There are some sure giveaway signs for fraud examiners to watch for when they’re interviewing a possible perpetrator.
Pamela Meyer, CFE, author of the book Liespotting, described some of those unconscious signals during a speech Tuesday at the Association of Certified Fraud Examiners annual conference in Orlando, Fla. Among the signs are a slumped posture, frequent lip smacking and licking, grooming gestures, avoidance of eye contact, and a false-looking smile.
“You can’t fake a smile,” Meyer suggested. She displayed side-by-side pictures of someone with a genuine smile, where the crow’s feet around the eyes shows a real smile, versus the same subject smiling only with their mouth.
Murderers are known to “leak” expressions of sadness, she noted, but when their anger turns to contempt for their victim, their upper lip can curl and pull up into a sneer. However, that expression is not always associated with deception (think of Elvis Presley’s famously curled lip).
Fraudsters frequently give themselves away by what they say, as successful as they may believe they are as liars. Among the telltale signs of deception are being inappropriately verbose or expressing post-interview relief when the interviewee believes the hard part of the interview has ended. When Meyer notices that happening, she will begin the questioning again, frequently with the same questions posed in a different way. A deceptive person may appear to be withdrawn or combative, frequently saying, “I don’t know,” or showing inappropriate flashes of anger.
“An honest person will be cooperative,” Meyer pointed out. “They will offer details and will be infuriated if they sense they’re being accused. They will offer appropriate details.”
Of course, these are not surefire signs of a fraudster or liar. Indeed, lying has become such a habit for many people that it has become pervasive in society, whether or not anything remotely illegal is going on. On the average day we can expect to be told anywhere from 10 to 200 lies by friends, family members, co-workers and others. Extroverts tend to lie more, and men lie more than women. Even babies seem to fake cries, pausing just long enough to find out whether mommy or daddy are listening and coming to comfort them before resuming their cries.
“There are good liars and there are bad liars,” said Meyer. Everyone makes mistakes, though. People who are overly determined in their lies tend to avoid using a contraction. Think of Bill Clinton’s finger-wagging denial, “I did not have sexual relations with that woman, Miss Lewinsky.” He distanced himself from Lewinsky by using the phrase, “that woman,” Meyer pointed out. He also issued a specific denial, rather than a categorical denial. And he said, “did not,” not “didn’t.”
Liars also use replacement language and soft euphemisms, such as “I didn’t take the hard drive,” or “I couldn’t have taken the hard drive,” instead of the more direct “I didn’t steal the hard drive.”
CEOs and CFOs have been caught using vague language in their earnings calls to cover up inventory shortages and revenue recognition problems, as in the case of the former CEO of telephone maker UT Starcom who later faced SEC problems. Perceptive financial analysts are trained to spot such language and pounce on any inconsistencies or vagueness, for good reason. A recent Stanford University study of earnings calls found that language patterns are better predictors of negative performance than many accounting indicators. Overly hyperbolic language can also be a giveaway, as with the former CFO of Lehman Brothers who used adjectives like “strong” and “great” as opposed to “challenging” in the bank’s final earnings call before it went belly up.
A skilled interviewer and fraud examiner will ask a subject to tell their story several times. There may be inconsistencies, or a telltale clue of whether or not the subject is telling the truth.
