All is Not Lost: Fraud Victims, Emotional Stress and the CFE

Fraud victims go through much of the same emotional aftermath as victims of violent crime. Jaime deBlanc-Knowles speaks with Stephen Peadnault, CFE, about the emotional impact of fraud and how CFEs can help victims cope with the trauma.

By Jaime deBlanc-Knowles

July 2015

“It’s devastating. It’s embarrassing. It’s heartbreaking,” said Penny Wasser, who, along with her husband Marv, lost her life savings to a con man. Her husband, remembering his feelings in the aftermath of the fraud, confessed: “You really wish you’d die.”

Richard Shapiro felt similarly shattered when he discovered he’d lost most of his fortune in the Bernie Madoff Ponzi scheme: “I know it sounds crazy, but it’s like when people come back from war — it was just so shocking and so deep and so out-of-the-blue unexpected.”

The depth and intensity of these fraud victims’ emotions highlight a striking reality about white-collar crime: Fraud victims go through much of the same emotional aftermath as victims of violent crime. Although victims of white-collar crime haven’t been physically violated, the psychological violation they experience can leave them significantly shaken.

In the wake of a fraud, victims can experience the following symptoms:

Loss of appetite

Insomnia

Persistent feelings of anxiety

Embarrassment and shame

Ongoing anger and resentment

Depression and even suicidal thoughts

Many studies have examined the financial impact of fraud, but far fewer have examined its emotional impact. “The psychology and sociology of it are never really discussed,” says Stephen Pedneault, CFE, principal of Forensic Accounting Services, LLC, a forensic accounting firm in Glastonbury, Connecticut.

In his practice, Pedneault deals with fraud victims on a daily basis and has become used to the emotional demands of the job. “Someone who is stable today could be very unstable tomorrow,” he says of his clients. In his 26 years as a forensic accountant, he has found it hard to ignore how central emotions are to his profession. “The first time somebody gets angry and looks like they’re going to pick up a chair and throw it at another party, it gets your attention pretty quickly.”

“When I’m not doing this, I’m also driving an ambulance on the weekends,” Pedneault says. “I’ve done that for the last 18 years. And we deal with the same thing [in the office]. Dealing with someone emotional on a medical call and dealing with someone emotional here — it’s not that different.”

“And it’s not taught,” he remarks. “There’s a ton of stuff out there on data analysis … and how do you find fraud and how to put together a good investigation and write a good report. But nothing that talks about how to deal with the emotions and how to deal with clients.”

So what does it take to sensitively and effectively work with highly emotional clients?

Calm Them Down

It’s important for CFEs to acknowledge that their clients have experienced significant trauma and to treat them accordingly. “When we get people in a highly emotional state, the first thing we try to do is bring them back down,” Pedneault says. “I just try to talk to them like if I had someone on the side of the road and we were called in an ambulance. ‘Take a deep breath. Tell me the story. Just relax. We’re here to help.’”

Listen. And Talk. And Listen.

A CFE needs patience to work with emotional clients, who often come into the office bearing a heavy load of anger, resentment and grief. The following strategies, recommended by the National Center for Victims of Crime, can help CFEs develop effective listening skills with their clients:

Maintain eye contact and use a friendly tone of voice.

Paraphrase information given by the victim.

Let the victim share the story once through, uninterrupted.

Ask open-ended questions.

Affirm the victim’s experience.

Pedneault can attest to the importance of talking — just talking — to fraud victims. “The fraud examination is important — looking at documents, looking at computer files — yeah, that’s important. But that’s probably 30 percent of what we do. We spend 50 percent of our time talking. Maybe 60 percent. … Most victims — they just want someone to talk to, and someone who can listen long enough and then give some good advice.”

Establish Rapport (and Carry Tissues)

Building a strong working relationship with the victim can go a long way toward helping the fraud examination proceed smoothly. CFEs can build rapport by acknowledging the trauma that victims have gone through and affirming that victims are not to blame. It is also important for CFEs not to condescend to or lecture clients, particularly when the victims are vulnerable or elderly.

One of the main roles of the CFE is to offer support. “We have people cry all the time,” Pedneault says. “One great way to build rapport is to recognize when someone is about to cry … and to offer them a tissue. It’s very comforting.”

“We have a lot of people come back after the cases and just stay in touch,” he adds, “Because quite often we’re told — you know, ‘I’ve been going through a lot, I have attorneys, I’ve got other professionals I’m paying … but honestly you guys are the only people who (a) listen to us and (b) give us straight-up advice.’”

Keep Expectations Realistic

One of the sad facts about fraud investigation is that fraud victims might never recover the money that was stolen from them — or they might recover only a small portion of it. CFEs should be frank with fraud victims about this fact and avoid offering false hope. Victims can experience further trauma if they have high expectations of recovering losses and then later have those hopes dashed.

CFEs should also be clear with fraud victims that recovery efforts take time. “The sad part of anything financial is that it doesn’t get resolved quickly,” Pedneault notes. “Even if you go in on a slam-dunk embezzlement case, it’s probably three to six months from the day it was discovered to the resolution.”

Fraud examiners should give a realistic timeline for the case and counsel clients not to expect immediate results. “Nothing happens fast in our world,” says Pedneault. “So [clients] are going to get depressed over time. … Keep educating them — everything’s going to happen, it just takes time.”

Help Maintain Perspective

One of the hardest things to do in a crisis is to maintain perspective. However, in the long haul of fraud investigations, that just what CFEs and fraud victims must do. Pedneault says it is helpful to remind clients that all is not lost. He tells clients: “Let’s not ruin the rest of your life over this; let’s figure out a way to resolve it.” He also finds that humor is helpful in lightening the mood — but it must be well-timed and appropriate.

Another constructive strategy is to separate the emotions of fraud from the business of fraud, something Pedneault accomplishes by drawing a Venn diagram for his clients. “I draw two circles that overlap and I say, ‘Every case that we have has two circles: an emotional case and what I call the business transaction. If you want to get divorced, we have to split your assets and divide your income: That’s business. And we have to figure out how you’re going to move on from whatever damage was caused by the marriage or the divorce. We can help you recognize that you need to separate those. But as long as those two circles overlap, we’re not going to make any headway.’”

Rally the Support Systems

Clients experiencing strong negative feelings often need more emotional support than CFEs can, or should, provide. CFEs should encourage emotional clients to seek outside support to come to terms with their losses. Particularly when the fraud investigation is long-term or involves significant personal losses, it’s important that victims attend to their mental and emotional health.

The National Center for Victims of Crime recommends a number of resources for victims of white-collar crime, including:

Adult protective services

Legal aid or other civil attorneys

Not-for-profit consumer credit counseling

Mental health support

Medical care or evaluation

Victims might also find meaningful support through one of the following agencies:

Family justice centers or elder justice centers

The state’s Attorney General’s Consumer Protection Office

The state’s Crime Victim Coalition, particularly the Financial Abuse Specialist Teams (FAST), which focus on complex financial abuse cases

Area Agencies on Aging (organizations that assist the elderly)

Online support forums, such as Scam Victims United

CFEs shouldn’t forget about taking care of themselves either. In dealing with highly emotional people, CFEs must guard against becoming too emotionally involved themselves — a habit that can quickly become draining and unproductive. Although CFEs should cultivate compassion for clients, they should avoid taking on the emotions of the case as if they were their own.

As Pedneault says, “It’s not your battle; you are just a piece of the solution.”