Foreword
Preface
The Human Factor
The Association of Certified Fraud Examiners (ACFE) -- The Report to the Nations
The Typical Fraudster
This Book’s Approach: The ABCs of Fraud
This Book’s Authors
This Book’s Setup
Acknowledgments
About the Authors
Part I Crossing the Line
Chapter 1 Fraud Is Everywhere
The Pervasiveness of Fraud
On Making (Up) the Numbers
A Slippery Slope
Fraud Is a Human Act
In Summary
Chapter 2 The Sins of Quantification and Other Mindset Impediments
The Danger of Numbers
Data Analysis Is Not Enough
Hard Numbers versus Reality
The Bank: An Ingenue Shall Lead Them…Into Fraud
The Plants: “Let’s Manufacture More than Widgets. Let’s Make the Numbers!”
Case Discussion: Challenging Questions
In Summary
Chapter 3 Beyond the Fraud Triangle
Towards an Outline of ABC Theory
Relevance of Behavioral Approaches
Understanding White Collar Crime
The Fraud Triangle
ABC Theory Origins
In Summary
Part II Why Good People Do Bad Things: Foundations of Behavioral Forensics--Psychological Theories, Conceptual Frameworks and Case Studies
Chapter 4 Beyond the Matter of the Fraud Triangle and Into the Mind
The Building Blocks of Behavioral Forensics--Understanding How the Basics of Human Behavior Tie Into Fraud
Fraud Is a Natural Phenomenon
The Mind and the Fraud Triangle: Pressure, Opportunity and Rationalization
Understanding the “Balance Sheet Basics” of the Mind: The Unconscious, Symptoms and the Defenses
The Case of Health South’s First CFO, Aaron Beam
Accounting, Finance and What It Means to the Mind
Psychological Defenses: The Roots of “Rationalization” Are Compromises We Make within Ourselves
The Power behind Psychological Defenses: Emotions
Emotions as a Problem or a Threat to Understanding the Rational World of Accounting
Emotions Play a Role at Many Levels in Fraud
The Mind Is Relevant Today: From Freud to functional-MRI (fMRI) to FACS--Peeking into the Brain
Affect, Our Hard-Wired Emotion, Has Two Ties to Fraud: Motivation and Communication
The Next Step: Looking at the Dance between the Bad Apple and the Victim(s)
In Summary
Chapter 5 …said the Spider to the Fly
The Predator/Prey Dance--Putting Behavioral Science Fundamentals into Motion
Emotions, Unconscious, Defenses… Oh My!
Relationships Matter: Where Things Are Set in Motion and Fraud Takes Place
The Phisherman: The Affective Dance of Fraudster and Victim
The Fraudster, the Victim and the Lyrical Seduction of Emotion
The Relationship as an End in Itself: Bernie Madoff
Why Don’t They Leave the Predator? A Deeper Dive into the Crime that Binds Fraudster and Victim
Lance Armstrong and His Accomplices
Where Is the Humility?
The Alarms Go Off: Beyond Fear, Excitement and How Shame Plays a Role
Good to Evil: How a Hard-wired Emotion Is Ignored and Manipulated
Inside the Mind of the Internal Predatory Fraudster: Shame and Emotional Manipulation
Shame: A Powerful Inborn Tool for Learning Is Also the Interpersonal Engine for Fraud
The Healthy and Adaptive Function of Shame in the Workplace
Shame as a Driver for Better Performance
When Shame Is Maladaptive at Work
Maladaptive Shame Defenses: How Bad Apples Shame Others to Perpetrate Fraud
False Pride: With the Threat of Shame, Comes Hubris
The Predator Bullies the Professionals
What Role Does Mental Illness Play?
Monsters in the Nursery
Subclinical Psychopathy: Does It Play a Role in Recruiting, or Small-time Frauds?
In Summary
Chapter 6 The Accidental Bad Apple
When Honesty Reverses Course
Committing the Crime
Crossing the Line: A Theory of Accidental Bad Apple Motivation
We All Choose to Ignore Rules
The Dynamics Inside the Mind of the Fraudster Who Accidentally Crosses the Line and Stays Over: The Reversal
Beyond Greed: More Ideas on Motivation
New Insights on Behavioral Forensics from Motivational Reversals in a Bad Apple
Seeing the Insights
Case Examples of Accidental Bad Apples Reversing
Disregarding Risk: The Thrill of Being Close to, But Not In, Danger
It’s Only a Game: The Role of a Protective Frame of Mind that Makes Rules and Repercussions Disappear
Beyond The Milgram Experiment Mindset
Where Is the Milgram with the Phisherman? Same as with the Fraudster – ABSENT!
Why Now? Understanding the Lifespan Issues that Play a Role in Fraud Reversals
The Psychological Conflict of Midlife May Provide the Fraud Triangle “Pressure”
This Business Downturn Can’t Stop Me Now, I’ve Come Too Far!
Counterpoints
Lessons from Executives and Managers on the Couch
In Summary
Chapter 7 Bad Bushel and Beyond
Seeing the Larger Context of the C-Suite
Luck and Effort Distinguish Senior Executives
Interviewing Executives
Problem Solving: Putting Executives through Industrial Grade Assessments
What Life is like as an Officer: Excitement, Vigilance and Caution
Trouble in the C-Suite: Overwhelmed Overpaid and Over-Confident--Narcissism and Beyond
Narcissism: Beyond Self-Love
The Power of the Narcissistic Leader Turns to Harm
Psychopathy and Anti-Social as a Related Concept in the Leader
Defining Narcissism from Afar
Charismatic Leadership
Narcissistic-Like Traits: Comparing and Contrasting Three CEOs
Moving Into the Bushels and the Crops
On the Emerging Science of Persuasion
In Summary
Part III A Call to Action
Chapter 8 How Can We Resist Being Manipulated?
Professional Skepticism, Lie Detection, Common Sense and What You Can Do Monday Morning
The Financial Markets: Moral Foundations of Capitalism
The Operational Fraud Triangle
Emotional Manipulation
Taking Action to Avoid Fraud
Helping Senior Executives with Staying on the Right Side of the Line
Is it Legal?
Is it the Right Thing to Do?
On Lies and Misrepresentation
What You Can Do “Monday Morning”
Regarding the Psychology of Fraud
Only the Paranoid Survive
Affinity Risk
Sorites Paradox, or the Tipping Point
Fraudsters Shoot Big, then Bigger
Risk Appetite for Danger
MISR Leads to Fraud, then MISERY
Relative Value of Money
Cognitive Dissonance
In Summary
Chapter 9 The Future of Behavioral Forensics
Developing Fraud Awareness and Information Integrity
A Culture of Cleverness
The Information Integrity Framework
The Future of Behavioral Forensics
Afterword
Appendix I The Psychology and Sociology of Fraud: Integrating the Behavioral Sciences Component Into Fraud and Forensic Accounting Curricula
Appendix II
Supplement to Preface: 2011 ACFE Video: “Inside the Fraudster’s Mind”
Supplement to Chapter 3: Greed Takes the Blame by David M. Freedman, Senior Editor, The Value Examiner
Supplement to Chapter 3: Michael Grayson Poem
Supplement to Chapter 5: Sample Phishing Email -- “The Case from the Inbox”
Supplement to Chapter 7: Executive Assessment
Supplement to Chapter 8: Ken Fisher on How to Smell a Rat
Supplement to Chapter 8: On the Psychology of an Unindicted Co-conspirator Sought by Government as a Cooperating Witness
Supplement to Chapter 8: Fraudster Modus Operandi--Convicted Felon Samuel Antar on the Art of Spinning
References
Index
