Forensic Accounting and the Downfall of Al Capone

Al Capone was the infamous head of Chicago’s organized crime during the Prohibition Era. Capone and his gang practically ran the city with their bootlegging, gambling rings, prostitution, speakeasies, and propensity for killing off the competition. Their criminal ventures amounted to an estimated $100 million per year.

Despite his infamy and flouting of the law, Capone intimidated witnesses and covered his tracks, meaning authorities were unable to prosecute him for his many crimes.

Following the Money

In 1929, at the height of Capone’s reign, President Herbert Hoover gave the order to take down Capone’s gang and dismantle his criminal empire. When the law failed to prosecute his crimes, the duty to investigate Capone’s finances fell to the Treasury Department. A treasury agent and former accountant, Frank J. Wilson, was chosen to lead the investigation.

Frank Wilson embarked on possibly the first major, high-profile forensic accounting investigation. Wilson combed through records, old checks, and bank documents—anything even tangentially related to Capone’s organization. Over the course of Wilson’s investigation, he examined an estimated two million documents to create a case against Capone.

As Wilson searched for evidence and asked after the mobster, Capone pushed back by putting a $25,000 bounty on Wilson’s life. Wilson fled Chicago, but continued the investigation until he found his critical piece of evidence in the form of a set of mislabeled ledgers. These ledgers detailing Capone’s gambling operations confirmed unreported income directly linked to Capone. It was the jackpot, and enough to sentence Capone to 11 years in prison for tax evasion.

With its leader behind bars, the authorities set to work dismantling Capone’s gang and Wilson was immortalized as the accountant who took down a crime lord. Wilson eventually became the chief of the Secret Service and is credited by some as having originated the field of forensic accounting.

SDC CPAs (formerly Studler Doyle and Company) follows the model set by Wilson, sifting through records and evidence with a keen eye to uncover wrongdoing, debunk phony insurance claims, and catch corporate thieves.

Posted in: