Jules Kroll Stresses That Practitioners Can’t Grow Without Innovating

Jules Kroll recently had a shocking conversation with the head of compliance at a major European bank. “I asked them what they had seen in terms of fraud in the first quarter of the year,” said Kroll, during the Monday Opening General Session of the 31st Annual ACFE Global Fraud Conference. “They were seeing [fraud] up over 600%. So, we have our work cut out for us. … I don't think we're ever going to see a sudden outbreak of honesty.” Kroll, the 2020 recipient of the ACFE’s Cressey Award, says the profession needs to continue to innovate to find new ways to combat fraud as he did when he was a pioneer of the modern intelligence and corporate security industry.

During his virtual keynote, Kroll provided a whirlwind trip through his five decades of investigative experiences and offered attendees some counsel on innovation tactics.

“Let me begin by thanking the ACFE for this lifetime achievement award,” Kroll said. “It has a great deal of meaning to me. I have been an admirer of the mission of the ACFE and Joe Wells [ACFE founder and Chairman Joseph T. Wells, CFE, CPA] from the beginning.”

Kroll began J. Kroll Associates in 1972 (later Kroll Inc.) after he had to manage his ailing father’s Queens printing business and saw systemic purchasing corruption in the industry. “I vowed that I would try to do something about [the corruption],” Kroll said. “So, it began as a business looking at corruption, fraud and waste in the procurement area. … I had one employee, that was me,” he said. A year later he added an assistant.

“We developed this business in the context of the Nixon impeachment and all the stories about international corruption … and public campaign scandals,” Kroll said. “Corruption and fraud issues surrounding the discrimination of class and of race were very much present at that time.”

Financial institutions began hiring Kroll’s firm to “do something we called ‘due diligence,’ which was a relatively new idea at the time.” His firm then began investigating alleged inflated values of companies involved in hostile takeovers. Kroll’s firm again had to innovate to discover the seemingly unknowable. For example, before the age of drones, his firm hired pilots to take aerial photos of steel slab in the storage yards of Sharon Steel — a business the infamous Victor Posner acquired in a hostile takeover. Kroll found that Posner had been inflating Sharon’s worth.

Kroll worked with the FBI to investigate organized crime in the U.S. He then investigated the Ferdinand Marcos family in the Philippines, that was alleged to have stolen U.S. aid money; Daniel arap Moi in Kenya; Fernando Collor in Brazil; Alberto Fujimori in Peru and many others. “My former company, Kroll, and my new company, K2 Intelligence, has done over 60 former heads of state and former corrupt official investigations,” Kroll said.

After Saddam Hussein invaded Kuwait on Aug. 1, 1990, the Kuwait government hired Kroll’s firm to investigate Hussein’s ill-gotten gains and understand his corrupt procurement system. The Saddam investigations have led to similar jobs in global governments, Kroll said. “Certain countries today are doing similar things today,” he said.   

Kroll’s firm then began restructuring bankrupt corporations, most notably Enron in 2002, because of businesses’ injustices and ineptitude, Kroll said. They also began a bond-rating agency because “we felt the rating agencies preceding the Great Recession had really let the country down,” he said.

In 2019, K2 Intelligence merged with Financial Integrity Network to offer regulatory, compliance, risk management, anti-money laundering and other services. Kroll continues as K2’s chairman of the board. His son, Jeremy, is president, CEO and co-founder of K2. Kroll is chairman of Kroll Bond Rating Agency, a member of the board of directors of cybersecurity firm, BlueVoyant; and chairman of the John Jay College of Criminal Justice Foundation.

Power of Innovative Individual Fraud Fighters

Kroll said that hundreds of people who work for his firms around the world have the CFE credential. “It is the CFE … individuals and groups that have provided the bulk of the … analysis dealing with fraud,” he said. “It’s generally one individual — an accountant, a lawyer, former law enforcement — in the public or private sector, in our profession who figured out something that might be going on,” Kroll said. He lauds these brave anti-fraud practitioners who are innovating in the public and private sectors — just as he began to do in 1972 when he fought corruption that had preyed on his father’s printing business.

“This kind of [fraudulent] behavior is generally not raised by big law; it's generally not found by the accounting firms,” Kroll said. “The training that you receive from the ACFE and from others is hugely important.”

Kroll regretted that he couldn’t meet conference attendees face to face. “But if Dr. Wells will invite me back to the next one, I'd be happy to have a cup of coffee or a beer with you and tell some more stories.”

For more information on Jules Kroll see “Indefatigable investigator: Jules Kroll still revolutionizing corporate investigations,” January/February 2020, Fraud Magazine.