Issue No. 553 of Your Weekly Staff Meeting highlights stunning (and scary) accounts of scammers, cheaters, and financial fraudsters. Yikes! And this reminder: click here to download free resources from the 20 management buckets (core competencies), click here for over 550 book reviews, and click here for last week's review of You're the Leader. Now What? Leadership Lessons from Mayo Clinic.
Are there any yellow flags flying in your organization? How about red flags? Learn more about perpetrators, prey, and whistleblowers in this must-read new book, Fool Me Once: Scams, Stories, and Secrets from the Trillion-Dollar Fraud Industry.
Fraud Is NOT an April Fools’ Day Joke!
Happy April Fools’ Day! Now let’s get serious. You know the old axiom, “You can pay me now…or pay me later.” Here’s my version:
[ ] Option #1. You can read Fool Me Once now—and learn to spot scams and fraud today. (Maybe in your organization right now?)
[ ] Option #2. You can read Fool Me Once later—after you’ve been scammed.
Whew! This book will pump up your heart rate—and prompt your suspicious mind (as Elvis would say). It reads like a crime-busting novel—but it’s all true, including the $53 million that the comptroller from Dixon, Illinois, embezzled from her city! This is a must-read page-turner.
Scams, Stories, and Secrets
from the Trillion-Dollar Fraud Industry
by Kelly Richmond Pope
The author, Professor of Forensic Accounting at DePaul University in Chicago, shines a light on scams and fraud from three perspectives:
• Perpetrators
• Prey
• Whistleblowers
She has interviewed many, many perps—and get this—some (after prison) join her for transparent conversations in her classes at DePaul or on presentations to businesses and professional groups. She examines the how and the why of fraudsters. Kelly Richmond Pope offers sound best practices so you and your organization do not become victims—or even innocent bystanders—to fraud. This book is One. Big. Wakeup. Call.
For a taste of the author’s research and deep dives into hundreds of scams and the three elements of the “Fraud Triangle” framework (opportunity, pressure, and rationalization), start reading in any chapter—but have your blood pressure monitor handy! Examples:
• “We didn’t learn about internal controls in seminary,” confessed Suzanne, a Lutheran pastor. Until…letters from the Illinois Department of Revenue and the IRS arrived. Fast forward…the church elders learned that Debbie, the volunteer church treasurer, had helped herself to almost $181,000 in church funds.
• Bob, a lawyer and accountant, who taught at DePaul University’s college of business, was sentenced to 84 months in federal prison for a $22.9 million mortgage fraud scheme. “He lost his law license, his teaching job, his house, his standing in the community, and his marriage.” (Oh—did I mention he also served on his church board?)
• Robert was a compounding pharmacist who pleaded guilty to intentionally diluting 98,000 cancer drug prescriptions for 4,200 patients. (Each watered-down vial equated to more profit for Robert). And yes, people died—but that happens to some cancer patients, right? Would anyone notice? His sentence: 30 years. Why did he do it? He owed the IRS $600,000 and “Years earlier, he had pledged $1 million to his church, which was to be paid in three installments. Everything was coming due at the same time.”
Have you ordered the book yet? You must! And don’t miss the stunning documentary that Kelly Richmond Pope produced and directed about the City of Dixon’s fraud. Amazon Prime asks, “How could one woman steal $53 million without anyone noticing? All the Queen's Horses tells the story of Rita Crundwell as self, the perpetrator of the largest case of municipal fraud in American history.” Click to view.
View the documentary, All the Queen’s Horses, to learn how the comptroller for the city of Dixon, Illinois, embezzled $53 million—undetected for 20 years!
The author wrote the book “for anyone who manages money or thinks that fraud can never happen to them or their organization.” She adds, “No matter where you work, no matter where you live, no matter how much (or how little) money you make, your life could be tinged by fraud. It’s to your benefit to understand how it works.”
LOL! While reading this book, I received an email from “José,” who asked, “Did you receive my donation of 3.5M dollars?” And—not to worry—because the email footnote promised that “This message has been scanned for the Ebro Hydrographic Confederation against possible malicious codes.” (At least, that’s how Google translated it from Spanish.) LOL!
