The Accountant and Al Capone
15 May 2020
The story of how forensic accounting brought down one of America’s most famous Gangsters
Al Capone famously said that “you can get more with a kind word and a gun than with a kind word alone”. But when it came to catching him, all it took was diligent and skilled forensic accounting, explains Tristan Yelland.
Crime always leaves a footprint
Thanks to double-entry book-keeping, a financial crime will almost inevitably be captured in accounting records somewhere. This means that, despite the criminals’ best efforts, someone who is skilled at investigating those records can solve these crimes. This is why forensic accounting has always been integral to the successful outcome of a financial investigation.
The accountant who brought down Al Capone
Most people know that, despite controlling a vast criminal empire and ordering hits on a multitude of his enemies, Alphonse “Scarface” Capone was ultimately convicted not of murder or racketeering, but of tax fraud. This was no fluke, but rather the result of a dogged two-year forensic accounting investigation that was conducted by the US Treasury department and led by special agent (and accountant) Frank Wilson.
The forensic investigation
In the summer of 1930, Wilson and his team reviewed approximately two million of these documents. They also questioned hotel proprietors, real estate agents, bartenders and accountants, though most were too overwhelmed by fear to admit to having any dealings with Capone.
Finally, Wilson’s investigation found the key that cracked the case: late one night, he found three bound ledgers, one of which appeared to show the distribution of proceeds from a huge gambling operation among three people, referred to only as “A”, “R” and “J”. On one page was the notation: “Frank paid $17,500 for Al”. This was the first tangible link between the proceeds of a gambling operation and Capone. However, Wilson still needed to prove that the proceeds actually found their way to Capone.
Using forensic accounting, he first of all identified the individual who made the notations in the ledgers by matching his handwriting against bank deposit slips. Wilson tracked that individual down and convinced him to turn witness against Capone. Next, Wilson was able to identify a bank depositor who had turned up to a bank with bags full of cash and purchased $300,000 of cashier’s checks, the cash from which went directly to Capone. This was Capone’s share of the gambling operation, and by tracing it to him, Wilson was able to demonstrate that the gangster received income on which he should have paid tax.
The trial
Further findings followed, and in March and June of 1931, a grand jury indicted Capone on 23 counts of tax evasion, with the trial beginning in October of that year. Capone maintained that he had received no income and was confident that he would escape justice, which was not altogether surprising as he had bribed the whole jury. However, the judge found out and switched juries with a courtroom down the hall. The new jurors - who were sequestered so that Capone’s gang could not reach them - found Capone guilty of tax evasion. He received an 11-year prison sentence together with fines totalling $250,000 and $30,000 in court costs. It was the largest penalty levied against a taxpayer up to that time.
This would not have been possible were it not for the efforts of Frank Wilson and his team of forensic investigators.
https://www.grantthornton.co.uk/insights/the-accountant-and-al-capone/