Categorized in: Fraud

Tags: 2021 Fraud Week

Published: November 18, 2021

When frauds happen, people are often left in disbelief that someone they knew would choose to deceive and harm their organizations. We’ve all heard stories of the “trusted employee” who proved to be anything but trustworthy. Outside observers often have questions like “how could this have happened?” or “shouldn’t someone have noticed?” Answers to these questions usually require a deeper understanding of the “human side” of fraud.

Organizations can—and should—have policies and procedures in place to minimize their fraud risk. But the human element is essential for understanding the full story of any given fraud. People are naturally inclined to trust other people, especially their colleagues. Fraudsters often use personal relationships to their advantage when they’re committing fraud. If we remember this, we can apply a healthy level of professional skepticism to all of our work activities, and we can employ the “trust but verify” method to help minimize the risk of potential frauds going undetected.

The anti-fraud and criminal justice communities have countless resources on fraud theory, criminology and psychology to help us understand why and how people commit fraud. While scholarly articles are helpful, we find great value in seeing frauds portrayed or analyzed in popular media. That’s why to round out the 2021 International Fraud Awareness Week, the State Auditor’s Office has put together a list of our favorite documentaries, short videos and podcasts to help you understand the human side of fraud.

Plus, these “fraud features” pair better with a bucket of popcorn—or, in the case of the podcasts, a walk in the brisk fall air.

Documentaries and movies

All the Queen’s Horses, a film by Kelly Richmond Pope

Summary: This documentary tells the story of Rita Crundwell, who in her time as Comptroller and Treasurer for Dixon, Illinois, misappropriated $53.7 million from the city. Crundwell’s fraud is considered to be the largest municipal fraud in U.S. history.

Takeaways: Crundwell was a long-standing, trusted employee in all senses. She lived an extravagant lifestyle that some say should have raised a red flag. However, Crundwell’s colleagues rationalized her lifestyle to themselves, and her fraud went undetected.

Find ways to watch at AllTheQueensHorsesFilm.com

Bad Education, HBO

Summary: This movie is based on the real-life embezzlement scandal at New York’s Roslyn School District. The movie claims that this is the largest school fraud in the nation’s history, carried out by multiple employees, including the superintendent. Related news articles on the fraud total it up to about $11 million.

Takeaways: The movie depicts not just the fraudsters’ rationale for committing fraud, but the School Board’s rationale for helping cover it up. Bad Education also gives us such a great example of the smooth-talking fraudster. He uses manipulative words and behavior, he is well-liked, and he plays on people’s emotions and insecurities. It’s a great case study in why the “trusted employee” model is so flawed. (Please note this movie is rated R.)

Dirty Money, a Netflix original series

Summary: This Netflix series covers various stories of greed, corruption and crime across the globe. The first season covered stories like Volkswagen’s “clean diesel” scandal and Canada’s maple syrup heist. We especially recommend “The Wagon Wheel” episode in the season two, which covers the Wells Fargo scandal.

Takeaways: The fraud triangle, which includes pressure, rationalization and opportunity, is a useful model for explaining the factors that lead to fraud. The Wells Fargo case is a great example of the pressure leg of the triangle. The bank’s structure demanded and rewarded employees for opening a high number of new accounts each day.

Documentaries and movies

How Whistleblowers Shape History, a TED Talk with Kelly Richmond Pope (12 minutes)

Summary: If you see something, say something. This sounds like a simple direction, and we all believe we would surely follow it. However, many potential whistleblowers do not come forward because they’re afraid of retaliation. In this TED Talk, Kelly Richmond Pope (creator of All the Queen’s Horses) shares lessons from high-profile whistleblowers and why whistleblowers need our trust and protection.

Takeaways: This TED Talk helps us explore why people who suspect fraud aren’t always willing to blow the whistle.

Fraudster Video: Gary Foster, Fraud Conference News (3 minutes)

Summary: Gary Foster tells us why he decided to steal $22 million from Citigroup. You might be surprised what the trigger was that made him decide to steal.

Takeaways: One reason so many organizations fall victim to a “trusted employee” is that it’s human nature to picture fraudsters as innately “bad” people who we could all spot easily. In reality, fraudsters are often otherwise good people who made a poor decision because elements of the fraud triangle—opportunity, pressure and rationalization—lined up for them. In this case, Foster had an easy opportunity, but most importantly in his case, the rationalization that he was owed the amount he stole. We also recommend reading the accompanying article that provides further context.

Podcasts

Dupe of the Week, Episode: “To Steal or Not to Steal, Nov. 16, 2017

Summary: In this episode, a convicted fraudster talks about his family life, time in the military and career servicing ATMs, where he had access to almost $1 million each day. He then explains why he eventually chose to steal that money. 

Takeaways: This story is a compelling example of how an otherwise good person might choose to steal when the opportunity exists. We hear the fraudster describe his actions and motivations in his own words.

Fraud Not Frog, Episode: “Reformed $8.5 MM Fraudster Nathan Mueller Answers Questions Never Asked Before,” Aug. 21, 2019

Summary: When presented with an opportunity to steal, fraudster Nathan Mueller embezzled nearly $8.5 million from ING in just over four years.

Takeaways: Nathan’s story is another great case study in the fraud triangle. Faced with an easy opportunity to commit fraud, personal financial pressure and, of course some, rationalization, Mueller chose fraud. Mueller’s description of his mindset and the factors that led to his fraud are enlightening.

Fraud Talk, Episode 73: “Former Controller Exploited Accounting Software Glitch and Stole $1.3 Million,” July 23, 2018

Summary: Ryan Homa is a convicted fraudster who stole $1.3 million from his employer over three and a half years. He started his fraud only five months into his employment with the company.

Takeaways: Homa describes not only his clear opportunity to commit fraud, but also the personal financial pressure to do so. He also makes a statement that we often hear in our fraud interviews—he didn’t plan to steal the money; he planned to just borrow it and pay it back.

#fraudweek

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Categorized in: Fraud

Tags: 2021 Fraud Week