The Challenge of Proving Intent

We often talk about the importance of getting inside the mind of a fraudster in order to prevent and detect fraud, but taking that journey into the psyche is crucial when proving one of the pillars a fraud case stands on: intent. In her breakout session today, Janet McHard described the challenges elusiveness of proving someone’s intent to commit fraud.

McHard, CFE, CPA, MAFF, CFF is the owner and founder of McHard Accounting Consulting LLC and led a full room of attendees through her session titled, “The Challenge of Proving Intent: Bad Accounting or Criminal Intent.”

So, how do we legally prove intent? McHard described the two types of evidence that will stand up in court: direct and circumstantial evidence.

According to McHard and some of the attendees in the audience, direct evidence can include email conversations between co-conspirators, a confession complete with the suspect’s reason for committing a crime and, in some cases, video of a suspect talking about what they did and their intention for doing it. You can also find a co-conspirator to testify to someone’s intent by sharing his or her direct knowledge of a crime. McHard said that direct evidence in the form of a confession is often harder to get than circumstantial evidence. But, when you are able to get a confession, the statement has to illustrate intent. “I usually have them dictate it to me and I write it out because I know my handwriting,” McHard said. “I purposely leave out a word on every page so that when I ask them to read it back to me, they are forced to initial by any words that have to be added back in. I have them sign it at the end with two witnesses.”

The other kind of evidence to consider when proving intent is circumstantial evidence. As opposed to direct evidence, circumstantial is evidence proved by inference and requires reasoning to prove a fact. At some members of the audience mentioned, this can include falsified receipts or documents, money found in a personal account when it was meant for a company account, journal entries where every entry is documented except suspicious ones, the destruction of records or photoshopped bank records. As McHard pointed out, circumstantial evidence is usually part the cover up. “In my office, we like to say, ‘It ain’t the thing that gets them, it’s the cover up of the thing that gets them,’” she said. “It’s the other side of the journal entry; that’s where your clues are.”

Though the legal definition of intent differs slightly per country, we still look to the legal term “mens rea” when trying to grasp what’s needed to prove a criminal act. When translated to English, the full Latin phrase that it is derived from means, “the act is not culpable unless the mind is guilty.” For fraud examiners, establishing intent, whether through direct or circumstantial evidence, requires us to once again travel inside the mind of the fraudster and not only understand the fraud, but prove it.