Gotcha! How Forensic Accounting brought about the downfall of Al CaponeBondBeebe
Lawrence R. Beebe, CPA, Principal
Elliot Ness. J. Edgar Hoover. Al Capone. Frank Wilson. Wait, Frank who? Frank Wilson – likely the first and most famous forensic accountant ever known.
The 1920s mobster Alphonse “Scarface” Capone was an accountant’s nightmare; actually, he was a nightmare for many others as well. It turns out when running nightclubs, speakeasies, dog tracks, brothels and distilleries, having comprehensive accounting “books” is a liability, at least when you’re a criminal. So when multiple law agencies were trying to bring Al Capone up on racketeering charges, there simply wasn’t evidence for a conviction. Add that to the fact that everyone involved was either paid off by Capone, or “silenced” permanently by his gang, and it’s easy to see why he got away with so much for so long.
The Untouchable Forensic Accountant
The television show and big screen movie “The Untouchables” captures an exciting period when Elliot Ness and his merry men from the Prohibition Bureau tried to bring Capone down with force. Most people know that what got Capone thrown in prison was tax evasion, which on the surface may seem a lot less interesting and less likely than gunning him down or trapping him in the middle of a criminal act. But it was no fluke, and work of over two years by the Special Intelligence Unit of the Treasury Department went into getting this conviction. Frank Wilson was the special agent purposely assigned to get Capone on tax evasion.
More than a standard accountant, a forensic accountant may serve as an investigator, auditor and attorney, for the purpose of looking for clues, predicting the criminal mind, analyzing reports for irregularities, and understanding the law well enough to know how to make evidence work for a case. Wilson and his team worked relentlessly, pursuing every possible avenue, seeking any written record for clues, tracking down those who wrote records and doing their best to get testimony from any key player – certainly no easy job at all. The premise was to somehow show Capone was spending a significant amount of money that was “earned” so they could therefore prove he didn’t pay any income tax on that income.
To Catch a Thief – Providing Litigation Support
After reviewing approximately two million documents, the forensic investigation yielded the much-needed break in the case. Wilson discovered three ledgers with documentation as to receipt of monies, with first initials as clues. Using handwriting samples, Wilson was able to track down the person who made the key notations in the books, and now had a witness. Tracking the bank depositor who turned cash into cashier’s checks was the next step, proving money was actually given to Capone. Despite death threats to Wilson and his family, Capone was indicted and finally brought to trial in October 1931. The jury (bribed by Capone) was switched by the judge at the last minute, and Capone went to prison for several years, receiving the harshest penalty given to a taxpayer.
How Mr. Wilson Beat “Capone the Menace”
Surely the facts of this story are just as interesting as the make-believe version, and who thought the hero would be an forensic accountant? Certainly most cases involving employee theft, securities fraud, insurance fraud, kickbacks, and the like aren’t as exciting, or dangerous, as this one was. But it demonstrates the broad range of skills needed to perform forensic accounting investigations, and the rewards of doing it well. Wilson’s career continued to grow until his death in 1970, while Capone would die 23 years before him. Maybe “The Frank Wilson Story” will become a classic movie someday; maybe Sean Connery could play him.