The Financial Investigator moves into the Digital Age

Tuesday May 15, 2009

Businesses, government agencies, lawyers and investigators now have help when it comes to building and maintaining complex fraud examinations. Cynic Inc, a leader in building tools for Fraud Examiners, is proud to announce the launch of a new Data Services group that aids litigation support for forensic accounting and corporate oversight.

Edmond Martin, retired United State’s IRS Special Investigator, knew that using the latest computer techniques in object-oriented programming, the high-tech accounting investigator could be freed from archaic spreadsheets and manually associated boxes of paper discovery. “Before, one person could work a case for years,” says Ed, “but now with artificial intelligence, document recognition and data automation we are able to manage evidence and organize every case efficiently and accurately.”

“Shedding light on complex accounting cases is how this all got started,” says Ed Martin, “I was seeing these advances using computers in other fields and was sure there was a better way for us.” After years of design and testing, Ed’s company Cynic Inc, is now using their new software tools as a service to help aid in the prosecution and defense of numerous financial fraud cases and money disputes. “It is important that our techniques are 100% accurate, this is the lives of people and companies we are dealing with.”

Cynic has developed many proprietary software tools built specifically to aid in streamlining Financial Data Services. Everything from Optical Character Recognition applications (OCR) to Digital Discovery Cataloging, Cynic offers the most complete group of in-house services at a very affordable rate. “We can take hundreds of boxes of financial discovery and turn them into useable digital formats in a fraction of the time of traditional methods,” says Ed.

The main application we use, Cynic Dio (pronounced: dee-oh), includes everything from advanced search techniques to document images being tied directly to their associated data objects which makes all data available at the investigator's fingertips. Whether it is generating reports for case prep or for building better collaboration amongst an investigative group, Cynic has the tools needed to make sure your fraud examinations or fiscal analysis is both prompt and accurate.

From details rise doubts about death

Parents say their push for answers about their son's demise revealed clues of a cover-up at his Colorado college.

By Chuck Lindell
AMERICAN-STATESMAN STAFF
Sunday, November 20, 2005

Rio Nicholas was found dead in his Colorado college dormitory, sitting cross-legged in a shower stall, a smear of blood on the wall.

Finding a capped syringe lying on the tile, campus police blamed drugs.

The coroner agreed, ruling the pre-dawn death an accidental cocaine overdose.

Back in the Texas Hill Country, two somber police officers and a chaplain approached his parents' house to break the news. Bearing the coroner's phone number but little useful information, they knocked at 9 a.m. Dec. 6, 2001.

It was a memorably tough assignment, one of the officers recalled. Brenda Nicholas broke down, refusing to believe that her oldest boy had died, alone and far from home, at 19. Johnny Nicholas, though dazed and distraught, was faster to accept the news.

But not for long.

Strange details quickly emerged about Rio Nicholas' death, his father said. Unexplained marks on the body, but no autopsy. Questionable investigative techniques. Concerns about "dirty people" at the college. Allegations of evidence planted in a backpack.

Riddled with doubt, Johnny and Brenda Nicholas did not discuss the cause of death when hundreds turned out for their son's funeral in Fredericksburg.

Instead, Johnny Nicholas traveled to Colorado three times seeking answers and then hired Ed Martin, a shrewd private investigator from Austin who had helped solve the disappearance of atheist Madalyn O'Hair during a 26-year career as an Internal Revenue Service special agent.

In the time since, the parents' suspicion has given way to grim certainty that Rio Nicholas did not die in the shower and did not die by accident.

"We feel pretty clearly that it was homicide. Absolutely," said Johnny Nicholas, a prominent blues artist and former member of the band Asleep at the Wheel.

Colorado authorities disagree, saying multiple investigations found no evidence of foul play.

The Colorado School of Mines in Golden, where Rio Nicholas died as a freshman, stands by the original ruling of accidental drug overdose, saying its small police force "competently and thoroughly" investigated the death.

"School officials," a written statement said, "understand how difficult it has been for the family to accept the tragic loss of their son."

After years of back and forth, a tipping point came last spring when the Nicholases learned that the coroner had preserved samples of their son's blood and urine. They arranged to have the fluids sent to two established forensics labs for further testing — maintaining proper chain of custody, Austin lawyer Henry Novak said.

Novak is keeping the full results secret, preferring to save his ammunition for the courtroom. But, Johnny Nicholas said, results from both labs agree that Rio Nicholas did not die of a cocaine overdose.

