Fraud Author Tracy Coenen

Putting a stop to fraud, big and small, demands that we understand what drives the fraud. People have something within their personal moral codes that causes them to commit fraud.

One of the most common factors that I have seen in each fraud I investigate is greed. Not every fraud starts out this way. There are plenty of schemes that started with a need on the part of the thief. Maybe there was a mortgage payment due or an unexpected car repair bill. The thief probably doesn’t think a theft in this situation is related to greed, and maybe it’s not.

But for many who commit fraud, they are just plain greedy. They see an opportunity, and they exploit it - period. For many of these people, there isn’t even a question as to whether or not they’ll steal from the company. If the opportunity is there, they’ll take it. A fraud may grow for this type of person because it is fun or gives the employee a “high.” But to continue to get that “high,” each fraud must be a little bit bigger, a little bit more risky.

For others, greed doesn’t come so naturally, but may still be there. An accounting manager may have started a fraud scheme to pay a few personal bills that were looming. The original intent was to cover those bills, and no more. But as the fraud progresses to three or four or five incidents, the accounting manager starts to develop the greed.

She or he probably wouldn’t immediately recognize it as such. But it’s there. Maybe a desire to buy some nicer shoes, and one more theft would pay for them. What about a nice dinner out? Another theft could fund that. The thief starts thinking about the things that the company could “pay for,” and this is how the greed builds.

Can companies prevent or remove greed from the mindset of their employees? Probably not. However, management can be on the lookout for signs that point to greed in motion. Management can also make sure that employees are fairly paid, treated equitably, and duly appreciated for their contributions to the company. Doing these things helps stop some good employees from going bad.

Beyond that, the way to manage the greed is to look for fraud and stop it dead in its tracks. Management must make the small frauds a priority, and follow through on them to stop them from becoming big frauds. All fraud is important, not just the big fraud that we see in the headlines.