At the top of his field, Central Washington University professor trains students how to track down fraud

By BENJAMIN ROMANO

YAKIMA HERALD-REPUBLIC

ELLENSBURG -- Robert E. Holtfreter is training the next generationof financial detectives to serve on the front lines of a growingbattle against corporate and consumer fraud.

The Central Washington University distinguished professor ofaccounting has immersed himself in the field, drawing a prestigiousaward from the Association of Certified Fraud Examiners, the largestanti-fraud organization in the world. Holtfreter, 62, will berecognized with the ACFE's Outstanding Achievement in Accountingaward in July.

From his tidy, third-floor office, the fast-talking Holtfretergenerates reams of research and academic journal articles on thearray of financial frauds that are sucking away businesses' profitsand bilking consumers through the mail, over the phone and on theInternet.

"That's my passion right now," said Holtfreter, who has exploredlots of accounting territory in 34 years of research and teaching.

By itself, occupational fraud, broadly defined as the misuse ofone's position for financial gain, results in annual losses of 6percent for the typical organization in the United States, accordingto an ACFE study. Extrapolated to the entire U.S. economy, thatrepresents an estimated $660 billion loss in 2003.

And while massive corporate meltdowns at Enron and WorldCom getthe headlines, the study found that small businesses sufferdisproportionately larger losses.

Investor outrage over the high-profile accounting scandals and theSarbanes-Oxley Act passed by Congress three years ago in response,have done much to drive up demand for forensic accountants andCertified Fraud Examiners.

"These frauds have been there for a long time, but the companyhasn't had the resources, the IRS and the SEC haven't had theresources to get ahead of it," he said. "They've hired a lot ofpeople in the last two to three years, which has helped out ourstudents."

Central is one of 160 universities in the country to offer acourse in fraud examination, designed by the ACFE. Six years ago only15 institutions offered the class, said Holtfreter, who serves on theassociation's higher education and research committees, and sits onthe editorial board of The Fraud Magazine.

That's just a fraction of his committee memberships, leadershippositions and advisory roles in numerous professional organizations.An avid hunter, Holtfreter also serves on two Department of Fish andWildlife committees and is co-chair of a Yakima City Council budgetstrategy team. (He carpools to Ellensburg to teach classes three daysa week.)

The fraud examination class is popular with accounting majors andcriminology students. Holtfreter routinely has 65 students or moreenroll each fall. Another 30 or 40 students are in classes atCentral's Lynnwood and Des Moines campuses.

"The students are aware that this is an important course to put ontheir transcripts," he said.

Students pursuing a career in forensic accounting need to be sharp-eyed folk who don't take information at face value. They need to beanalytical thinkers who avoid falling into routines.

"If you work in the fraud area," Holtfreter said, "you're dealingwith someone that's a very clever person, and they've thought out ofthe box. You've got to basically think like they did."

Joseph R. Dervaes, audit manager for special investigations at theWashington State Auditor's Office and the man who nominatedHoltfreter for the award, said his enthusiasm is passed on to hisstudents, which is important for the advancement of the field.

"The college kids are a tremendous asset and they are the future,"Dervaes said.

Holtfreter would like to see the university enhance its offeringsin forensic accounting, perhaps creating a track for fraudexamination professionals within its accounting degree program.

"We're the only school in the state that has that class, so Ithink we can capitalize on that and draw more students," he said.

Another college has gone a step further, offering bachelor's andmaster's degrees that incorporate both forensic accounting andcriminology. Utica College in New York claims the only graduate-level program in economic crime management in the country.

Holtfreter has a good connection in the field of criminology: hisdaughter.

He's co-authored several papers with Kristy Holtfreter, assistantprofessor in the School of Criminology and Criminal Justice atFlorida State University.

Daughter followed father into the academic world, and now, asresearch director of FSU's new Consumer Fraud Institute, iscollaborating with him on research into topics such as identitytheft.

"He's always been a role model as far as career accomplishments,research, and also valuing teaching and supporting students in theclassroom," she said.

His students -- some of whom refer to him as Dr. 007, according toKristy, for his striking resemblance to Sean Connery -- have ratedhis teaching at Central an average of 4.2 on a five-point scale. Hewas given the Washington Society of CPA's Outstanding Educator Awardin 2002.

Kristy is one of Holtfreter's four children, all of whom havegraduated from college as of this spring. His wife, Judy, is ateacher in the West Valley School District.

"I finally got them off of welfare," Holtfreter said with a laugh,directing his next comment to his kids: "Don't call again and ask formoney because you're not going to get it."

He wants to buy a boat and take up salmon fishing. Any openings onthe salmon commission?