There's a simple thread that connects entrepreneurs and conmen. In the latest episode of Fraud Talk, Alexander Stein, Ph.D., discusses this connection and dissects how the psychodynamics of fraud can help fraud examiners spot the differences between ethical employees and malevolent ones. You can catch Dr. Stein as a keynote speaker for the upcoming ACFE Fraud Conference Canada in Montreal, October 20-23, 2019.
Below is an excerpt from the full transcript of the discussion, which you can download in PDF form, or you can listen to the episode.
Emily: You've said that you believe entrepreneurs and conmen may share formative experiences. I found that to be really interesting. What, in your opinion, do they have in common?
Dr. Stein: In a word? Creativity. I think we can easily talk about malicious creativity and to consider what is it about the constitution of a person that he or she — although primarily we're talking about he — who will take all kinds of entrepreneurial brilliance and a hunger for innovation and use it in destructive, socially destructive or non-legitimate ways, rather than something that adds value to society where it profits other people, shareholders or stakeholders. Where those two paths diverge becomes really meaningful.
Before they diverge, there are often a lot of similarities between creative people in the ways that they launch ventures that do something for them that's very important.
You were asking earlier about ethics and malice. For better and for worse, one of the things that happens when you start to tear away the constraints of ethical behavior is you have a broader field available to you.
Basically, there is no voice or no limit saying you shouldn't do that, or you can't do this. Essentially, you can do anything you want, and so you have a creativity unrestrained there, which is one of the reasons why we often find the good guys on their back foot, trying to figure out, "Well, how do we get ahead of people who are doing bad things?" Who would have ever thought to put a bomb in a shoe or the ways in which we're often surprised, even by the remarkable innovation of how certain things can be weaponized that we thought were just perfectly normal?
It does take a particular, almost artistic, mind to be able to look at something usual and say, "Yes, well, we can use that in a very different way, and I don't really care what happens if I do that. I'm just going to do it." This is where those two kinds of unique characters intersect. However, the results are obviously vastly different.
Emily: We need to be thinking just as — “we” being fraud fighters — we need to be thinking just as creatively when we're trying to prevent fraud by saying, "This is how a criminal could exploit this system."
Dr. Stein: Certainly, that can be harder than it seems when you just say it like that. The idea of “think like a criminal” is a fairly well-established perspective, certainly in law enforcement. For anybody who's looking to be able to prevent wrongdoing of some kind, you have to be able to think literally outside of the box because you can be sure that your opponent is not thinking within any boxes. You need every advantage that you can get.
You can find all episodes of Fraud Talk at ACFE.com/podcast or wherever you listen to podcasts.