Voter Fraud Risk Exists. The Question is Materiality.

 
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By Leah Wietholter, MBA, CFE, PI

Questions surrounding election fraud and whether, how, and how often it happens are being discussed extensively in the media these days. I decided it might be helpful to our readers if we examined some of these questions using the same techniques we use when investigating financial fraud, as many of the same principles apply.

The Risk of Voter Fraud Exists

In the 1920s, a criminologist, Donald Cressey, studied white collar, non-violent criminals. Resulting from his research, the theory of the Fraud Triangle was formed which is now used throughout the auditing and fraud investigation world. 

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The concept behind the Fraud Triangle theory, which has been supported by my 14 years of forensic accounting and fraud investigation experience, is that under the right set of circumstances, even with someone who has never committed a crime before, the risk of fraud exists. For example, if an individual has an ever- increasing pile of medical bills with no ability to pay (pressure), manages the bank accounts of a small business where no one would notice an extra payroll or check payment to the individual (opportunity), and the individual can rationalize her actions by thinking, “I’ll repay this next pay period” (rationalization), then a risk of fraud exists. Applied more broadly, risks of fraud exist in almost every relationship, including the relationship between individual voters and their state election board. 

Applying the Fraud Triangle in the context of an election, possibly more than ever before, many individuals hold extremely strong political beliefs and believe that their candidate's loss would be an existential crisis for the country (pressure and rationalization). Controls at the point of voting or registering to vote are often meager to avoid voter disenfranchisement (opportunity). Thus, the risk of voter registration or voter fraud exists.

How to Find Fraud in a Process

The best way to detect fraud is to evaluate the processes and procedures surrounding the system that could be defrauded. 

  1. Understand the stated process from start to finish.

  2. Identify the qualifications or requirements behind each step in the process.

  3. Verify that the qualifications or requirements are being met and/or that the verification process exists.

  4. Based on the above, evaluate which areas in the process are lacking in either step 2 or step 3 and identify the ways in which someone could subvert the process to gain an unfair or illegitimate advantage at the expense of the others in the process.

The Voting Process

Due to the dissenting opinions about voter fraud this year, I decided to follow the above steps to examine the processes and controls of the voter registration and voting processes—excluding any type of computer hacking or software glitches. Processes, policies, and statutes vary from state to state, so for the purpose of this article, I will use Pennsylvania as the example.

Step 1: Registering to Vote

In Pennsylvania, the voter registration process begins with an individual certifying that they are a US citizen, 18 years of age, and a resident of the county in which they reside. As with any fraud investigation, I evaluated these requirements against the methods by which the assertions on the form are verified. 

  • Citizenship: An individual must certify under penalty of perjury that he is a United States citizen on the voter registration form. No independent verification of citizenship is performed by the commission. Additionally, no additional proof of citizenship documentation is required to be submitted with the voter registration form. However, when a registered voter votes for the first time, he must show a form of identification.

  • Voter Identification: Voter registration forms must include a driver’s license number or the last four digits of a social security number. Either identification number is then compared to databases maintained by the Pennsylvania Department of Transportation or the Social Security Administration. If a match is not obtained from this comparison, the registration application is not automatically rejected and the commission attempts to gather additional information.

Step 2: Voter Registration List Maintenance

Counties perform list maintenance activities including:

  • Removal of deceased voters

  • Removal of voters who have confirmed they have moved outside of the county

  • Send notices to voters when voters have not voted in two federal general elections

  • Send notices to voters that have been identified as having a change of address by the US Postal Service

The voters who are sent notices are marked as inactive in the system. A voter is only removed from the list after being sent a notice requesting address confirmation, marked as inactive, and if the voter does not contact the county for two federal general elections after receiving the notice.

After receiving the notice that an individual has died, the Department of Health notifies the commission within 60 days and the commission removes the voter registration.

