Tag Archives: fraud triangle

One degree of separation

I recently was at a holiday party with a diverse group of people.  The one thing they all had in common was Pink Collar Crime.  It is the relatable crime.  Every group at the party had either been personally embezzled in their business or knew someone directly who had been embezzled.  It is like the dirty little secret in business.  Also, it is like Kevin Bacon’s 6 degrees of separation but actually in pink collar crime only one degree.

No one wants to admit they have been stolen from.  No one wants to admit they were duped daily for sometimes years by their most trusted employee.  It hurts.  From Jean Le Carre: “The capacity to love is proportionate to the capacity to be betrayed.”  I read this in articles about people who have been stolen from.  The people who stole often are like family members.  They know their target inside and out and often use that to their advantage.

When people find out what I do they start speaking quietly to me.  “I want to tell you what happened to me…” and they pour their hearts out to me.   From Betrayal (written by Jed Block on the Goodwill NCW $500k theft) “On a personal level, I felt shame, embarrassment and anger. I also experienced a profound sense of loss of innocence and a challenge to my fundamental capacity to trust. Before the embezzlement was discovered, I was an ardent fan of the employee who committed the fraud against us.”

That is the hardest part of my job.  I want to restore their trust but they need to understand trust is not an internal control.

You can trust your employees with many things but be very careful when you are trusting them with your finances.


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I am not a bad person

Bonnie Brannock Davis was a longtime volunteer for the Giles County Lifesaving and Rescue Squad. She also had a good paying, $120k per year, job at The Chemical Lime Company in Ripplemead until she was laid off.

She just was sentenced to two months in jail for a $65k theft from the Giles County Lifesaving and Rescue Squad. She was facing up to 100 years. She had no previous criminal history and had volunteered decades as a medic for Giles County Lifesaving and Rescue Squad.

She apologized over and over to the Giles County Lifesaving and Rescue Squad, which she called “the love of my life,” and to her family and the community at large.

Davis repaid the $65k to the non-profit. She stated that she made “anonymous” donations to repay over time. Davis told investigators that she had tried to repay the rescue squad by making anonymous donations. That is what many embezzlers do not understand. It is easier to steal money but much harder to replace the stolen funds. They may have intentions to repay but the mechanics of it are much more difficult to do. However, she did make 2 payments before sentencing to cover the $65k theft.

There was no “extravagant” spending on Davis’ part according to her attorney. I’ve seen this before. They start stealing because of a pressure and it snowballs. In this case Davis was a lifetime member of the non-profit.

People like Davis don’t wake up in the morning and say they are going to steal but at some point something triggers it. In Davis’ case the loss of a good paying job was most likely the trigger.

Davis is on LinkedIn https://www.linkedin.com/in/bonnie-davis-7b57b76 and from her information was a Deputy a long time ago. After she was let go it appears she started her own business which it seems did not replace her salary.

You just never know. Pay attention to your volunteers and their situations.

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Get out of jail free card



What is a get out of jail free card? Unfortunately for some, it’s the card your employee has when you catch them stealing from you. The panic from the moment you find out you have been stolen from can become even greater. This is when you confront your employee (remember you need legal and HR help for that) and they turn the whole debacle around to possibly get out of jail and threaten you with disclosure of your dirty little secrets.

What are those dirty little secrets? Do you have two sets of books? Do you write off inappropriate expenses? Do you hire and fire illegally? This is just the start of what the desperate thief will try.

What do you do when this happens? Again, (insert legal advice here from a good attorney who has worked these cases before-not your golfing buddy) you need to process your own personal situation. I never tell someone directly not to file with law enforcement. But as your “fraud coach” I will tell you to take a step back and analyze all the angles.

I had a client once who, as so many do, wanted the perp hung in the town square. The client generally needs to be talked off the ledge. You need to prepare for the process. The process is long and hard and not cheap. You need to think about the potential PR crisis. You need to be ready to take responsibility for your business and other employees.

