What Makes a Fraudster Tick?

FROM THE RESOURCE GUIDE

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

It is an unfortunate truth that fraud exists in every country and in every industry. One of the most challenging parts of this continuing fight is understanding what goes on in the mind of someone who commits fraud. What causes one person facing financial hardships to steal from his employer while another finds a more honest way to pay his bills? And what goes through the mind of individuals as they are making that choice — that first decision — to become a fraudster? How do they continue to justify their actions to themselves as they carry out their schemes?

As an anti-fraud professional, it’s important to look for the answers to those questions. You cannot effectively deter fraud unless you have a full and complete grasp of the different motivations and tipping points that might affect a fraudster. I have found that interviewing fraudsters is one of the best tools to truly enter their minds. Each story is interesting in its own right, but when combined, you begin to see the common thought patterns displayed by these perpetrators before, during and after the crime. It is also important to examine different theories offered by experts — both past and present about what causes some people to turn to fraud. 

One thing that has always stood out to me while trying to understand fraudsters 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 the ACFE has conducted over just the last four or five years,it is just as relevant now as it was back in Dr. Donald Cressey’s day. His basic theory still holds up: 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.

I am excited to announce that the ACFE has developed a new 1-day class, Understanding the Mindset of a Fraudster. We will also be offering a 4-hour version of the class as a Pre-Conference session at this year’s 27th Annual ACFE Global Fraud Conference. The seminar will examine fraudsters’ behaviors and motivations, as well as the pressures, opportunities and rationalizations for their frauds. Through discussions about human behavior, video interviews with convicted fraudsters and interactive problem-solving, you will gain a deeper understanding of mindsets and personality traits common to many fraudsters.

A good fisherman understands how a fish reacts to different types of lures and water conditions. A good fraud examiner understands how individuals react to different interview techniques and workplace controls. Understanding more about the mindset of a fraudster will better prepare you to catch those people who travel outside the lines to enrich themselves at someone else’s expense. 

Read John's full article and find more training resources in the ACFE's latest Resource Guide.

ACFE Wraps Up Seminars in Asia-Pacific Region

AUTHOR'S POST

Mandy Moody, CFE
ACFE Social Media Specialist

Donald Cressey’s Fraud Triangle is not a concept that only applies to one gender, culture or country. Whether you are investigating fraud in Bangkok or Belfast, pressure, opportunity and rationalization are three universal factors that know no regional boundaries. Just as these motives are universal, so are the training and skills needed to fight them.

In April the ACFE was proud to host seminars in Shanghai, Jakarta and Melbourne in an effort to offer more anti-fraud training and education in the Asia-Pacific region. With a diverse group of anti-fraud professionals in attendance at each course, the enthusiasm and need for education regarding internal fraud and investigations, as well as fraud risk management, were apparent.

“The fraud schemes themselves are universal – there seem to be very few differences in the schemes from one part of the world to another,” ACFE Faculty Member Gerry Zack, CFE, CPA, CIA and President of Zack, P.C. said. “When I was asked to teach these courses, I expected to really enjoy meeting anti-fraud professionals from all over the world and hearing their stories. And I was not disappointed.”

Zack traveled first to Shanghai, China, April 15-16 to teach the two-day Auditing for Internal Fraud. The fraud fighters assembled there explored the challenges auditors face when identifying fraud and learned about the common schemes, detection techniques and methods of preventing occupational fraud. He then taught Conducting Internal Investigations in Jakarta, Indonesia, April 18-19 and wrapped up in Melbourne, Australia, April 22-23 with Fraud Risk Management.

Lim Kurniawan, CFE, is the Managing Director at Awesome Consulting in Jakarta. He knew of Zack before attending the Conducting Internal Investigations course because he bought the book, Fair Value Accounting Fraud, written by Zack. In the book, Zack highlights the risks of the International Financial Reporting Standard, a standard that is adopted as a local accounting principle in Indonesia. Kurniawan and Zack not only share the challenges of implementing global standards, but they also experience the same successes and trials during the interviewing process.

Kurniawan plans to use the lessons from a simulation Zack used in the course to help clients interview witnesses. “The skills taught in this course were practical, which I believe to be very applicable,” Kurniawan said. “Gerry offered specific examples from his own life, not fictitious ones. It was such an honor for Indonesia to be visited by an amazing international speaker. I hope in the future such a richly rewarding course could be attended by more people, thus Indonesia could be more blessed in this way.” 

Read more about the seminars in the ACFE's latest Global Spotlight.