Local Fraud Buster Inducted Into International Auditor Hall of Fame

After more than four decades, Joe Dervaes continues “leading through service.”

Joe Dervaes
Joe Dervaes Ted Olinger, KP News
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Vaughn resident Joe Dervaes, 80, became just the fifth person worldwide inducted into the Association of Certified Fraud Examiners Hall of Fame at a virtual global conference held June 19-21, capping a 43-year career in auditing and fraud investigation at federal and state levels.

The ACFE is an international organization of 90,000 certified fraud examiners, attorneys and law enforcement personnel that works to detect and reduce white-collar crime and train others in best practices. It was these same certified fraud examiners who brought down Bernie Madoff’s $65 billion Ponzi scheme in 2008.

The Hall of Fame award is the highest honor any CFE can receive.

“I was just astounded,” Dervaes said. “It’s not an award you compete for, it finds you.”

But it’s not the first of its kind for Dervaes, who also received the ACFE’s lifetime achievement Cressy Award in 2003 for fraud deterrence and detection, the organization’s highest honor at the time, presented to him by then Washington State Auditor Brian Sonntag.

“My whole life is about service — leading through service — service to the nation, to the state, to the community,” Dervaes said. Even in retirement, he is still active in the ACFE, is president and sexton of Vaughn Bay Cemetery, and treasurer of the Key Peninsula Historical Society and Museum.  

“The ACFE and CFE designations are two of the most important things that ever happened to me in my career, besides these two awards,” he said. He joined the ACFE in 1988 to further his own education and share his knowledge.

Dervaes was elected to the ACFE board of regents in 1998 where he spent four years, including three as chair; he joined the faculty, taught at conferences worldwide, served on the board of review for disciplinary action, wrote 80 columns on fraud for the ACFE magazine over 13 years, and was the first to be appointed to a new fellowship program created to produce a manual on fraud — a project he’d already done once when he literally wrote the book on fraud examination for the Washington State Auditor’s Office.

“All of my experience in fraud comes from working for the state for 22 and a half years,” where he was the audit manager of special investigations. “But I was trained for it in the Air Force,” he said.

Dervaes joined the Air Force in 1963 after graduating from the University of Tampa, where he grew up, with a double major in accounting and business administration.

“They were going to make me an air traffic controller, but when I got to officer candidate school, the resident auditor walked in and said anybody with accounting experience follow him, and I started auditor training right then. I was 22.”

Dervaes spent his entire Air Force career in the audit agency, retiring in 1983 as a lieutenant colonel, including a five year tour at the Pentagon examining accounts for “sensitive compartmented information” (also called “above top secret”). “That was a very important assignment for me,” he said.

He also served on Okinawa, in Korea, and bases stateside including McChord, where he met his future wife, Peggy.

“An Air Force base is a city; we audit everything in the city,” he said. “Gas stations, flight lines, clubs, anything that can go wrong. We’re not auditing because we think something is wrong, but to make sure everything is going right.”

That was the approach Dervaes brought to his job with Washington state in 1983.

“The auditor’s office is the watchdog of the public dollar: That’s their mission,” he said. “My specialty is employee embezzlement in state agencies and local government. If somebody found a fraud during an audit, my job was to help them. If it became big, bad, ugly or politically sensitive, then I did it.”

Dervaes conducted the most difficult interviews with fraud suspects himself. “I was on point. If something happened and we had to go to court, then I would be the person testifying as an expert witness. Because of the quality of the work we did, I probably had to go to court no more than a dozen times.” Their cases were usually so overwhelming the suspect would confess and strike a plea bargain.

“One of the things that an auditor is never trained to do is to try to talk somebody out of suicide,” he said. “That’s something you have to learn. When you catch somebody by surprise and they know that it’s over, their next thing is ‘How will I live after this? My family will hate me, my friends will hate me.’ I’ve had to do that a number of times.”

Dervaes found that many in state government were doing what they were told but didn’t know why, which limited their performance.

“I used my job to reach all the financial people in the state of Washington, in government,” he said. “At that time we had over 300 auditors statewide and 10 or 11 regional offices, and I went everywhere. If we could teach them to do their work correctly and understand why they were doing it, they could find fraud themselves quicker. That became my focus for 20 years of training all over the state.”

Dervaes was involved in 730 investigations uncovering losses of over $13 million and received the Outstanding Auditor of the Year Award. He also managed the statewide whistleblower program in Olympia. When he retired, the Washington Finance Officers Association gave him a lifetime membership as an appreciation, one of the few rank-and-file members to receive that honor.

He and Peggy got married in 1965. In 1983, they moved to the Davidson family homestead in Vaughn, where Peggy grew up. Her family has lived there since it was established in 1889, six months before Washington became a state. They have three adult children, five grandchildren, and two great-grandchildren.

“I’ve been here longer than any other place in the world, including my 22 years growing up in Florida,” Dervaes said.


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