With that final bit of information, the Nicholas family filed a federal lawsuit in Denver in mid-October accusing four university officials, including the campus police chief, of conspiring to cover up Rio Nicholas' murder. The officials, the lawsuit claims, chose to protect the school's reputation rather than investigate a possible homicide and identify "the murderers."

"We want to know what happened to our son. What we were told is not supported by the evidence, and none of it adds up," Johnny Nicholas said.

"Believe me, we want closure on this. We need closure on this. We want to move on with our lives. But I'm here steadfast in our determination to see this through and do the right thing."

 

Demetrios Nicholas — "Call me Rio," he'd say — was a good-looking bon vivant. Athletically gifted and musically talented, he was a cheerful, charismatic guy who made friends quickly, friends and former teachers recalled.

"He was a good kid. A lot of energy, vibrant, a smart kid," said Peter Pollock, his university ROTC instructor.

Nicholas showed no sign of heavy drug use, said Pollock, who worked closely with the freshman.

"I was surprised to hear about the way he died because I didn't suspect him to be an intravenous drug user."

The oldest of three boys, Rio Nicholas grew up at his parents' restaurant, the popular Hill Top Cafe about 10 miles north of Fredericksburg, where he sometimes joined his piano-pounding father on stage for some of the hottest blues in Texas. Rio's saxophone can be heard on two songs for "Rockin' My Blues to Sleep," a CD released nine months before he died by Johnny Nicholas and the Texas All-Stars.

Music had taken a back seat to sports and science by the time Rio Nicholas left home to pursue a chemical engineering degree from the Colorado School of Mines, a small engineering and science research university.

ROTC provided a full scholarship and a path to his dream of becoming a U.S. Air Force pilot. He worked out frequently, struggled to catch up in calculus and pledged a fraternity.

Thanksgiving provided a triumphant return home.

"When I picked him up at the Austin airport, he just looked fabulous. He looked great. He was beaming. I could tell he was doing great," Johnny Nicholas said.

The mood darkened, briefly, during the drive home.

"There was a pause in the car. Right about between Ben White and Oak Hill on that new part of the highway there, he said, 'Dad, there's some real dirty people up there at school,' " Johnny Nicholas said in an interview.

"I asked, 'What do you mean, son? Are you having any problems?' He said, 'Well, don't worry; I can handle it.' "

Asked if it had anything to do with his roommate, Rio replied, "Yes, with him and some of his friends," according to the lawsuit.

Rio Nicholas also spoke of roommate troubles in phone conversations, said longtime friend Regan Mann.

"He wasn't comfortable in his room anymore, is exactly what he told me," Mann said. "Close to the time he died, he started getting a little more paranoid, sleeping on the couch. He just said there was some stuff going down he wasn't very happy about."

She said Nicholas also mentioned concerns that another student — a friend of his roommate's — was stalking him, an allegation included in the lawsuit.

Nicholas thought he saw his name tattooed on the student's arm, saying: "I don't know if I'm seeing things, but it seems pretty messed-up to me," Mann said.

Brandon Reese, named in the lawsuit as Nicholas' roommate, declined to comment when contacted at his Golden home. Philip Javernick, named in the lawsuit as the student with the tattoo, could not be located for comment.

 

Two weeks after Thanksgiving, Rio Nicholas was dead.

According to the lawsuit, Reese told campus police that Nicholas rose from bed between 3 and 3:15 a.m. Dec. 6, 2001, to watch TV in the five-bedroom suite's common room — though in a later interview with a coroner's investigator, Reese said Nicholas rose at 3 a.m. to take a shower. Crime scene photos, however, show Nicholas' bed covered with books, notebooks and clothes.

Suitemate Jonathan Fuchs, awakened about 5:15 a.m., entered one of the suite's two shared bathrooms and found Reese holding a capped syringe and standing in front of the shower where Nicholas' body lay, the lawsuit says.

Fuchs, who also declined to be interviewed for this story, called 911.

Only one campus police officer was on duty, so Golden city police also responded to the Weaver Towers dormitory, Golden Police Chief William Kilpatrick said. But after helping secure the scene and take photos, Kilpatrick said, his officers were dismissed by campus Police Chief Richard Boyd.

"When it's on their campus, their property, it's their jurisdiction," Kilpatrick said. "They said they didn't need our help beyond what we gave them initially."

But for the Nicholas family, the dismissal was the first of several acts that shattered the investigation's credibility. With the Golden police gone, the lawsuit says, Boyd and school officials "moved quickly to cover up any hint of a homicide" lest the negative publicity hurt the university's reputation, fundraising and recruitment.