But…before you laugh at me, note that the author was almost scammed in a sketchy phone call, until she asked a colleague to listen in. The big idea of this book—we are all susceptible to fraud. “So how do you protect yourself and your company from fraud? By understanding how fraud takes place and by not being afraid to speak up when it does.”
You’d expect a university professor to organize this uncomfortable topic in a thoughtful way and she doesn’t disappoint.
• PERPETRATORS: Intentional Perps, Accidental Perps, and Righteous Perps
• PREY: Innocent Bystanders and Organizational Targets
• WHISTLEBLOWERS: Accidental Whistleblowers, Noble Whistleblowers, Vigilante Whistleblowers, and Crossovers
I’ve attended my fair share of finance workshops over the years, including annual briefings and more with outside auditors (as a CEO and a board chair), but I must admit—I learned something new and critical in every chapter. Yikes! I should have been more vigilant in my leadership years and more helpful in my consulting years. Did I mention? This book is required reading!
Understanding each of the above categories will help you stay alert. You’ll learn both the how and the why. In discussing intentional perps, the author notes research on three kinds of arrogance: individual, comparative, and antagonistic. The latter, “which is considered to be the worst type, is found in people who enjoy denigrating others based on an assumption of superiority.”
Caution! Did you know that arrogance is also a component of narcissistic personality disorder and that “…along with psychopathy and Machiavellianism, narcissism is one of three characteristics in the ‘Dark Triad’ of personality traits…”? (Read my book review on narcissistic pastors and churches.)
Kelly Richmond Pope notes that in her experience, “intentional perps typically exhibit traits of grandiose narcissism.” That type “have an inflated sense of self and think they should receive special dispensations simply because they’re so wonderful.” But…another caution—perpetrators are not all alike. In addition to intentional perps, “Accidental perps are people who didn’t originally set out to commit a crime but accidentally found themselves benefitting from someone else's mistake.” The big question: “Do I take or do I tell?”
Righteous perps (what a great description!) mirror the syndrome called the Robin Hood effect. “People like Robin Hood exist everywhere, including corporate America. Some of these folks…rationalize their crimes because they’re ‘helping someone else.’ They robbed Peter to pay their pal, Paul. (A new company, perhaps? PayPaul.)” The author believes Immanuel Kant, the German philosopher, would love righteous perps!
There’s so much more:
• View the author’s 12-minute TED Talk, “How Whistle-Blowers Shape History.”
• Phishing, vishing, and smishing!
• The excellent “chapter takeaway” bullet points and end-of-chapter quick facts.
• Dan Ariely’s research on the brain—and why after lying for 12 or more times, you “stop feeling any negative emotions or guilt (assuming you did in the first place).”
• Why whistleblowers are often scorned and not praised. Do you consider them rats and snitches—or heroes?
• The Whistleblower Triangle: “…outlines the decisions that confront most whistleblowers. Similar to perps, whistleblowers weigh the opportunity, pressure, and incentives to blow the whistle.”
• Warning! Before you become a whistleblower, read page 178—and note that “69% lost their jobs or were forced to retire” after speaking up and “64% were blacklisted from getting another job in their field.”
• Why the author took a polygraph test to clear her name—and when all else failed, wrote a blog about it.
• And why “…friendship, faith, and family are not accounting controls. They are relationships, and you must never confuse the two.”
Did you know that the Association of Certified Fraud Examiners identified 11 types of nonprofit schemes in 2020? Corruption accounted for 41% of all cases, following by billing (30%), expense reimbursements (23%), and cash on hand (17%). Others included: noncash, skimming, check and payment tampering, cash larceny, payroll, financial statement fraud, and register disbursements. (Read the 2022 report here and note the "Fraud Prevention Checklist" on pages 92-93 of the downloadable report, including this question, "Are regular, anonymous surveys conducted to assess employee morale?")
