Digital Deception: Understanding AI and Crypto in the Age of Fraud and Forensics

Good morning, everyone. I'm Ben Ziccardy, a manager in the Fraud and Forensics Practice at Brown Edwards & Company. I hope you're all well this morning. I'm really happy to be here and thankful for the opportunity to share my thoughts on two critical topics that are reshaping our field: artificial intelligence and cryptocurrency. 

My Journey to Fraud and Forensics 

Before we dive in, let me share a bit about my background. I originally started here at Brown Edwards in 2016 in the municipal audit space. I spent about six and a half years in that part of the practice, but I always had the plan to move into fraud and forensic work at some point during my career. It's a topic I'm very passionate about and something I find to be very rewarding professionally. While I was at BE the first time around, I earned both my CPA and CFE. 

Then in early 2023, I was presented with an opportunity to join a small component of the Department of Justice called the U.S. Trustee Program. If you haven't heard of it, I'm not surprised—I hadn't heard of it before I joined either. The program oversees bankruptcy cases filed in the Western District of Virginia, and we acted in a civil enforcement capacity, ensuring these cases moved through the court system according to the laws and practices governing bankruptcy filings. 

As a bankruptcy auditor, my primary responsibilities were related to bank and financial statement analysis. I worked with seven legal professionals—four attorneys and four paralegals. My day-to-day responsibilities included asset tracing, financial reconstructions, and Chapter 11 plan feasibility analysis, which was very projection-heavy. There were also a ton of administrative duties that were part of my routine. While I was there, I was able to earn my Certification in Financial Forensics, as all of the work done there was considered forensic accounting. 

By luck, I was presented with an opportunity to come back to Brown Edwards and help build this part of the firm—the fraud and forensics practice. When it was offered to me, it was just too good of an opportunity to pass up. Having a chance to help something grow from the ground up and have a significant impact on it was incredibly appealing. I started back on May 1st, and since that point, we've really hit the ground running with several large projects coming within weeks and months of my starting. Many of these projects are actually going on as we speak now. It's been a wonderful transition, and I'm very grateful for that. 

The Evolution of Artificial Intelligence 

I want to preface this by saying I am not considered an AI expert. I say that because I don't necessarily think there are many experts in the field. The technology is changing so rapidly that the learning cycle really is continuous. There are changes almost daily that we need to stay abreast of and be familiar with. 

Surprisingly enough, AI conceptually has been around since the 1950s. Alan Turing published "Computing, Machinery and Intelligence," and this was sort of where the concept came from. This publication eventually resulted in the Turing test, in which a human would compete in a game against another human and a machine. The goal was for the human competing to determine which of the two they were competing against was a machine and which was human—essentially trying to model AI behaviors closely to what humans would exhibit. 

Clearly, this concept has evolved since the 1950s. Today, there are four widely recognized types of artificial intelligence: 

Reactive AI is the most basic form. It has neither memory nor the ability to use past experiences. The best example I can think of is video games—at least the video games from my childhood, at the risk of dating myself. I think of things like Tecmo Bowl and Mortal Kombat, where they had set reactionary motions that would come about based on the player's (the human player's) actions. 

Limited Memory AI uses the past to a degree, but stores only transient knowledge. Autopilot settings on planes are a prime example of this type. 

Theory of Mind AI exists, though the capacity to which it exists is debated. There are elements of it present in generative AI, but the extent of its development remains a source of discussion among industry experts. 

Self-Awareness AI is the final stage and is currently only theoretical. This would consist of developing AI systems that are introspective, meaning they have the ability to form thoughts and representations about themselves. This is really what's going to humanize the concept and really take it to the next level. As far as a timeframe for that final piece, it's very much up in the air. It could come quickly, and it could be years down the road, but my guess is sooner rather than later. 

AI's Role in Fraud Prevention and Forensic Accounting 

Given these traits and potential abilities that AI has, it clearly can play a role in fraud prevention and forensic accounting. We would have a lot to offer, beginning with one of the first steps in either a financial statement audit or a forensic audit—bringing new capabilities to our investigative toolkit. 

The technology is advancing at such a pace that the learning cycle is truly continuous. There are changes almost daily that we need to stay abreast of to remain effective in our work. 

Cryptocurrency: A High-Level Overview 

The second major topic I wanted to cover today is cryptocurrency. I'm providing a very high-level overview that I hope is relevant to at least some folks here, particularly for fraud examinations, asset tracing, and investigations. While the full details of cryptocurrency can be complex, understanding the basics is becoming increasingly important in forensic accounting work. 

As our world becomes more digitized and new forms of currency emerge, forensic accountants and fraud examiners must adapt. Cryptocurrency presents unique challenges in asset tracing and fraud investigations, but also creates new opportunities for those who understand how to navigate this evolving landscape. 

Looking Ahead 

The intersection of artificial intelligence and cryptocurrency represents just one aspect of how our profession is evolving. As we continue to build the fraud and forensics practice here at Brown Edwards, I'm committed to staying at the forefront of these developments and bringing that expertise to our clients. 

I'm passionate about this work and find it very rewarding professionally. My diverse background—from municipal audit to the Department of Justice to building this practice—has given me a unique perspective on the challenges and opportunities in fraud and forensic accounting. 

If you're interested in learning more about how artificial intelligence and cryptocurrency might impact your organization, or if you need assistance with fraud examinations or forensic investigations, please don't hesitate to reach out to our team. 

Ben Ziccardy is a Manager in the Fraud and Forensics Practice at Brown Edwards & Company. He is a CPA, Certified Fraud Examiner (CFE), and Certified in Financial Forensics (CFF). For more information about our services, please contact our team using the form below.