Investigators should have known that homicide was at least a possibility and proceeded accordingly, Johnny Nicholas said. Instead, the lawsuit states, campus police:

•Failed to secure Nicholas' room or inventory its contents.

•Opened Nicholas' room to his suitemates later that morning but collected evidence from the room a day later.

•Failed to collect blood from the shower wall, conduct a blood-type test or seek to determine its source.

•Failed to treat Reese as a potential suspect or test him for drug use.

•Failed to conduct fingerprint or blood tests on two used syringes found in a wastebasket of the room shared by Nicholas and Reese. One was later found to contain cocaine, yet Nicholas had only one needle puncture wound, the lawsuit said.

"From the very beginning, this thing stinks," said Michael Hinton, a Houston lawyer who once prosecuted homicides as a Harris County assistant district attorney and is now advising the family. "The investigators were totally inept, unqualified, untrained, and, consequently, the murder scene was compromised from the get-go."

According to available crime statistics, there were no on-campus homicides for the police force — now with six full-time and five part-time officers — to investigate from 1998 to 2003.

Citing the pending lawsuit, the Colorado School of Mines Police Department declined to answer questions or open its investigative file.

The university administration also declined to answer questions, instead releasing a statement that asserts "that the death of Rio Nicholas has been competently and thoroughly investigated (and) that the school has no basis for questioning the coroner's conclusion."

Toxicology screens on Nicholas found "large amounts" of metabolized and unmetabolized cocaine in his system, the school said, and two follow-up investigations by the district attorney's office supported the conclusions by the university police and the coroner.

The first investigation was, in reality, a review of the police reports undertaken at the university's request, said Pam Russell, spokeswoman for District Attorney Scott Storey.

"They asked to see if there was any follow-up we might recommend. We didn't recommend anything," Russell said.

The second investigation, in summer 2002, was conducted after a request by the Nicholas family.

"We had some of the investigators re-interview folks, conduct an investigation," Russell said. "We did not find anything inconsistent with . . . the Colorado School of Mines investigation."

Hinton dismissed the second probe as the weak result of halfhearted interviews of witnesses long after the fact.

"The word, if there wasn't a tragic death involved, is 'laughable,' " he said.

 

Shortly after Rio Nicholas' body arrived in Texas, Johnny Nicholas was called to the local funeral home to examine unexpected markings on his son's body.

The markings, also found in crime scene photographs acquired later, led the Nicholases and a hired forensics expert to conclude that Rio's body had been placed in the shower after he died.

Rio Nicholas' coloring indicated that blood had pooled in his face after death, suggesting that he had died facedown, not sitting upright, the lawsuit said. He also had a grid pattern imprinted into the left side of his face, indicating that his head had rested on a surface that did not match the shower tiles.

His forehead was discolored, the tops of his feet and his knuckles were bruised, and "abrasions populated his body," said the lawsuit, which raises the possibility that the injuries occurred "at the hands of some person."

The details, however, are not corroborated by an autopsy. None was conducted.

The Colorado School of Mines says the Nicholas family requested that no autopsy be performed.

Johnny Nicholas adamantly denies being contacted about an autopsy, calling the statement "a baldfaced lie." The larger question in his mind, however, is why an autopsy was not automatic for an unattended, unnatural death.

Colorado authorities refused to answer questions about the lack of an autopsy.

The current Jefferson County coroner, dentist Richard Dial, was not in office when Nicholas died. Generally, he said, the decision to conduct an autopsy rests solely with the coroner, often with input from police.

The coroner at the time, Carl Blesch, was not a pathologist. Blesch, now an investigator with the district attorney's office, did not return a call seeking comment.

Absent an autopsy, the Nicholas family considered exhuming Rio about two years ago. They rejected the idea after talking to a pathologist and after the Jefferson County coroner declined to participate or pay for the exhumation.

"It was going to be tremendously painful for us, and we just weren't sure how much could be gleaned at that time," Johnny Nicholas said. "Also, our financial resources were a big consideration."

Exhumation remains a possibility, and Johnny Nicholas thinks that a new examination of Rio's body could explain the smear of blood on the shower wall.

Campus police dismissed it as spray from a blood vessel after Rio plunged the needle into his arm, the lawsuit said. Johnny Nicholas, however, believes there is another explanation.

"We think there's a very high possibility that he has a skull fracture . . . in the back of his head. We believe that's where the blood came from in the shower," he said.

 

The day after Rio Nicholas died and his suite was reopened, Robert Francisco, the university's student life director, entered his room to collect personal effects.

