RAFFA, P.C.
1899 L STREET, NW
WASHINGTON, DC 20036
TEL. 202-955-7204
FAX 202-822-0669
LKIRSCH@RAFFA.COM
• 9 years of fraud investigation and financial audit experience
• Started career with U.S. Government Accountability Office’s Forensic Audits and
Special Investigations Unit
• Led as many as 3 concurrent forensic audits and investigations on a variety of
topics, including: Federal contractor/grantee eligibility fraud and integrity issues;
federal tax collection program integrity; abuse of government purchase cards,
travel cards, and premium class travel privileges; employment of sex offenders
and child abusers at schools and child care facilities; passport application fraud;
manufacture and marketing of herbal dietary supplements
• Planned, developed, and completed audit and investigative objectives, scope,
and methodology
• Designed innovative analytical strategies and investigative techniques to identify
fraud indicators in complex datasets, using software packages such as IDEA and
SAS
• Identified, investigated, and ultimately referred hundreds of cases of potential
fraud, waste, and abuse to federal authorities for administrative action
• Led multiple undercover operations of varying complexity and political sensitivity
• Drafted numerous congressional testimonies and publicly available audit reports
(see co-authorship experience below)
• Designed and implemented internal quality assurance policies and procedures
• Bachelor of Science, Accounting – University of Maryland, College Park
• Bachelor of Science, Finance – University of Maryland, College Park
• Designated as a Certified Fraud Examiner (CFE) by the Association of Certified
Fraud Examiners
Part I: The Fraud* Page 63