YELLOW OR RED FLAGS? After reading this book, you will become more alert to red flags—and when to “stop and wonder.” (See the author’s list of 12 red flag triggers, including “Never trust anyone who doesn’t have a photo on LinkedIn.”)
To order from Amazon, click on the title for Fool Me Once: Scams, Stories, and Secrets from the Trillion-Dollar Fraud Industry, by Kelly Richmond Pope. Listen on Libro (7 hours, 28 minutes). And thanks to Harvard Business Review Press for sending me a review copy.
BONUS RESOURCE! Join the ECFA Webinar, “Fraud Case Studies & Controls to Protect Your Organization,” on April 5, Wednesday 1:00 p.m. ET.
YOUR WEEKLY STAFF MEETING QUESTIONS:
1) Author Kelly Richmond Pope ordered an item from one of her favorite designers. The Calleen Cordero handbag arrived promptly. The next day, an identical handbag arrived. Oops! Now she had to decide: “Do I take or do I tell?” (This reminded me of Clayton Christensen’s counsel to his Harvard Business School students, “100 Percent of the Time Is Easier Than 98 Percent of the Time.” Read my review of How Will You Measure Your Life?) What would you do—and what have you done recently—when “opportunity” presents itself?
2) What color is the flag in your staff meetings and board meetings? To stay alert to potential scams and fraud, click here to read Lesson 35, “Is Your Board Color-Blind to Hazardous Conditions?” in Lessons From the Nonprofit Boardroom by Dan Busby and John Pearson. What color was flying at our last board meeting: green, yellow, or red? (Click here to read the lesson commentary/blog by Danny de Armas.)
Mastering 100 Must-Read Books - Part 3: The Mount Rushmore of Leadership Legends
Book #24 of 100: The Ideal Team Player
For your team meeting this week, inspire a team member to lead your “10 Minutes for Lifelong Learning” session by spotlighting Book #24 in Mastering 100 Must-Read Books.
THE IDEAL TEAM PLAYER:
How to Recognize and Cultivate
the Three Essential Virtues
by Patrick M. Lencioni
Books #22 through #40 spotlight 19 books I named to “The Mount Rushmore of Leadership Legends” group—featuring Patrick Lencioni, Jim Collins, Ken Blanchard, and Peter Drucker. Part 3 features four books by Lencioni, including this leadership fable. Would your leadership team agree on the three essential virtues of a team member?
• Read my review.
• Order from Amazon: The Ideal Team Player
• Download the 100 Must-Read Books list (from John and Jason Pearson)
Warning! Lencioni urges you not to hire anyone who doesn’t live out all three virtues: Humble, Hungry, and [People] Smart. What happens if a prospect has just one out of three? Lencioni’s memorable labels are caution enough:
• Humble Only: The Pawn
• Hungry Only: The Bulldozer
• Smart Only: The Charmer
Scam Protector!
In your organization or company—how protected are you from scammers, cheaters, and embezzlers? How about “righteous perps?” Is your whistleblower policy update to date? Mastering the Management Buckets notes this:
“Don’t let non-financial people off the hook. The core competencies of the Budget Bucket must be learned and applied by every team member. At your monthly meeting to monitor the monthly financial reports, create a Q & A culture that affirms that ‘There are no dumb questions.’”
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"Columbo Investigates the Last Supper!"
That's how I titled my review of the perfect book to read during Lent. Scott Hahn describes his book, The Fourth Cup: Unveiling the Mystery of the Last Supper and the Cross, as “part memoir, part detective story, and part biblical study.” Read my review here and check out other book reviews on the Pails in Comparison blog.
PEARPOD | TELLING YOUR STORY. Your organization’s storytelling strategy and tactics may be pitch-perfect. But…has your team invested time in the Crisis Bucket—so you’re prepared when a crisis hits? Who is your spokesperson? Who do you trust in the media—to get your story out? Read this reminder from The Crisis Bucket: “Don’t trust your instincts in the middle of a crisis. Involve a trusted adviser immediately.” Read more commentary by Jason Pearson in Mastering the Management Buckets Workbook. Contact Jason at Pearpod (Design, Digital, Marketing, Social).
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