Criminologist Dr. Donald Cressey strongly influenced Dr. Joseph Wells, CFE, CPA, and others who formed the ACFE. Cressey's principles culminated in the formation of the Fraud Triangle, which fraud fighters have used for decades to understand and work cases. Students and aspiring fraud examiners need to understand that the Fraud Triangle isn't just some sociological theory from a textbook but an important application in the field.
The case of "Judy" is an important study in the application of the Fraud Triangle and several other fraud examination tenets. We know the Fraud Triangle by its three sides: pressure, opportunity and rationalization. As you read the case study, think about each category and how it might apply in cases you're working now. (This case is real, but I've changed some of the details, including names.)
'Only the Lonely'
Judy had been a bank teller for a regional financial institution for 14 years — since her senior year in high school. Over time, she became a respected authority in her area, and bank managers and employees saw her as a good person. Her value increased when the bank promoted her to a supervisory position when she was 30.
Though she was finding success in her job, her husband was spending too much time at his work, and she turned to gambling to ease her loneliness. She soon got into significant debt, but she didn't tell her husband. She also didn't tell her family or seek mental health or financial counseling. Instead, (surprise) Judy chose to steal money from bank customers.
Trap of loneliness: a non-shareable problem
Judy had a problem of physical and emotional isolation — a secret to hide from everyone. She felt inhibited to talk through her situation with anybody and work on solutions. In his classic book, "Other People's Money: A study in the social psychology of embezzlement," (Montclair: Patterson Smith, 1973), Cressey called this a "non-shareable problem." In this case, it was the pressure side of the Fraud Triangle.
Interviewers can ascertain early in an interview process the geographical and emotional closeness of the subject's family and the subject's ability to participate in difficult conversations — important factors in discovering a non-shareable problem. A subject also can use the isolation theme as an effective excuse for blaming others for the subject's psychological mindset that allowed the fraud.
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