As of March 2020, Pennsylvania is a member of the Electronic Registration Information Center (“ERIC”) which assists states in maintaining accurate voter registration lists by facilitating the communication of voter information between states. Not all states participate in ERIC.

Step 3: Voting

On the day of an election, the voter is required to show a form of identification. The list of allowable documentation includes photo identification such as a driver's license, student ID, or employee ID and non-photo identification such as a voter registration card, a current utility bill, paycheck or bank statement. Additionally, when voting in person, the individual signs a poll book to record that the individual voted at that location.

For the November 2020 election, Pennsylvania voters were allowed to vote in person or via absentee ballot or mail-in ballot. To vote via absentee ballot or mail-in ballot, the voter was required to request the ballot either online, in person, or via mail. The request for the ballot required the voter to list the Pennsylvania driver’s license or ID card number or the last four digits of the Social Security number. If the voter had neither, they were to supply a photocopy of an acceptable ID.

The Pennsylvania Department of State issued guidance to counties that ballots with non-matching signatures would be discarded.

Fraud Risks in the Process

In learning about this state’s voting process, I noticed a few policies that do not mitigate the fraud risk or prevent fraud in the process.

  1. When certifying that an individual meets the criteria for registering to vote, an independent confirmation of the individual’s assertions is either not performed or when confirmation is performed, a non-match does not immediately reject the application for registration. From a fraud risk perspective, it would be possible for someone to register to vote who does not meet the criteria.

  2. While list maintenance is performed, an individual can remain on the inactive status for several years. This could potentially result in someone voting in multiple states - especially for the states who do not participate in ERIC, or something similar. 

    Additionally, it is possible to have deceased voters on the list during an election based on the length of time required for the Department of Health to notify the commission for which someone could cast a vote on their behalf.

  3. The required non-photo identification of an individual—especially as part of the mail-in ballot process—provides additional fraud risks such as non-government issued IDs, utility bills and bank statements which can be created simply using software tools. This could create the opportunity for someone to impersonate a registered voter and vote on their behalf.

Post-Election Audits

I do want to mention that Pennsylvania has begun incorporating risk-limiting audits of election results. For more information on how this works, visit Pennsylvania’s website here https://www.votespa.com/About-Elections/Pages/Post-Election-Audits.aspx. Based on review of the site’s information, while it may help confirm whether or not the tabulations were correct, the audits, similar to financial audits, are not designed to find fraud. So even with a post-election audit, the fraud risks detailed previously would not necessarily be discovered.

Fraud Risk, Fraud, and Materiality

While fraud risks in the voting process exist, it does not mean that fraud has occurred; at the same time, it also does not mean fraud cannot or does not exist at all. Fraud risks, as described in the previous section, exist—especially at the individual voter level. However, especially when considering the risk at this individual level, it is also important to consider materiality.

In the context of financial fraud, the Association of Certified Fraud Examiners 2020 Report to the Nations identified that organizations lose five percent (5%) of their revenue each year to fraud. Five percent of $1,000,000 in revenue is $50,000 which can be quite a bit of money for an individual to steal and use personally in a year—in addition to their normal compensation. But the transactions comprising that $50,000 over a year would probably not immediately stand out to stakeholders, management, or even auditors. It is common that fraud is often not identified by financial audits because it falls below the materiality threshold. In this scenario, fraud occurred, but due to the size of the transactions, the fraud did not materially impact or create other immediate, noticeable financial issues. 

In the context of elections, the threshold for materiality is whether the result of the election is affected. While there are definitely risks of voter fraud in the process, and individuals have even been charged with voter fraud, in order to alter the outcome of an election, these fraud risks would have to be exploited on a very large scale or as a result of years and years of compounded voter fraud. 

As the Fraud Triangle theory suggests, even people who aren’t “hardened criminals” can commit fraud when in the right situation. The risk of voter fraud exists; the question to be considered in any particular election is one of materiality.

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Leah Wietholter, MBA, CFE, PI, CPA1 Comment