Good Guy Gone Bad Gone Good: The Story of John Rusnak

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Mark Blangger
ACFE Research Editor

Once a good guy goes bad, there’s no turning back — right? For some, absolutely. For others, like John Rusnak, hope exists.

Allfirst Financial was searching for a savvy foreign currency trader to help boost its bottom line. Enter well-intentioned John Rusnak. During his first two years at Allfirst, Rusnak did well, but he wanted to prove that he was the go-getter he made himself out to be when he was hired. So, he began placing multi-million-dollar bets on the yen rising against the dollar, only to watch the yen’s value nosedive — and his anxiety skyrocket. Rather than face humiliation and the discovery of the mounting losses, Rusnak requested more cash to increase the size of his trades, hoping to alleviate his deficit. His hopes dashed, he took advantage of Allfirst’s loose (almost nonexistent) internal controls to enter bogus option contracts into the system, giving the illusion that his trades were remunerative.

After five years, Allfirst’s powers that be realized how much capital the bank had tied up in the currency market and demanded that Rusnak release it to remedy the bank’s balance sheet’s skew toward the foreign exchange market. Runsnak’s smoke screen soon dissipated. The discovery that the requested capital was nonexistent and Rusnak’s cover-up of $691 million in losses led to his arrest. He was sentenced to seven-and-a-half years in prison, fined $1 million for concealment and required to pay restitution.

After serving his time, a former acquaintance gave Rusnak a job and later put him in charge of running his ZIPS Cleaners franchise. Now an advocate for second chances, Rusnak works with jail treatment centers and similar organizations to staff the growing franchise, helps juveniles find entry-level jobs and uses his “bad guy” past to mentor others on the consequences of making poor choices.

John Rusnak is just one example of bad guys who, following their expiation, do turn back, and even pursue liberation from their past and associated guilt. Another on the list of bad guys who did an about-face is Kevin Mitnick, who was convicted of hacking into Digital Equipment Corporation and Motorola, and now evaluates organizations’ internal controls.

Financial cover-up and financial gain are most often the impetus for good guys like Rusnak and Mitnick to become bad guys. Studies on white-collar crime have brought to light some mind sets that are common among such white-collar fraudsters. Here are a few examples:

• The fraud is victimless. (The organization and its employees and shareholders are victims. Enron and WorldCom are epitomes.)
• The benefits outweigh the costs. (For those who fail to consider the consequences of being caught, the opposite is true.)
• The victim is at fault. (The fraudster blames the crime on the organization’s [victim’s] failure to implement strict controls; the fraudster’s lack of self-control and moral integrity are to blame.)

The intricacies and results of these studies are explored in detail in the ACFE’s new online self-study course, Criminology and the Psychology of Fraud. The course offers anti-fraud professionals insight into crime causation, how criminological theories explain and predict white-collar crime, psychological and organizational restraints as well as other revealing information to add to their toolbox of knowledge.