Know Where You Are Going: The Value of Interviewing Fraudsters

GUEST BLOGGER

John D. Gill, J.D., CFE
ACFE VP of Education

In the early 1980s, Dr. Joseph T. Wells, CFE, CPA, Chairman and founder of the ACFE, and Jim Ratley, CFE, ACFE President and CEO, began producing anti-fraud training videos. One of the signature elements of their videos was the inclusion of videotaped interviews with actual fraud perpetrators. Thirty years later, interviews with real-life fraudsters are still an important part of the ACFE’s training programs.

For the last few years, I have been fortunate to conduct many such interviews myself, and I freely admit that it is one of my favorite parts of my job. I’m always surprised that anyone is willing to sit down and talk on camera about their crimes. We do not pay them for interviews, but we have at least a few people each year who are willing to talk candidly about their mistakes.

Yogi Berra said, “If you don't know where you are going, you'll end up someplace else.” In the fraud examination field, if you don’t know who you are trying to catch, you’ll end up with someone else as your perpetrator. I’ve interviewed at least a dozen white-collar criminals, and without exception, they have all been articulate, congenial, nice and intelligent. Several were CPAs or lawyers, and one had a Ph.D. in science. Several had previously led Fortune 500 companies.

So if you think the individuals who are committing fraud in your organization are the low-level employees with little education, you don’t know where you are going.

Another thing I have learned is that the Fraud Triangle is alive and well. Every so often, someone argues that the triangle is no longer relevant or needs to be revised, but based on the interviews I’ve done over just the last four or five years, I think it’s just as relevant as it was back in Dr. Donald Cressey’s day. In case you are new to fraud examination, one of the core principles is the Fraud Triangle, which was based on research done by Dr. Cressey in the mid-1950s. The theory is that fraud is likely to occur if the subject has some kind of unshareable financial pressure, a perceived opportunity to relieve that pressure, and the ability to rationalize his or her conduct so that there is a lessening of guilt or a feeling of justification.

In every interview I have conducted, the circumstances followed the Fraud Triangle pattern. For example, Nathan Mueller, who is interviewed in this video made especially for International Fraud Awareness Week, was expecting his first child. His financial pressure was that he believed in order to adequately provide for his family, he needed extra money to pay off debts and purchase a bigger house. A year earlier, he found out he had check approval of up to $250,000, a mistake on the company’s part that provided his perceived opportunity. Nathan’s rationalization was that a check to him in the amount of $19,000 was of no consequence to a large insurance company. His department regularly processed payments in the millions of dollars, so the company would never miss the money.

We feature these fraudster interviews in our newsletters, our online courses, in our live seminars and for awareness campaigns like Fraud Week. I urge you to give them a close listen. These are the people you are trying to catch. Other than the fact that they made some bad choices with regard to doing the right thing, they are just like you and me. Watching these videos will give you some insight into who you are looking for so you know where you are going.