Former AG Talks Fraud Prevention

Steve Clark has seen life from both sides of the glass.

After losing his job as Arkansas’ attorney general in 1990 and being convicted of felony fraud, Clark applied for — but didn’t get — a job as a limousine driver making $20,000 per year. He wrote on the application that he knew how to treat passengers because he had spent a lot of time on the other side of the glass.

Clark was referring to the glass that separates the driver from passengers, but it could have been a metaphor for another kind of glass.

“It was all food, whiskey and wine,” Clark said, referring to the things he bought with his state expense account as attorney general.

“There were times I would consume two bottles of wine in an evening,” he said. “At the time, I didn’t think I had an alcohol problem … Why did I need a certain kind of single-malt scotch to have value? Well, I didn’t. But that was the confusion in my mind. I wanted to be larger than life. I’d just like to be life-sized today.”

Clark said he hasn’t had a drop of alcohol in the last 11 years.

And he has turned his fraud conviction into a job qualification. Clark teaches law now at St. Thomas University in Miami, and he travels to speak at conferences held by the Association of Certified Fraud Examiners, which The Wall Street Journal described at the “premier financial sleuthing organization.”

Clark’s message is, basically, don’t do what he did.

In business, it’s often OK to write off dinner as an expense. As a public servant, that dog won’t hunt.

“People in public life get to thinking they are bigger than life,” Clark said. “I thought I was a big dog. I was neither a big dog nor an honest man, and it was wrong. Business people can do that, but public officials cannot … I was not entrusted by that office to do that. Not to act like a head of a major corporation.”

Political Aspirations

A few days after Clark announced his campaign for governor in January 1990, the Arkansas Gazette broke a story questioning more than $115,000 his office spent on travel and meals.

Clark’s salary in 1990 was $26,500 per year, but he was often seen during that time eating in Little Rock’s most expensive restaurants.

Clark, who had been attorney general since 1978, aborted the campaign for governor. He was subsequently charged with felony theft, and a Pulaski County jury convicted him of wrongfully charging less than $2,500 for personal expenses. He resigned as attorney general.

Clark didn’t go to prison, but he was fined $10,000 and ordered to pay restitution and court costs.

In 2004, Gov. Mike Huckabee pardoned Clark, which enabled him to start teaching at the St. Thomas University law school.

In the meantime, John Gill, director of research for the ACFE, had hired Clark in 2001 to teach a Principals of Fraud class.

“I said if anyone can talk about making a mistake and paying the consequences it’s Steve Clark,” Gill said. He said he was surprised at first to hear that Clark agreed to speak.

“He got excellent scores and the attendees loved him,” Gill said. “He’s an excellent public speaker and sharp as a tack.”

At one ACFE conference, Clark spoke on “Public Life and the Things I’ve Learned from Audits.” The program read: “As the chief legal officer of Arkansas, his job was to uphold the laws not break them. However, former Attorney General Clark committed an expense account fraud where he wined and dined phantom diners at the expense of the state. Learn how poor judgment derailed a promising political career, and how Steve Clark has worked to rebuild his life both personally and professionally.”

On July 10, Clark is scheduled to speak at the national ACFE in Washington, D.C.

The 58-year-old Leachville native said he shares his story about 20 times a year with groups ranging in size from 15 to hundreds.

Losing Control

Clark said his ideas of proper conduct were skewed by politics and alcohol.

“But I believed them because I was in public service,” Clark said. “I should have done everything by the book, but I didn’t. You can go through a litany of achievements, but it doesn’t matter.”

Richard B. Atkinson, dean of the University of Arkansas School of Law, was a colleague of Clark’s in the 1970s, when he was a faculty member at the law school. Clark taught there from 1973 to 1976, along with Bill Clinton, who later became attorney general, governor and president.

Atkinson said he knew of Clark’s recent teaching move and wasn’t surprised.

