Today I will do what others won’t, so that tomorrow I can do what others can’t. -Jerry Rice
Psychology of FraudFraud Diamond • Person with Capability ... Who benefits – me or others? Who...
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5/2/2017 1 Psychology of Fraud Rand Gambrell, CPA/ABV, CFE, CFF, CVA Director Forensics & Valuation Services [email protected]
Transcript of Psychology of FraudFraud Diamond • Person with Capability ... Who benefits – me or others? Who...
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Psychology of Fraud
Rand Gambrell, CPA/ABV, CFE, CFF, CVADirectorForensics & Valuation [email protected]
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• Participate in entire webinar• Answer polls when they are provided• If you are viewing this webinar in a group Complete group attendance form with
• Title & date of live webinar
• Your company name
• Your printed name, signature & email address
All group attendance sheets must be submitted to [email protected] within 24 hours of live webinar
Answer polls when they are provided
• If all eligibility requirements are met, each participant will be emailed their CPE certificates within 15 business days of live webinar
To Receive CPE Credit
Association of Certified Fraud Examiners – Report to the Nations – 2016 Global Fraud Study
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Association of Certified Fraud Examiners – Report to the Nations – 2016 Global Fraud Study
Association of Certified Fraud Examiners – Report to the Nations – 2016 Global Fraud Study
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The Usual (?) Suspects
Bernie Madoff• $65 billion Ponzi scheme
• Lasted over 15 years –Madoff was investigated at least eight times by SEC
• More than 51,700 claims filed by alleged victims
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Tommy Elrod & “WakeyLeaks”• Player & long-time assistant
at Wake Forest University
• Accused of providing Demon Deacon game plans to opposing coaches
• Financial gain? $0
Toby Groves• Founder of Groves Funding
Corporation
• Misrepresented income, falsified loan documents, reported fictitious homes
• $7 million bank fraud
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Why Do Good (?) People Do Bad Things?
Classic Theories of Fraud Motivation• Edwin H. Sutherland &
“Differential association” Criminal behavior is learned
through interaction with others, not through institutions Fails to address WHY people
adopt criminal behavior
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Fraud Diamond• Person with Capability
• Position & authority in the organization• High-level understanding of system• Egoistic nature• Persuasive & deceptive nature• Resilience to stress
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Breaking Bad – Case Study in Fraud• Walter White Terminally ill with minimal
financial resources – perceived need Former student is involved in
drug underworld – perceived opportunity Walter is not a “bad guy,” he’s
just doing this for his family –rationalization
Current Fraud Theory – Reversal Theory• Motivation is divided into four
polarities (each with a choice) Rules – conform or rebel? Task – get the job done or
enjoy the journey? Who benefits – me or others? Who grows – do I gain mastery
or do I help others?
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Values of the Eight Motivational States
Impact on Fraud Motivation 1. Serious – need for money
due to dire financial circumstances
2. Playful – thrill of the chase
3. Conforming – everyone is doing it
4. Rebellious – pleasure of being bad
5. Mastery – beating the system
6. Sympathy – form of self-indulgence
7. Self – personal gain
8. Other – using gains for one’s family
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Practical Impact of Reversal Theory?
What About Co-Conspirators?• Often, co-conspirators aren’t
bad people, they can’t see the impact (fraud is unintentional)
• People commit fraud because of relationships (we like each other)
• Cognitive association limitations
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Toby Groves Revisited• Founder of Groves Funding
Corporation• Misrepresented income,
falsified loan documents, reported fictitious homes
• $7 million bank fraud• Why did employees, title
company personnel, etc. contribute to the fraud?
Future of Fraud Controls
Association of Certified Fraud Examiners – Report to the Nations – 2016 Global Fraud Study
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QUESTIONS?
The information contained in these slides is presented by professionals for your information only & is not to be considered as legal advice. Applying specific information to your situation requires careful consideration of facts & circumstances. Consult your BKD advisor or legal counsel before acting on any matters covered
BKD, LLP is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.nasbaregistry.org
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• CPE credit may be awarded upon verification of participant attendance
• For questions, concerns or comments regarding CPE credit, please email the BKD Learning & Development Department at [email protected]
CPE Credit
THANK YOUFor more information
Rand Gambrell, CPA/ABV, CFE, CFF, CVA | [email protected]
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