Detecting Fraud in Organizations: Techniques, Tools, and Resources

Chapter Four

How to Act Like a Fraudster

To Catch a Fraudster, You Need to Think Like One

One way to remember who you are is to remember who your heroes are.

—Steve Jobs

How would a fraudster have to act to get away with fraud in your organization? It is through an analysis of people’s actions that we can develop fraud awareness and expose fraudster behavior.

Developing a trustworthy, fraud-fighting workforce is key to this chapter’s methods because it helps your organization spot potential fraudsters while working alongside the 800-pound friendly gorilla to detect, deter, and prevent fraud.

Fortunately, most people inside and outside an organization give themselves away, in a number of ways (including leaving an extensive paper trail by accident or from guilt) the fact that they committed fraud. But regardless of how they give themselves away, identifying the fraud after the fact is reactive thinking. We want to be proactive in preventing and deterring fraud rather than handling it after it has taken place.

The fraudster often commits affinity fraud, which is fraud targeted at a specific group of people, by preying on members of the group, such as the elderly, a particular religious or ethnic community, a language minority, or a professional group. The group is focused, scripted, and predictable, which helps the fraudster to blend in. For example, the Madoff scam, which targeted a specific group of investors and created the facade that only certain people were eligible to participate ...