Sat | May 25, 2019

Collin Greenland | The mind of a fraudster

Published:Monday | May 13, 2019 | 12:30 AM
The typical organisation loses five per cent of revenues in a given year as a result of fraud.

From the beginning of time, there have been members of the human race who have sought to deprive others of their possessions, cash or otherwise, through innumerable dishonest schemes. A comprehensive listing of fraudsters over time would doubtlessly exceed the catalog of any other wrongdoers, since acts of fraud have proliferated world history throughout the annals of time.

The latest study (2018) done by the world’s largest anti-fraud organisation and premier provider of anti-fraud training and education – the Association of Certified Fraud Examiners (CFE) – estimates that the typical organisation loses five per cent of revenues in a given year as a result of fraud. To place it in context, if the five per cent loss estimates were applied to the 2017 estimated gross world product of US$79.6 trillion, it would result in a projected total global fraud loss of nearly US$4 trillion.

What, therefore, are the psychological features that characterize persons who are inclined to deceive, mislead, delude and beguile others to carry out acts contrary to the rules of society, make easy money dishonestly, or engage in scams designed to con others. In order to deter, prevent, detect and mitigate the effects of fraudsters, it certainly would help if we understand what is occurring in their shady cranium. Various psychologists and criminologists have researched this phenomenon and attempted to explain several technical components of fraud that occupy the minds of white-collar cheats.

Possibly the best known, and most widely accepted explanatory model, was developed by Donald R. Cressey, referred to as the ‘Fraud Triangle’, which is formed by psychological pressure, opportunity, and rationalisation. Pressure is the motivation, opportunity is the chance to commit fraud, and the rationalisation is how we justify our actions to ourselves.

Cressey’s hypothesis is as follows:

“Trusted persons become trust violators when they conceive of themselves as having a financial problem which is non-sharable, are aware this problem can be secretly resolved by violation of the position of financial trust, and are able to apply to their own conduct in that situation, verbalizations which enable them to adjust their conceptions of themselves as trusted persons, with their conceptions of themselves as users of the entrusted funds or property.”

Some experts prefer ‘motive’ instead of Cressey’s component ‘pressure’, since some frauds are motivated by greed more than situational pressures. Whereas ‘pressure' and opportunity are easily understood and recognised by auditors, fraud investigators and law enforcement personnel, rationalisation is often not discerned. This refers to a mental technique used to eliminate guilt, as fraudsters rarely see themselves as evildoers. They often regard themselves as denigrated or discriminated against by day-to-day life and are victims of an oppressive system, or they engage in a state of mind that blocks any kind of feeling. Criminologists called this feature as neutralisation, as it’s a very common way to see the victim as the guilty party, depersonalise or despise the victim.


In Jamaica, for example, lotto scammers have been quoted as rationalising their actions as reparations due to them for the past atrocities meted out to their ancestors during slavery.

Many embezzlers have blamed inadequate salary, poor working conditions and insensitive employers as reasons for dipping their hands in the company coffers. Fraudsters have also rationalised stealing from their employers based on autocratic management, managing by powers with little trust in people, centralising authority in top management, measuring performance on a short-term basis, making profits the only criterion for success, making rewards punitive, strings-attached and ‘political’, giving feedback that is always critical and negative, and creating a highly hostile, competitive workplace.

Rationalisation makes crimes such as Internet fraud and some forms of financial frauds easier to stomach for the criminal, since the victims don’t have a face.

Other criminologists, such as Edwin Sutherland and John Clarke, have postulated hypotheses purporting to explain, categorize or describe the psychology and aspects that typify fraudsters. These various models featured aspects such as genetical bases, differential association, sociological factors, motivators, ‘beating the system’, the fraud scale, and workplace conditions.

The fact is that, regardless of the models examined, Cressey’s components seem evident in all white-collar crimes.

It is said that to annihilate evil, we first need to know about its nature. The rest is a matter of planning. Knowing what’s in the fraudsters’ minds will better equip us to counter them more effectively.

Collin Greenland is a forensic accountant. Email feedback to and