Tone at the top of course is part of the equation. While there is NEVER a reason for stealing you need to understand the rationalization part of the fraud triangle. When you give your assistant your credit card bill or expense report that is filled with personal expenses realize what you are doing. You are possibly chipping away at their own set of values. When they see you expense a family vacation to ski while attending a work conference they see you cheating and stealing. This can start a slippery slope (pun intended) for them to start stealing.

Most people, in my opinion, do not wake up and say I am going to steal from my boss or my employer. What does happen is they go to work and get a call from a bill collector stating they are late and their car is going to be repossessed, their husband or partner leaves them with a mortgage, their kid texts them about the school ski team they can’t afford and then they start down that path.

So when they get caught they are desperate to not go to jail and break up a family. Everything they have seen taking place at work becomes fair game for them to defend themselves. You need to be prepared for this. How do you prepare for this? Tone at the top. I can’t say that enough. What your employees see in your behavior is incredibly important.

I can’t tell you how hard it is for an employer to go through this. They want to do the right thing but they also feel the need to protect themselves and their business. So what happens is that sweet, conniving little Mary gets off and then goes to the next business. Eventually she will get caught but sometimes it takes awhile.

You set the example for your employees. Be the best example you can be. Set the right tone at the top and maybe she won’t have the get out of jail free card.

If this has happened to you I would love to hear from you. Please email me at kellypaxton503@gmail.com.

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Fraud Magazine Got Ink!

So excited to announce that Catch her if you can-Pink-collar criminals was printed in this month’s Fraud Magazine-Fraud Spotlight:


Stay tuned for new material.  I spoke at the Spokane Chapter of the ACFE for their annual conference.  Lots of new stories daily.  Thank you for your support.  screen-shot-2016-11-04-at-2-06-02-pm

Graphic courtesy of Fraud Magazine-ACFE



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Millennial Pink Collar Criminal **Is She Different?

I just finished reading The Assistants by Camille Perri.  It is considered to be a 2016 Hot Summer Read.  Pink collar crime is hitting the mainstream. Watch for a movie down the road according to Perri.   I first heard about The Assistants on NPR. The Assistants is Perri’s debut novel.  What initially drew me in was the story of a young woman who has always done all the right things until it went awry by accident.  The story is engaging and kept me intrigued until I finished the book.  Don’t worry I won’t spoil the ending.  But suffice it to say in my work as a fraud examiner I have yet to see this type of ending. 

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Tina Fontana is a 30 year old “good girl” who has worked for Robert, a “titan”, at Titan Industries for 6 years.  Tina holds his life together and Robert relies on her.   Early in the book Tina makes a life changing honest mistake.  A mistake on an expense report is made and Tina starts down a path she never really saw coming.  Oh, that check?  Didn’t I cancel that? I’d never intentionally take money that didn’t belong to me.  That’s just not how I was raised.”

What I find interesting in the story is the technical nature of the crime.  Is this a new way of stealing for the millennial generation?  It wasn’t an accident when I logged on to my student-loan account either.  But that was the cunning whimsy of technology at work, too, because if I actually had to leave my house at any point—or even just sit down and write out a physical check, and stuff that check into an envelope, and walk that envelope to the mailbox to mail it—I don’t think I could have done it. But quietly typing alone in my dark bedroom felt so innocuous, to anonymous, and even potentially undoable.  There’s something devastatingly permanent about dropping a letter into a public mail box isn’t there?  …But just clicking Send? There would always be Cancel, Edit/Undo.” 

Dr. Linda Grounds, forensic psychologist, told me that the first time a woman embezzles she is very clear in her recollection of the theft.  They remember what they did and thought at the time of the first theft. The subsequent thefts are much more of a blur. They also think they are going to return the money just like Tina thought in The Assistants. There is massive denial going on in their minds.  For Tina “Remembering the money made my stomach lurch. Sweet Jesus, Mary, and Joseph (this was my mother’s voice in my head now, not Robert’s), how had I gotten myself into this? This was so not me.  I didn’t even download music illegally.  I’d never in my life ingested an illicit drug.  I crossed the street only at crosswalks.”

