When Is Too Good To Be True Too Good To Be True?
International Fraud Awareness Week, brainchild of the Association of Certified Fraud Examiners, a trade group combining forensic accountants, computer forensics professionals, investigators and other research professionals, is drawing to a close. Jennifer Mackovjak, my co-founder and partner at 221B Partners, and I had the chance this past week to discuss investigative research with members of the Southwest Ohio Chapter of the ACFE at the chapter’s Fraud, Cyber & Ethics Conference. Our colleague Amanda Malusky Krauss was a great host and event organizer.
The moniker of fraudster is one that applies not just to actors in the business and corporate class, but also spans cultural, social and political circles, as well. To wit: a short list of notable past and present icons include impossibly profitable and steady investor Bernie Madoff, whose trail of economic and personal damage and destruction claimed billions; televangelist, huckster and all-around creep Jim Baker who talked Christian redemption while walking thievery; and, more recently, identity-busting chameleon Congressman George Santos, whom author Leo Rosten might have held out as a modern-day emblem of chutzpah of the most brazen order.
Almost any issue of glossy and gossipy Vanity Fair will have some treatment of a good-looking whippersnapper, shameless upstart or aging narcissist who, like a special-ops soldier, cracks the fortified ranks of the VIP sections of the rarefied airs of Manhattan, Parisian or Silicon Valley social circles on the back of fictitious claims of blue chip birthright, exotic pedigree, or ownership of next generation intellectual property. And there are, to be sure, innumerable others who in ways small and large engage in on-going or one-off sleight of hand, either deliberate or extemporaneous, for thrill, profit or both.
Companies and organizations (sometimes) institutionalize compliance and due diligence programs and other procedures to catch and prevent fraud because the specimen of homo sapiens is, by virtue of its makeup, prone to fall for these schemes. In her book The Confidence Game: Why We Fall for It…Every Time author Maria Konnikova posits that “cons work so wildly because, in a sense, we want them to...We want to believe the tale.” I find this take extraordinarily compelling. “We want to believe…” There is, then, a human chord running lengthwise across our being that is struck and plucked (for some) by the fraudulent proposition.
Everywhere in the lingua franca of finance you will encounter the word credit. It’s one-half of the binary system we have in accounting for allocating payments and is the singular adjective for the plastic cards in our wallets that underlie most consumer transactions. It’s also, of course, derived from the Latin root cred and is tethered to our understanding of belief and, thus, some measure of confidence (see also: confidence man).
Elsewhere, Konnikova has, in an interview, noted that “fraud really thrives in moments of great social change and transition. We’re in the midst of a technological revolution. That gives con artists huge opportunities. People lose their frame of reference for what can and can’t be real.” We might be best served by thinking about ways of, in modern parlance, swapping FOMO (fear of missing out) for ROMO (reality of missing out), if we want to give credit where it’s actually due and not where we’d like it to be, because too good to be true so often is.