EC A Felon’s View Of White-Collar Crime - Why Society Is Very Vulnerable To Fraud


Apologies are irrelevant. While contrition and forgiveness are admirable traits, apologies do not change the past or undo the harm caused by fraudsters. Apologies tend to make the victims feel a small measure of comfort and make fraudsters, as a minimum, appear remorseful. However, apologies should not be relied on to predict future behavior. People should be ultimately judged by their actions, not by their "well meaning" words or claimed "good" intentions.

Invisible White-Collar Criminals

According to the Association of Certified Fraud Examiners (ACFE) 2014 Report to the Nations on Occupational Fraud and Abuse, “Occupational frauds can be classified into three primary categories: asset misappropriations, corruption and financial statement fraud.” Less than 10% of fraud perpetrators had been previously charged with a crime or had criminal records. As the economic impact of an economic crime goes higher, it is less likely that the perpetrators involved have any previous criminal records. Did Bernie Madoff, Ken Lay (Enron), Bernie Ebbers (Worldcom), or Dennis Kozlowski (Tyco) have criminal records? The answer is no. Therefore, it is difficult for law enforcement and professionals to profile the white-collar criminals among us.

Most Fraud is Discovered from Tips

The ACFE 2014 report found that, “Tips are consistently and by far the most common detection method. Over 40% of all cases were detected by a tip — more than twice the rate of any other detection method.” Specifically, the study states that 42.3% of occupational frauds are initially detected from tips and 6.8% of such frauds are found by accident. Therefore, 49.1% of occupational frauds are found by tip or accident. Furthermore, the ACFE stated, “Management review and internal audit rank second and third, respectively, in frequency of detection, but they lag far behind tips.” Only 16.0% of frauds were detected by management review, 14.1% by internal audits, and 3% of frauds by external audits. Unfortunately, our society must primarily rely on the actions of whistleblowers to inform us about most frauds.

Who are the Whistleblowers?

While many whistleblowers are glamorized by the press, most of them are not motivated by altruism, but by revenge or personal gain. Every source has an agenda. To government investigators, it’s known as the XXX principle (and I am not talking about pornography).

  1. Ex-lovers: Divorced spouses, former girlfriends and boyfriends.
  2. Ex-business associates: Former customers and suppliers.
  3. Ex-employees: Fired employees, laid off employees, and employees who quit working for the entity.

Whistleblowers can provide useful information. Most whistleblowers have an ax to grind and are looking to promote their particular personal agendas. They may have known about the crime during the execution of it, but did not report it until later. A whistleblower’s credibility should be judged on the basis of actionable verifiable information they provide, not what they say.

Do Audits Really Protect Investors?

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I am a convicted felon and a former CPA. As the criminal CFO of Crazy Eddie, I helped my cousin Eddie Antar and other members of ...

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