So is this how the new generation of Pink Collar Criminals is going to work exclusively?  There have been studies on how spending habits change when you use credit or debit versus cash or check.  According to a 2000 study titled, “Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay,” the number of cases in which credit cards appear to have some impact spending habits are many.  Will embezzlement incidence and amounts change also with technology?  Damn you, technology. Technology made it so easy to deposit that check, I could have done it by accident.  It wasn’t an accident—but it could have been.

The Fraud Triangle, developed by Donald Cressey in 1973, consists of opportunity, pressure and rationalization.   Tina rationalizes “So $19,147 was roughly only two lost arguments to Robert.  And it wasn’t even his money, was the thing.  It was the Titan Corporation’s money, and Titan had billions—literally billions and zillions of dollars.  Could anyone really blame me for not giving this minuscule- to -them -yet-life-changing-for-me amount of money back to the Titan Corporation?” She continues “What I needed to pay the Roto-Rooter man to unclog my ancient toilet, Robert used to play a round of tennis at the country club.  What I needed to buy a computer that didn’t spontaneously shut itself down, he used to have his Mercedes waxed with a rare special formula was was probably composed of the placenta of baby dinosaurs.  My monthly MetroCard was a single RM-monogrammed handkerchief, which Robert considered to be use-and-toss disposable.

In the past it may have been a dentist writing off his family’s trip to Aspen against the business and telling his office manager to pay it all out of the company accounts.  The office manager not being able to afford to send her kid to the local mountain then starts the slippery slope of justifying her stealing money to send her kid on the ski bus because her boss just “stole” from the IRS. 

As for the Opportunity Tina saw her one time “slip” being so easy.  Today’s technology made it so easy.    “How did this plan dawn on me?  I’ll tell you: In the past six years there had been many days I though, Wow, Robert Barlow really trusts me?  Because I had serious access to this man’s identity.  Account numbers, passwords, when he was due for his next prostate exam.  I knew all his secrets.  On the worst days my thinking was more along the lines of, Wow, I could rob Robert Barlow blind if I really set my mind to it!…The truth was, I took great pride in the trust Robert had in me.  I was flattered by it, and by simple being associated with him.  On my own, as a person, I wasn’t so important.  But as Robert Barlow’s assistant, maitre d’s and hoteliers knew me by name. …Robert made me worth something.  I would no sooner have stolen from him than I would have from my own peasant-stock mother and father.The reason we could actually get away with this is because the men who made the big bucks passed off the responsibilities they couldn’t be bothered with (like signing their own names) to their assistants.”

The pressure for Millennials may be their student loans.  We are constantly hearing in the news the amount of debt that the average college student graduates with.  Tina lives a spartan existence in Brooklyn in order to pay her student loans.  Her parents are working class and aren’t able to help her. Perri was recently interviewed by the Huffington Post and the question about income inequality was raised.  Perri answers “First and foremost, I wanted to write a fun and fast-paced read. But I wanted a social consciousness to be present in the guts of this novel. Income inequality is now a very big issue, and we’re seeing it in this year’s election cycle. I think the skyrocketing cost of a college education has placed it in the sphere of being a luxury-priced necessity. People in their twenties and thirties can’t get ahead financially the way their parents did.”

Dr. Grounds also states that her patients have anxiety about getting caught.  They have sleep difficulties.  “Physically, I was falling apart.  Someone of my already-anxious constitution was just not designed for a life of crime” is how Tina is feeling.  There are many pink collar criminals who get caught because of the stress of the lying and stealing slowing are breaking them down.  Diann Cattani spoke at the annual Association of Certified Fraud Examiners annual conference that she became physically ill from her stealing.  After staying home from work and watching an Oprah episode and realizing she was physically ill she went to her work the next day and confessed.  Many pink collar criminals actually feel a sense of relief when they are caught.  That is after they realize they most likely will be going to jail. 

So if you are either a Millennial or a person who has been victimized by a Millennial pink collar criminal I would love to know your thoughts.  It will be interesting to see if there are any substantial changes in the ways of the pink collar criminal.  Stay tuned. 

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