CBA Record January 2017

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and the company holds the attorney-client
privilege and it alone can choose to waive
it. Failing to provide a proper Upjohn
Warning can result in the waiver of the
attorney-client privilege, put the person
conducting the interview in a conflict situ-
ation, or raise the ire of regulators.
Multinational companies and their
outside advisors must take care to ensure
that the investigation is conducted in com-
pliance with the law of the country from
which documents and computer files will
be taken and where interviews will be con-
ducted. Some countries require employers
to specifically notify their employee if he
or she is the subject of an investigation.
Other countries prohibit computers and
documents from being taken out of the
country as part of an investigation. This
patchwork of cross-border rules and regu-
lations requires detailed attention. Even
countries operating exclusively within the
United States need to navigate the rules of
each state concerning employee rights and
privilege issues.
What Should Be Done at the Conclusion of a
Fraud Investigation?
At the conclusion of an investigation (or
perhaps sooner), businesses need to decide
whom to contact. Is regulatory notice nec-
essary? Should the police be contacted? Did
the fraud impact lending warranties? Does
the insurer need to be notified? Do custom-
ers have a right to know? Do external audi-
tors need to be notified? Answers to each of
these questions, of course, depend on the
nature of the business and fraud at issue.
Another critical step is reviewing the
internal controls to determine what led to
the fraud, how it could be duplicated in other
business units or by other employees, and
how internal controls should be improved.
Finally, there is always the threat of
litigation following employee fraud. The
company and management may face
shareholder, regulatory, customer or other
lawsuits, as discussed above. But they need
not remain purely defensive. Businesses
that have been defrauded have every right
to explore and pursue claims against the
fraudsters, their colluders, and third parties
that enabled the fraud.
Conclusion
Employee fraud is a growing scourge that
impacts businesses of all sizes. Simply
assuming “it won’t be us” is a path fraught
with peril both for companies and man-
agement. The fraudster profiles and risk-
mitigation mechanisms discussed above
provide means for mitigating the likelihood
of employee fraud and dealing with it
should a problem arise.
Anthony F. Fata is a partner at the law firm
of Cafferty Clobes Meriwether & Sprengel
LLP and teaches Securities Regulation and
Corporate Governance as an adjunct profes-
sor for Seton Hall University School of Law’s
Masters in Jurisprudence Program. Corey M.
Martens, CPA, CFF is a partner in KPMG’s
Forensic Investigation Services practice in
Chicago.
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