Working in the financial world may not seem like the most exciting lifestyle, but for a lucky few it is. They get to spend their time investigating fraud, chasing bad guys and arranging stings. Steve Lee does. The 53-year-old forensic investigator never envisioned this lifestyle when he graduated from school. He kicked off his career working on bankruptcy cases for a large accounting firm. One day, though, as he gazed out the window in his office atop the World Trade Center towers, he decided it was time for a change. He moved to California and started Steve Lee & Associates, where he could focus on his true passion: investigation. “I’d love to tell you there was a master plan,” he said, “but that would be a complete misrepresentation.” The next thing he knew, the firm had four offices across the United States and another in England, and was handling complex fraud cases across the globe. Lee recently sat down with the Business Journal in his Century City office to discuss his career, his current work and what made him want to get far, far away from the World Trade Center.

Question: Forensic investigation sounds very exciting.

Answer: We sometimes refer to ourselves as an economic SWAT team because we do tend to be called in to the most interesting, complex and challenging sorts of situations that confront organizations and individuals around litigation or investigations. We have a reputation for being able to solve thorny problems.

Like what?

A lot of our work relates to fraud investigation. Everything from Ponzi schemes where people end up in jail, to securities fraud committed by companies, to Foreign Corrupt Practices Act prosecution by the government. Sometimes we actually get hired to defeat the security of companies, both in the electronic world and occasionally in the physical world.

Electronic world? You mean hacking?

In the cases where we’re hired to defeat somebody’s security in order to prove their vulnerabilities, it’s an authorized activity; it’s not an illegal hack. We have what we call ethical hackers.

How do you find people with that skill set? Were they former hackers?

Some of them were. A couple of them cut their teeth as young hackers. With the fullness of time comes wisdom and the realization that there’s a better world out there, which is the world of stopping hacking, not promoting hacking.

It’s a good thing they’re on your side now.

To give you an example of what they can do, one of them called me up one day – he was at the lab and I was at my office in the suburbs – and he said, “Nice tie.” I said, “Really? What tie am I wearing?” And he described it in detail.

How did he do it?

He said, “I’m looking at you through the camera in your Mac.” I said, “Really? We’re not connected.” He said, “Yeah, we are. I hacked into your machine and I’m looking at you through your own camera.”

That’s scary.

That is scary, isn’t it? Since then I’ve had a Post-it note on the camera of my computer, and I highly recommend it, by the way.

Did you know you wanted to get into this field in college?

I started out in the sciences, and ended up minoring in the sciences and majoring in economics. I came under the spell of a really interesting guy there, a professor from India. His name was professor Raj Bhargava.

Why was he so influential?

He was old enough to have worked in the post-World War II government of India. He brought a whole new perspective, a global perspective, which is good for a kid who had grown up landlocked in the Midwest. He really promoted my interest in international business and economics.

Then what did you do?

When I got out of graduate school, I had in mind working for a specific firm which was called Touche Ross – it was one of the Big Eight accounting and consulting firms. I wanted to work for them in the worst possible way because in my view they were the most creative and out of the box of the Big Eight. I interviewed with Touche (and) a few months later I reported for duty at the 94th floor of One World Trade Center. This is in the late ’80s.

What was it like working in the World Trade Center?

I had a really wonderful time – one of the great working experiences of my life. Most of the New York practice was in Midtown, but there was a group of about 43 people in the World Trade Center. Working for them took me to England; it took me to various places in Western Europe; to Guam; to Japan; to South America, where we actually had an assignment to build a stock exchange. It was a pretty exciting time.

So that is where you learned forensic accounting?

It was a tremendous opportunity to get involved in court-related activity because all the bankruptcy work involved lots of testifying, lots of preparation of evidence. That’s really where I learned this trade, in many respects. Today, you can actually get degrees in forensic accounting, but in those days it was more a matter of it picked you and you either rolled with it or you didn’t.

Clearly, you’re lucky you did not spend your whole career there. Why did you end up leaving?

I think it was 1991 or 1992, and my wife and I lived in Princeton, N.J. I called her up one night at about midnight from my perch in the 94th floor, standing in one of those long windows. You could kind of stand up in them because the HVAC system abutted the window. The Statue of Liberty looked a lot like a water bottle. At that height, the Trade Centers used to sway – visibly. You could feel it when you were up there, particularly if you were in the window because you could get that sense that you were moving. I called her up and I said, “You know, we need to move out of here.”

Why?

I said, “If I stay in this building, I’m going to die in here.” I just had that sensation. She’ll tell you; she’ll validate the story. I don’t know why, I just had this horrible feeling.

That’s pretty incredible.

The next year was the garage bombing of the World Trade Center in 1993. It happened to be where I parked my car. I thought that was it. Of course, much to my surprise on 9/11, when the buildings went down.

What was it like when you found out about the terrorist attacks?

It was very eerie. The personal connection is just difficult. It took me many, many years before I could go back down there and look at the site. It was just really hard. I mean you go in and out of there every day; you ride the elevators.

Did you know anyone who died?

I did. My colleagues at Touche had moved on; they weren’t in the building anymore, which I’m glad to say. But we had this long relationship with Morgan Stanley. The head of security for Morgan Stanley was somebody I knew, and he died in the building. One of my former colleagues from Touche Ross had become the colonel who was in charge of the National Guard units who were the responders on the scene. Fortunately, neither he nor any of the guys in his unit, I think, were killed. But a lot of them suffered from inhalation problems and post-traumatic stress.

