3 Kinds of People Stealing Your Money

“If there are people, there could be fraud.” It’s the reality in our modern world.

Kelly Richmond Pope, an accounting professor and the author of “Fool Me Once: Scam Stories and Secrets From the Trillion Dollar Fraud Industry,” takes us on a journey into the heart of this invisible crime.

With fraud costing around $5 trillion globally and affecting every industry and country, it’s a universal issue that’s closer to home than we might think.

Understanding the Fraud Triangle

At the core of understanding fraud is the Fraud Triangle, a concept introduced by criminologist Donald Cressey. It comprises three elements: opportunity, rationalization, and pressure.

Pope’s fascination lies particularly with rationalization, the mental gymnastics that turn ordinary people into perpetrators.

She explains that the distance between the perpetrator and the victim often leads to a false sense of victimlessness. Booking a false entry doesn’t feel the same as stealing money from someone’s wallet, allowing people to believe there’s no real victim.

But as Pope emphasizes, the repercussions are far-reaching, affecting real lives and real money.

Rationalization is the final piece of the triangle, where individuals justify their actions as harmless or deserved. They might see skimming funds as a minor perk or believe the company won’t miss a few dollars, especially if they perceive their actions as balancing an unfair situation.

This self-justification is crucial in transforming thought into action, making rationalization a dangerous and potent component of the Fraud Triangle.

The Three Faces of Perpetrators

Pope categorizes fraudsters into three types: intentional, accidental, and righteous perpetrators.

Here’s a more detailed look at each:

• Intentional Perpetrators – Intentional perpetrators are calculated and savvy, often seen in high-profile fraud cases like Bernard Madoff. They exploit weaknesses within their organizations for personal gain, with a deep understanding of the systems they manipulate. Their actions are premeditated and driven by a desire to benefit at the expense of others.
• Accidental Perpetrators – Accidental perpetrators unknowingly commit fraud, typically by following orders without grasping the consequences. They are well-intentioned employees who trust their superiors and act without malice. However, their ignorance doesn’t excuse the legal implications of their actions.
• Righteous Perpetrators – Righteous perpetrators rationalize their fraudulent actions as serving a noble cause, often to help someone in need. Despite their good intentions, their actions are illegal and carry serious consequences. This group represents a moral gray area in fraud.

The Wells Fargo Scandal

The Wells Fargo scandal, where employees felt pressured to open millions of unauthorized accounts to meet aggressive sales targets, is an example of the everyday pressures that can lead to fraudulent activities.

The scandal highlighted not just the actions of individuals but the systemic issues within organizations that encourage or even necessitate fraudulent behavior.

The most alarming part? Those who tried to speak up were often fired, setting a dangerous precedent about the safety of whistleblowing in the corporate world.

Preparing for the Unthinkable

Pope’s lectures always end with a call to action for her students: be vigilant, speak up, and use internal channels to report suspicious activities. However, the Wells Fargo scandal made her rethink this advice.

Now, she also emphasizes the importance of having a “rainy day fund” and the courage to walk away from a job if it compromises one’s ethics.

It’s about survival in a world where you might not be able to trust the very organization you work for.

A Call for Awareness & Action

These insights shed light on the complex world of fraud, revealing that it’s not just a crime committed by a distant, immoral few but a potential path that anyone might find themselves on under the right (or wrong) circumstances.

All of us need to be more aware, more skeptical, and more prepared to stand up against unethical practices. In a world where fraud is as common as it is costly, understanding the human element behind it is the first step in protecting ourselves and our organizations.