The field of forensic accounting as we know it today is a relatively recent invention by accounting standards, having been established in the 1940s.
Whilst such an important part of accounting today that forensic accounting jobs are a core component of the legitimacy of countless industries, the earliest investigation that could be considered forensic accounting was the case of infamous organised crime boss Al Capone.
However, around the time he was working, another major fraud was taking place that originated in Sweden, quickly took over Wall Street and was exposed by a massive and sudden financial crash.
Ivar Kreuger, known as “The Match King” owned the entirety of the Swedish match industry, thanks in no small part to a merger with much bigger Swedish match companies in the 1910s, most notably AP Jonkoping-Vulcan in 1917.
He did this by inflating the value of the company, a trick that would allow him to dominate the worldwide match market during the 1920s, a period of considerable growth which made his company worth $600m, half of which he lent to governments around the world in exchange for monopolies.
It was a scheme reliant on selling shares in his company in the fast-paced US stock market, attaching huge dividends to them that ultimately came from other people buying his stocks, turning a legitimate match company into the biggest Ponzi scheme until Bernie Madoff’s investment firm.
He subsequently also inflated the value of his assets, claiming another $400m that simply did not exist.
Ultimately, much like Mr Madoff, his scheme would be exposed by a crash in the market, with the Wall Street Crash of 1929 making investors far more hesitant, causing a very real liquidity crisis.
Finally, in a desperate attempt to save his company, he merged his company with International Telephone and Telegraph, but the audit ITT requested found gaps in his accounts, but before the full breadth of his fraud was exposed, Mr Kreuger was found dead in 1932 with what is believed to have been a self-inflicted gunshot wound.
The extent of his scheme was only discovered five years later, involving over 400 companies, with a total cost of over $750m.