WHEN FRAUD IS COMMITTED
Reading the headlines about another fraudulent scam is upsetting on many levels. When the story is one in which the money stolen is in the billions—and thus beyond conceptualization for the average person, who never crosses paths with such large sums—the media accounts stoke rage and provoke calls for justice.
In the allied professions of management and accounting, similar feelings are aroused. Such outrage is more complex in reality and includes feelings of betrayal by peers, colleagues, or even management or capitalist heroes. Legislatures are called upon, grand speeches are delivered, and references are made to times when people were honest, a man earned a living with his hands, and communities (and markets) were based on trust.
In the end, the widespread loss of trust, personal and corporate reputations, and market confidence is the greatest casualty of a catastrophic fraud.
As more and more resources are put into addressing the problem of fraud, sometimes it just looks as though too little is being done too late, and at other times the efforts don't seem to make a dent at all. The fraud problem simply seems to be increasing in scope and frequency, and newspaper headlines continue to highlight how the last major financial loss has just been surpassed by the most recent.
Consider this curious case of theft. A man named Arthur “the Brain” Rachel gained notoriety for stealing the 45-carat Marlborough diamond from a London jewelry store three decades ...