Fraudstyles of the Rich and Famous

As news breaks about fraudulent bribery payments by the wealthy and celebrated to officials and coaches at prestigious colleges to obtain admissions spots for their children, the lingering question resurfaces: how do the privileged continue to embroil themselves in such public scandals?

What about other wealthy people who make financial contributions to colleges and universities conveniently timed around their own children’s acceptances? While in certain situations fraud has not been alleged, these instances still raise the specter of unfairness, inequity, and the question of deceptive practices—for both the “contributor” and the benefitting institution.

Clearly, a sense of entitlement permeates many of these individuals. But a more compelling inquiry is whether these individuals even recognize the questionable nature of their actions.

Fraud is generally defined as the intentional use of deception to obtain something of value or deprive another of that value. Bribery amounts to a form of fraud, where the bribing party seeks to hide their payment for an unfair benefit. For instance, bribing a university official to get your son or daughter admitted can deprive that university of the opportunity for a more qualified applicant, and it robs superior applicants a fair shot at gaining admission. Over the years, the understanding of bribery has expanded from direct cash payments for reciprocal benefits to also include indirect, non-cash “contributions”, such as charitable donations and even employment of relatives.

An interesting parallel exists between these pay-for-admittance cases among the elite and what regularly occurs within business. Certainly, the business world is rife with classic cases of fraudsters swindling the naive and gullible out of their money. But another spin on fraud also exists, one less understood. Many employees find themselves either the unwitting perpetrators of fraud or unwilling accomplices in such schemes.

For instance, employees may feel pressured by managers to commit fraud for their employer’s benefit, even though these employees receive nothing of value themselves, other than avoiding a job loss that would otherwise occur if they disobeyed orders. Recall the many Wells Fargo employees who managed to retain their jobs by following orders to open fictitious accounts for unsuspecting customers.

Other employees commit fraud simply to “go along to get along.” I recall a speaker during my graduate business school days who recounted his story of going to jail for helping a vendor to commit financial fraud, even though he claimed no direct benefit. The only seeming benefit to him involved helping a valued vendor out of a tight invoicing situation—albeit repeatedly.

These recent reports of the wealthy and famous engaging in bribery to obtain a lucrative slot for their children in the better colleges don’t sound much like dubious characters meeting in seedy motel rooms to exchange briefcases of unmarked bills. Rather, it’s possible a more subtle “self-deception” is at play. Much like the well-intended employee who gets caught up in something they did not ask for and did not want, the college admissions scandal also suggest parents rationalizing their efforts, though seriously questionable, to help their children by leveraging their status. (Not that their actions represent good
character modeling, of course.)

Syntrio’s new course, “Business Fraud: Avoiding Deceptive Business Practices,” goes beyond the obvious
fraud of employees who purposely steal from their employers or businesses that conduct an ongoing
campaign of deception. The course also addresses the fact that employees can sometimes get enmeshed
in fraudulent schemes either without personal benefit or due to work pressures. Sometimes, it’s the
subtle, sly, creeping situations that trip up a good person, putting him or her onto the wrong path.

Posted in Ethics, Ethics, Fraud and tagged , , .