The Fraud Squad

Posted March 4, 2010 in News

It is no secret that San Bernardino County has been hit with a swath of corruption investigations and allegations at the state, local and even federal levels. Now residents are getting fed up. 


“I don’t really see how this county could be more corrupt than it already is,” says Jay Lindberg, one of the founding members of the San Bernardino County Anti-Corruption Group, an organization of residents dedicated to fighting corruption at all levels and holding elected officials responsible for their actions. “Our goal is to expose the corruption and try to clean it up. It’s straightforward in the process, and we’re building something that has to be powerful enough to where the people involved in this don’t become targets, or if they do they can survive it.”


There’s plenty for this group to sink its teeth into. There’s that cluster of a mess in San Jacinto where four city council members, a school board member and a local developer were indicted in a criminal case alleging tax fraud, bribery, money laundering, perjury and filing false government documents.


Prosecutors have also charged former San Bernardino County Supervisor (and former Assessor) Bill Postmus and others with over a dozen criminal counts, including bribery.


But when it comes to nailing political corruption, uncovering a paper trail or deciphering “cooked” books can often play a pivotal role. This is where Dr. Bob Hurt steps in. Hurt, a professor of accounting and associate director at Cal Poly Pomona’s Master of Science in Accountancy program, is a certified fraud examiner and a member of the Association of Certified Fraud Examiners, which recently started up a branch in the Inland Empire. 


“Fraud examination and forensic accounting are areas of interest for me ever since I have been at Cal Poly Pomona over 25 years,” Hurt says.


According to Hurt, corruption includes things like bribery, conflict of interest and economic extortion. “Asset misappropriation, as the name implies, refers to any misuse of organizational assets such as cash, inventory, other assets, and it can include items like larceny, skimming, check tampering, or fraudulent expense reimbursement schemes,” he explains. “Fraudulent financial statements are often equated with ‘cooking the books.’”


Fraud investigation is extremely complex, requiring investigators in the field to have to have a multidisciplinary form of training.


“Fraud investigation is not an exact ‘science’ because it deals with human behavior,” Hurt says. A fraud examiner needs to know about accounting and finance, of course; but we also need to understand human behavior, the law and information technology.”


And while Hurt would not comment on the IE’s ongoing corruption investigations, he explains the sociological factors that shed light on why people commit fraud. One widely accepted academic theory suggests that people commit fraud when three forces combine: pressure, opportunity and rationalization. “People who commit fraud are normally under some pressure to do so; such pressure may come from a variety of sources, including a need to pay off debts or to support a gambling or substance habit [editor’s note: Postmus has admitted to a drug habit],” Hurt says. 


“The opportunity to commit fraud often arises from an organization’s weak internal controls,” Hurt adds.


Hurt says that a recent surge in fraud at local and national levels provide proof that cases of fraud are rising. 


Lindberg, a longtime San Bernardino resident concurs with Hurt’s assessment. The author of Drug War Economics: The Machine Behind the Madness, says that he’s been fighting corruption in San Bernardino for nearly two decades. “Through this all, I have been attacked and charged with several crimes, which were eventually all dismissed,” he says. But also my family has been harassed and one of my parents was even killed. But I have survived, that’s what matters.”


Lindberg maintains that the only way to hold accountable elected officials who are responsible for fraud and other forms of corruption is to get politically active. “The problem is that we’ve got institutionalized, multi-layered levels of corruption in this county, and the big developers and corporations are at the top,” Lindberg says.


Lindberg contends that anyone out there can help to fight corruption. “We can all make a difference by using our voices and political power. People need to get involved and we encourage all residents concerned to come to our meetings, it is open to the public we need more people to jump on board. We can’t win this battle alone.”


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