Profiling The Fraudster: Removing the Mask to Prevent and Detect Fraud

Chapter 22The Role of the HR Recruitment Process in Profiling

THE ACFE'S 2012 Report to the Nations on Occupational Fraud and Abuse surmises that only 6 percent of fraudsters in the study had previous fraud convictions and that the most common behavioral red flags were living beyond one's means (36 percent of cases) and experiencing financial difficulties (27 percent of cases).

According to the ACFE, most occupational fraudsters are first-time offenders with clean employment histories. Approximately 87 percent of occupational fraudsters had never been charged or convicted of a fraud-related offense, and 84 percent had never been punished or terminated by an employer for fraud-related conduct. It is therefore not an easy task for HR departments to spot these employees and raise the alarm.

The report goes on to reveal further red flags attributable to human behavior in the workplace:

• Unusually close association with vendor or customer (19 percent of cases).
• Control issues or unwillingness to share duties (18 percent).
• Wheeler-dealer attitude (15 percent).
• Divorce or family problems (15 percent).
• Irritability, suspiciousness, or defensiveness (13 percent).
• Addiction problems (8 percent).
• Refusal to take vacations (7 percent).

Perpetrator's Criminal History

In 860 of the cases in the ACFE's 2012 study, the respondents were able to provide information about the fraudster's criminal history. 87 percent of fraudsters, according to the study, had never been charged or convicted of ...