On the top shelf of Nicholas' closet, he found a large gray backpack with its zippers locked by a padlock, the Nicholas lawsuit said. Inside were 92 wrapped syringes, which were turned over to campus police.

However, two Golden Police Department crime scene photos, taken the day Nicholas died and obtained by the Austin American-Statesman, show nothing that resembles a backpack on the cluttered top shelf. The backpack could be hidden beneath a parka and what might be a blanket on the shelf, but given its size, that appears unlikely.

Four additional crime scene photos show a large gray backpack in the common room. It is sitting on a sofa, clearly unzipped.

This, the lawsuit says, is the backpack found in Rio Nicholas' closet and later returned to the family, minus the syringes.

"That was probably the (discovery) that convinced me," said Dan Mahoney, the family's Denver-area lawyer, who now has the backpack. "It appears to be the identical backpack that's in the photographs. They're the same."

Beyond raising questions about why somebody would place syringes in the backpack and move it into the closet, the discovery also raises doubts about the investigation's adequacy, Mahoney said. According to the lawsuit, campus police did not fingerprint the syringes before destroying them.

"Good God, they shouldn't have destroyed the syringes without testing them," Mahoney said.

Other details also nag at Mahoney.

For example, he said, police reports show that Nicholas' jeans were found on the bathroom floor, pockets empty except for a plastic bag holding a small amount of white powder and a syringe wrapper. If Nicholas prepared a syringe of cocaine, which dissolves easily in water, where is the mixing container? Why is there no tourniquet to engorge a vein for easier injection?

"There is just no paraphernalia you associate with intravenous drug use," Mahoney said.

The lawsuit adds two other details. Reese was stopped by campus police two months after Nicholas' death and was found carrying "an array of drugs, but no charges were filed," the lawsuit states, adding that Javernick, the man Rio suspected as a stalker, purchased one-eighth of an ounce of cocaine the day before Nicholas died.

Information about the drug allegations was gleaned from campus police files, Johnny Nicholas said.

 

In their lawsuit, Johnny and Brenda Nicholas allege that university officials conspired to cover up their son's killing, depriving them of the evidence needed to file a wrongful death lawsuit against the killer or killers and violating their rights to due process and access to the courts.

The lawsuit names no dollar figure but seeks damages that could have been recovered in a wrongful death lawsuit.

It is an admittedly difficult path, requiring the Nicholases to convince a jury not only that a murder probably took place but also that school officials actively conspired to conceal the crime.

Still, a similar legal strategyproved successful for Mahoney in a 1984 death in suburban Denver.

Police ruled the death of stockbroker Lawrence Ocrant, who died in his bed from a single shot to the head, a suicide. The man's two grown children filed a lawsuit naming their stepmother — a secretary named Sueann who had replaced Ocrant's wife of 20 years — as the killer.

Mahoney argued that the children were deprived of evidence needed to solve a homicide by the police chief, who refused to have the wife's hands tested for gunshot residue and ordered the gun destroyed before the investigation was over.

A jury awarded the children $2.3 million, which an appeals court threw out before the lawsuit was settled in 2000 for an undisclosed amount.

Novak, the Nicholas family's Austin lawyer, declined to discuss what information has been compiled over the past four years.

"I will tell you this: There are no allegations in that complaint that we don't have the evidence to prove," he said.

The Colorado attorney general's office, which is representing the school officials, declined to discuss the merits of the lawsuit. It has about three weeks to formally respond to the suit that names Police Chief Richard Boyd, campus police Sgt. Robert Allen, Dean of Student Life Robert Francisco and Dean of Students Harold Cheuvront.

For Johnny Nicholas, filing the lawsuit proved cathartic, but with a price.

"It's been a lot harder than I had expected. It dredged up so much stuff and opened up a lot of wounds," he said. "And I can just tell you it offends me that so much of my son's life has become so public. It offends me that so much of his privacy has been violated and exposed in terms of all these gory details."

The ultimate goal is finding answers, he said — prompting Novak to prepare the family for disappointment.

"When we win this case, when we win this damage award against these defendants, we still may not know how Rio died," Novak said. "That's very possible."

But just the act of filing suit can bear fruit, he said.

"The only way that we can see that we could ever find out exactly what happened is if, in the course of discovery in a federal court lawsuit, some people start coughing it up," Novak said.

However it ends, Johnny Nicholas said, he is resolved to see it through.

"I'm not comfortable at all with all the publicity, but I recognize that it's part of the process," he said. "So be it."