“He is a very engaging human being with a lot of energy,” Atkinson said. “It is simply a challenge not to like Steve Clark. I deeply respect his effort to share his hard-earned insights with new generations of law students.”

“Either you’re honest or you’re not,” Clark said. “Either you’re ethical or you’re not.”

Clark said sharing his story with others puts a face on fraud.

“It changes their perspective,” Clark said. “It goes from being a statistic to someone you know.”

Then, Clark said, people will come out and share their experiences with fraud.

“I think a lot of Steve, and his forthrightness,” Gill said. “We do videos all of the time with people who commit fraud. A lot of them try to feign their apology and then they start to talk about their fraud.”

Gill said a lot of the time in those testimonies, the person appears almost proud of what they got away with by video’s end.

Cloudy Skies

Steve Clark still keeps a “Steve Clark For Governor” campaign button.

“I tell people that it was my campaign for governor in Arkansas that had more T-shirts and hats and bumper stickers than it had votes,” Clark said.

Clark announced his race for governor in January 1990 and withdrew from the race 30 days later under a cloud of allegations. He then spent the next two years appealing his conviction.

He moved to Brunswick, Ga., to serve as vice president of managed care for ABC Home Health Co. until 1994 when he moved to Memphis to work for InnerCare, a behavioral health company.

InnerCare brought him to Austin, where he continued work until the company was sold to a group of investors in November 1998, which was coincidentally the same month he married his wife, Suzanne.

He calls her a “lovely lady who was more than there every step of the way.” She will start law school at St. Thomas this fall.

Clark said he filled out 87 job applications in 1998. Only two of those got him an interview. He landed a $6.50-per-hour bookstore job and got a raise to $7 per hour three months later.

Clark said his tenure at the bookstore reminded him a lot of his law school days at the UA, where he worked on the maintenance crew at the Campbell’s soup plant in Fayetteville.

He was licensed to practice law on June 1, 2000, after two failed attempts at the Texas bar examination. But the bar wasn’t the only test. He also had to dodge the bullets of committee questions fired at him during a special character hearing for his case to become licensed to practice law. He said it lasted about two hours.

“What I say is people do not remember how many times you get knocked down, people remember how many times you get back up,” Clark said.

He said he still keeps contacts with former and current attourney generals. He said that post deepened his love and respect for Arkansas and it’s different industries.

Clark Shares Fraud Tips

Steve Clark tells students in his fraud class “a picture is worth a thousand words, but a thousand pictures are worth nothing.” He has been teaching regularly for the Association of Certified Fraud Examiners since 2001.

He said a jury in a fraud case is often burdened with hours of judge instruction and mountains of evidence. Clark thinks that’s why it’s hard to prosecute fraud cases. He referenced the recent acquittal of HealthSouth executive Richard Scrushy as an example.

Clark said he worked on a case for 19 months involving a family business where one family member, the office manager, was stealing from the company. The accused has now settled to pay back $200,000.

He said employers could take steps to help prevent or prosecute fraud in the workplace:

• Have a policy first. Clark said it’s also important to make that policy part of ongoing training.

• Have a safe-haven. A hotline where employees can call in anonymously to report activity is a great idea, he said.

• Have internal control.

“You’ve got to have enough internal control where you don’t have one person dealing with accounts payable, receivables, inventory and supply management,” Clark said. “If you don’t have internal control then you create an opportunity where fraud can occur.”

• Look for suspicious activity. Clark said paying attention to details such as purchase orders out of sequence or payments to vendors that only have a post-office box address could make for warning signs.

• Have a regular independent audit. Clark said there is nothing wrong with one person doing everything, but have safeguards in place.

“If you don’t expect and inspect you won’t find out what is going on,” Clark said. If you are the owner of the company, be the person to sign the checks, he said.

• Remember, justice comes in all degrees.

“Your job is to determine whether an unethical or illegal work occurred,” Clark said. “If you do nothing else but just stop that, you don’t have money coming out the door. You stop loss immediately and change the mindset of employees.”