By Kevin VoigtCNN
(CNN) -- When Sam Antar was cooking the books for his company, he used a number of complicated accounting tricks to dupe auditors. But some tactics were simple.
Bernie Madoff may be the tip of the iceberg as the financial crisis unravels other frauds.
"These auditors from the Big Four accounting firms are usually single kids just a few years out of school. What do kids in their 20s think about all the time? Sex," said Antar, who was at the center of a multi-million dollar fraud 20 years ago.
So Antar would pair "cute hot female" employees with male auditors as part of his distraction strategy. "In effect, I was a fraudster, matchmaker and pimp," said Antar, who avoided jail time by working with the government, and now advises government agencies and businesses on avoiding accounting fraud.
Since the financial crisis struck, accounting scams -- such as the multi-billion dollar Bernard Madoff scheme -- have made regular headlines. Last week, a Hong Kong executive at Ernst & Young was detained by police and documents were seized after evidence of falsified audit documents came to light in a court case. Ernst settled a $1 billion negligence claim by the liquidators of Akai Holdings out of court for an undisclosed sum and the executive was suspended awaiting internal disciplinary action.
A London executive for accounting firm KPMG -- another of the "Big Four" accounting firms (along with Ernst, PricewaterhouseCoopers and Deloitte Touche Tohmatsu) -- was sentenced to four years in jail in September for siphoning nearly $900,000 of company funds for personal use.
While there are no international statistics charting white-collar crime arrests, the number of people being trained to detect accounting shenanigans has exploded since the financial crisis. The U.S.-based Association of Certified Fraud Examiners, which trains accountants in fraud investigation, has 47,000 members worldwide -- adding 10,000 new members last year alone.
"There's always an uptick in fraud activity when the economy goes down," said Kim Frisinger, a former FBI accounting fraud investigator and managing director of LECG Hong Kong, a consulting firm. "It's like the ocean going out and you can see everything that was hidden under water."
The fraud triangle
If an employee is having an affair, Gary Zeune knows exactly where he would look to find equivalent accounting chicanery. "Look at his or her company expense reports -- they will almost always have false entries," says Zeune, an accountant who specializes in fraud. "No one budgets to have an affair."
Although there are "millions of ways to commit fraud, there are always three common elements in any employee fraud case -- incentive, opportunity and rationalization," Zeune said.
Although greed is an obvious incentive, it is not the only one -- infidelity, gambling debts, drug use or simple ego can start the slide into accounting crime. "Look at the Société Générale incident where a single trader, Jerome (Kerviel), lost the company $7 billion," said Zeune, referring to the incident that nearly destroyed the French financial services company in 2008. "Why? He wanted to show what a smart securities trader he was .... He was looking for psychic income, not monetary income."
Opportunity is created when a culprit feels there is a relatively low likelihood of being caught -- most often at private companies, Zeune said. "They have less internal controls than publicly listed companies."
Rationalization is the conversation with the white-collar criminal has with him or herself to assuage their conscience -- something that is much more likely to have during a downturn, when companies are downsizing and employees are asked to do more for less, Zeune said.
Catching a crook with crooks
But many accounting fraudsters don't operate within the bounds of right and wrong. Large-scale frauds such as Madoff or Enron are more pathological in nature, Antar said.
"You have to take morality out of the equation to understand the criminal mind ... I'd still be doing it today if I didn't get caught," said Antar, who went to school and obtained his accounting degree solely to look for ways to subvert the law.
Like diverting auditors with attractive staff, accounting fraud is all about distraction, Antar said. "It's like David Copperfield, it's an illusion ... I want you to look over here so you don't see what I'm doing over there."
Another tactic: Delay. "They would come in here with maybe six weeks to go through the books ... my goal would be to leave them 80 percent of the work for the last week, so they're rushed to finish."
Digging into accounting fraud means understanding "there is a big difference between truth and accuracy," said Mark Morze, who spent five years in U.S. prisons for a billion-dollar stock fraud in the 1990s. "Every financial statement I put together was accurate, but it wasn't truthful."
In fact, perfection is often a sign of shadiness, said Morze, who like Antar now teaches accountants about fraud. "You're doing everything in reverse, so of course it's going to add up," he said.
One of the best ways to detect fraud in financial statements is to read only the footnotes, and compare how they have changed over time. "Look for subtle differences, and that is where they will hide the fraud," said Antar. "That's what I did."
Most frauds fail to unravel because obvious questions aren't asked -- often because the perpetrators wrap themselves in a veneer of integrity. "Everyone thought Enron was legit," Morze said. "Bernie Madoff, people would say -- look who his clients are, Steven Spielberg -- he must be legit."
But once questions are asked -- and asked again -- the fraud often becomes apparent. "If people get offended when you ask them a question about verification, that's a sign something is up," Morze said. "No honest person gets offended when asking to verify something."