So you left New York in the early 1990s. Did you come straight to Los Angeles?

When I left Touche, we actually started in Silicon Valley. We had it there for four years. But I had a sickly feeling about the tech sector, which is where a fair amount of our work was. I wanted to expand and I wanted to get into a middle-market environment where there would be more clients, a little bit more of a distribution of services. Los Angeles seemed like exactly the right place to go.

How long before your firm really got off the ground?

A couple of years into my own practice – 1994, 1995, I think – I was flying home from the East Coast one day and I had about a half-million dollars of checks in my shirt pocket because I had been paid for a couple of projects. It occurred to me on that flight that it was a real business. Up until then I had just sort of thought it was a good run, kind of lucky, we’ll see how long it will last. I remember having a quiet moment and thinking, no, it’s actually a real business. There was sort of a gravitas suddenly. It wasn’t just the cash – it was just a reflection that we have real obligations to our clients, they have real expectations of us; these aren’t fleeting things.

Who are some of your local clients?

One of the ones that was local was IndyMac Bank. We were actually hired by IndyMac Bank some months before the (Federal Deposit Insurance Corp.) took them over to investigate specific loans, real estate development loans. So we’re not talking about a house; we’re talking about 1,000 houses.

There must have been plenty to investigate.

We actually drove out into the Inland Empire area and looked at these places. It was a pretty frightening sight: tumbleweeds 30 or 40 feet thick, construction equipment out in the field with a layer of dust an inch thick, so you knew that nothing had happened for months. It was a very interesting investigation, but obviously a disaster for IndyMac Bank.

Any outright frauds?

In one case, a bank fraud started out as a normal workout. We were invited to go in (to a borrower’s warehouse) with the bank, took a look, spent about three hours interviewing the CEO, walking around the warehouse. As we left the building, I said (to the bank officer), “I think your money’s been stolen and you’ve got major fraud.”

What tipped you off?

The fact that the CEO could not answer a single straight question in three hours, the fact that he didn’t know what he sold or the condition or status of his inventory. The biggest problem for me was … none of the loading docks were in any condition to ship or receive inventory.

So what happened?

It turned out it was a giant fraud. It didn’t take long for the bank to file suit against the company to recover its money. The very next day, the company went into bankruptcy. The CFO fled the country.

What was your role in this?

My job is to run this investigation and assemble all the information to prove fraud. Proving a fraud is not the easiest thing in the world to do. This company had 12 or 15 related parties with whom it cycled the inventory around and around. Long before there was litigation we took a forensic image of their accounting system and we learned that they had dummied up their accounting system. We were able to get the information even though they were hiding it and even though we didn’t have powers of subpoena and were able to do it legally.

What ended up happening?

Against each perpetrator we got judgments of $20 million.

Do you travel a lot for your job?

I do, unfortunately. I don’t love travel anymore; I did at one time but I hate it now because it’s just become a nightmare for all the common reasons – everything from the TSA checkpoints to the diminution of service on airlines.

It must be nice when you arrive, though.

Once there, I really enjoy sampling the culture. I’ve had the good fortune of being treated really well by lots of clients. One that comes to mind is having gone to Turkey for a job. I had to stay over the weekend and our host and client decided to send me to a resort on the coast. It was nice; it gave me a chance to go out and see the bazaars and to visit the archaeological sites that I frankly never would have.

How many countries have you traveled to?

The company has worked in over 50 countries. I myself have worked in more than 10, less than 20. And pretty much every continent in the world, except the cold one.

Do you speak any other languages?

Not really. I get by in a couple countries. We have a couple of people who are native speakers in Hebrew, Japanese, Russian, Chinese and, of course, Spanish. I try to conduct all my business in English when I can, just to keep it clear anyway.

How does your family feel about all your traveling?

I think they’re used to it. It’s not too awful. Fortunately, we’re a pretty good and cohesive team in the company, so more and more I’ve had other people who are standing in my place in travel and doing things I would have done several years ago.

When you’re not working or traveling, what do you like to do?

My wife and I are ballroom dancers. Not professional, but fairly accomplished. We don’t compete, but we’re social ballroom dancers. We do it a lot. She has been a ballet dancer for 25 years, so dancing comes naturally to her – not so naturally to me.

Do you think your daughter will follow in your footsteps in her career choice?

I don’t think she has any interest in business or commerce. She’s very much an environmental science, zoology and animal husbandry kind of person. Her interests are very close to the Earth.

As someone who spends his time investigating bad guys around the world, you must love James Bond and spy thrillers.

I have to admit that I do have a soft spot for thrillers and military films. I really enjoyed the recent Academy Award-winning film “The Hurt Locker.” It’s a pretty extraordinary piece of work. I enjoy spy thrillers. But after you’ve been married for 23 years, I’ve probably seen considerably more chick flicks than I’ve seen thrillers. And I’ve even learned to like some of them.

Steve Lee

TITLE: Managing Partner

COMPANY: Steve Lee & Associates

BORN: St. Louis; 1956

EDUCATION: B.S., University of Missouri; M.A., London School of Economics; M.S., Maryville University

CAREER TURNING POINT: Realizing in mid-1990s that his firm was a legitimate business

MOST INFLUENTIAL PEOPLE: Raj Bhargava, Lee’s professor at the University of Missouri; Frank McCloy, associate and ex-CIA agent

PERSONAL: Lives in Westlake Village with his wife, Elizabeth; has a 19-year-old daughter

ACTIVITIES: Ballroom dancing with his wife, charitable activity