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Teaming up to Bring Down the Business Arsonist
How forensic accountants can help reduce fire insurance fraud

By Jim Murphy

"After exfoliation, be delicate with pickaxes and shovels to preserve evidence. This may help with processing the scene later on."

It's 2 a.m. on a Tuesday night, and you're racing to a fast-spreading fire. Towering flames light up the sky. As you roll up to the scene, you see that a once-popular upscale restaurant is now fully engulfed.

Your top priority, as always, is to put out the fire and protect lives. But because this is a commercial fire, you may also want to keep some other key points in mind.

The first is to try to protect and preserve computers and file cabinets whenever possible, says Francis Frande, Chief, Financial Investigation Services Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives. "Any business record there can be a key," he explains.

"After exfoliation, be delicate with pickaxes and shovels to preserve evidence. This may help with processing the scene later on."

ATF works in tandem with local fire officials

ATF field offices enjoy good working relationships with area fire marshals, Frande says, serving with them on arson task forces and attending local fire meetings. The result? Fire officials are quick to notify their ATF contacts about suspicious blazes.

As a rule, ATF helps investigate fires that involve more than $1 million in losses, the injury or death of a firefighter or policeman or any other loss of life … and where the cause is unclear or involves explosives.

Not only can ATF lend a hand by providing teams of investigators and forensic technicians to help sift through evidence, it offers trained financial investigators, a resource most local departments simply don't have.

"Typically, if it's a business fire, they call in ATF," Frande says.

Besides protecting computer records and paper files at the fire scene and being careful not to destroy evidence, firefighters responding to a business fire should consider a number of questions that may point to arson.

"Red Flag" Questions:

  • Was the building unlocked? How was entry gained?
  • Were there multiple sources of ignition? How did the fire progress? What is the burn pattern?
  • Were accelerants found?
  • Where did ignition take place? (More than one fire has started in the file cabinet of the accountant with the drawers open, or in the business office, Frande says.)
  • Were there paper files in the drawers? (In some business arson cases, personnel files and timesheets typically used every day were missing.)
  • Is this one of the businesses most often targeted for arson such as: a bar/restaurant, warehouse, manufacturing plant, hotel/motel or auto garage?
  • If it's a warehouse, is there evidence that anything was actually stored in the building? (In one computer warehouse fire, for example, there was no melted plastic to be found, just burned boxes. In arson cases, contents are often removed before fires are set.)
  • Did you see vehicles racing away from the fire as you rolled up to the scene?

Answers to these questions may greatly help ATF forensic accountants determine if the fire is an arson-for-profit case.

Making a business case for arson

Working in cooperation with local fire officials, certified fire investigators, and insurance company investigators – forensic accountants will painstakingly reconstruct the company's entire financial condition.

They'll look at tax, sales, inventory and insurance records and try to determine:

  • Was there a financial motive?
  • Was business going bad?
  • Were new competitors in the area taking customers away?
  • Was the company owner outbid by someone else for the building?
  • Was the company paying its bills to suppliers and utilities?
  • Was it late in payments?
  • Was the owner putting in personal money to keep the business afloat?
  • Was the business appraised?
  • Did the owner increase insurance coverage within the last 30-60 days?
  • Was there a recent natural disaster in the area? (Because many businesses don't carry flood insurance, it's not unusual to see a spike in arson cases after a hurricane. Some fires have even started underwater, Frande says.)

The bottom line? After answering these and many other questions, and reviewing the evidence, Frande – or one of his auditors –can testify in court as an expert witness and help establish a motive.

"We often can make the business case for arson and get a conviction," he says.

Points to Remember:

  • Preserve evidence at the scene, especially computers and file cabinets.
  • Look for "Red Flags" that might indicate business arson.
  • Secure the site, so fire investigators and forensic accountants can determine the cause and help establish a motive that stands up in court.


Special thanks to Francis Frande, Chief, Financial Investigation Services Division, Bureau of Alcohol, Tobacco, Firearms and Explosives; and to Andrew L. Lluberes, Office of Public Affairs, for their assistance with this story.

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