Aaron Hinks photo Forensic accountant Simon Padgett, a South Surrey resident originally from the U.K., has travelled the world to investigate fraud.

Uncovering fraud across the globe

Scanning the books of businesses, South Surrey’s Simon Padgett has made a living catching fraudsters

Fraud investigator Simon Padgett recalls poring over financial documents of an African company, in search of peculiar transactions, when he heard a distinguishable sound behind him.

“Click, click.”

A high-ranking military official, the owner of the business, was standing behind Padgett, and had a gun pointed at his head.

“They escorted myself and my team, by tank, to the airport,” Padgett said, adding they were flown out of the country on a government airplane.

Within 24 hours, the business was shut down.

It’s one of several stories Padgett shared with Peace Arch News Wednesday, after spending more than 20 years as an international forensics fraud investigator.

Originally from the U.K., Padgett has lived in the Caribbean, South Africa and Abu Dhabi, and has worked in more than 40 countries. In the past few months alone, he’s worked in China, Sri Lanka, Malaysia, London and Dubai.

For the past three years, however, he has called South Surrey his home.

A chartered accountant since 1990, Padgett said he quickly got bored of “mundane auditing,” and moved to forensic accounting. After years of working as an investigator for several companies, Padgett started his own business, Forensicintegrity (forensicintegrity.com).

Companies call Padgett when they suspect fraud or corruption, or they require fraud risk-management training.

Due to non-disclosure agreements, Padgett would not share the names of companies – nor specify governments – he’s worked for over the years.

“I can’t really tell you details, but I’ve done work for many governments, and maybe for Canadian governments as well,” he said.

Most of Padgett’s clients, he said, are based overseas.

“In terms of fraud and corruption work, there isn’t a massive amount of it (in Canada),” he said. “You have the Canadian culture, which is one of reasonably high levels of integrity, one that follows the rules.”

Padgett said 85 per cent of fraud is committed by an employee in a trusted position.

He noted there’s a number of ways an employee can defraud a company, but in most cases money is stolen from either the revenue stream coming in or as the money goes out. That can be accomplished by misleading information, forgery or counterfeiting documents, overcharging or duplicating invoices.

“More often than not, the financial director who called us in, who has total control of everything financial, he’s the culprit. He called us in for a smoke-screen,” Padgett said.

Investigating government, Padgett said, is slightly different.

“In government, there’s a distance between ownership, and people think the tax base is a free pot of money, maybe.”

According to the Association of Certified Fraud Examiners, he said, an average of five per cent of revenue from an average organization goes to fraud.

“If you think about the government organization, that’s five per cent of what government spends… If you apply that to the gross domestic product of the world, it comes out to $4 trillion a year, fraud. That’s the amount of fraud that’s being taken out of the economy.”

The largest case Padgett has worked for, one he was hesitant to share details of, was based in a Middle East country.

“Just over $500 million was stolen from a major organization. That’s the biggest. That affects the country’s gross domestic product, prediction levels and everything.”

Three executive directors of the company went to jail for eight years, he said.

“The average fraudster, in a Canadian city, might be stealing half a million to over a million over a one- to two-year period. A lot of our work in that situation is finding out what they might have spent the money on and trying to get it back for the company. Civil action, and at the same time we will take criminal action.”

Locally, Padgett has been focusing his attention on blockchain and bitcoin transactions through the company DMG Blockchain Solutions, based out of Vancouver.

The financial industry, particularly the fraud risk-management industry, has been taking a turn with the emergence of blockchain and bitcoin technology, he said.

Bitcoin is a type of digital currency where encryption techniques are used to transfer the money from one digital wallet to another. Blockchain is the digital ledger – transactions made in bitcoin, or any other cryptocurrency – of the transaction, however, the details are encrypted.

As the director of forensic services for DMG, Padgett’s role is to trace how cryptocurrency services are used to move the proceeds of crime, whether that money is from fraud, drug sales, human trafficking or to finance terrorism.

“We’ve got some fantastic software that can trace the corruption money – for example, bribes. The big thing now is to pay me that bribe in bitcoin because it’s anonymous.”

Padgett said they can effectively determine the movement of bitcoin from a company’s digital wallet to the destination wallet. From there, he said, his company is able to determine where the destination wallet was opened and what other transactions it has received, and whether they relate to any proceeds-of-crime investigations.

The destination wallet is given a “bit score” which ranks the wallet depending on the probability it’s related to illegal activity.

“Financing of terrorism overshadows everything,” he said. “I know in the U.A.E., you could be put to death because there’s a link to terrorism. Money laundering, terrorism… these wallets are a very important part of cleaning up the world.”

Padgett wrote a book on the aspects of his job, Profiling a Fraudster.

Just Posted

B.C. scientist bringing seabird conservation to the forefront at international congress

Bird Studies Canada’s David Bradley is co-convening a symposium on biosecurity for island species

VIDEO: Child airlifted to hospital after crash in rural Langley

Jaws of life were used to cut off the roof of a car and free its occupants from a two-car accident.

‘Beauty amongst such tragedy:’ B.C. photographer captures nature’s trifecta

David Luggi’s photo from a beach in Fraser Lake shows Shovel Lake wildfire, Big Dipper and an aurora

Eagle tree cut down in South Surrey for ‘The Eagles’ development

Planned eagle preserve ‘a first for City of Surrey’

VIDEO: North Delta celebrates International Cat Day

We asked our readers to send us photos of their feline friends and they did not disappoint

Canadians fear for relatives trapped amid flooding in Indian state of Kerala

More than 800,000people have been displaced by floods and landslides

IndyCar driver Wickens flown to hospital after scary crash

IndyCar said Wickens was awake and alert as he was taken to a hospital

Ex-BCTF president ‘undeterred’ after early release from pipeline protest jail term

Susan Lambert and Order of Canada recipient Jean Swanson released early

Fast food chains look to capitalize on vegetarian, vegan trend with new items

Seven per cent of Canadians consider themselves vegetarians and 2.3 per cent identify as vegans

B.C. swimmer halts journey across Strait of Juan de Fuca after hypothermia sets in

Victoria MS athlete Susan Simmons swam for eight-and-a-half hours in 9 C choppy waters

‘Hard on water:’ Smoke not the only long-range effect of wildfires

The project began more than 10 years ago after southern Alberta’s 2003 Lost Creek fire

B.C. VIEWS: Genuine aboriginal rights are misused and discredited

Camp Cloud one of long line of protests falsely asserting title

Prime Minister Justin Trudeau to march in Montreal’s Pride parade

Trudeau will end the day in his home riding of Papineau

Most Read