The confession – the “how” and “why” of employee fraud

“It is not the criminal things that are hardest to confess, but the ridiculous and the shameful.”

– Jean Jacques Rousseau, (1712-1778) Swiss political philosopher

The employee sitting across the table from me (we’ll call him Bob) looked like he was going to throw up. I didn’t feel any better. I had played this scene over in mind for weeks and hardly slept the night before.

Welcome to my first interview involving a fraud suspect. You can conduct as many “mock” interviews as you like, but until you are sitting face to face with an employee accused of fraud, you really have no clue what it feels like.

Bob clasped his hands together – almost in prayer – and stared directly at me with eyes that appeared on the verge of unloading tears. Below the table, his legs were bouncing at an alarming rate, so much so that the binders in front of me were slowly shuffling towards the edge of the table. It was time to begin…

“Do you know why you’re here?” I asked

“Yes” said Bob. “I did it. I took the money. Can I go home? I need to tell my wife”

Now what am I supposed to do? The employee had confessed without seeing one document. This is easy! Will they all go this smoothly? I composed myself and asked Bob to tell me what he meant. What money? How did he take it? He again asked to go home, but I encouraged him so share his side of the story and review the documents I had compiled. I convinced him that he needed to know what he had just confessed to doing.

We spent the next hour reviewing the investigation binder in detail. During that time, Bob explained how he embezzled over $100,000 from the company. I also shared the mistake he made that resulted in his undoing. At the end of the hour, Bob had explained how he had committed the fraud, but he had not shared why he had done so.

Knowing how the fraud took place is certainly important as employee and third-party fraud tends to follow “tried and tested” modus operandi. There are certainly variations on themes where a fraud includes a “wrinkle” or unusual element that is unique. With nearly 17+ years experience in this arena, I am still learning new and unusual ways to commit fraud. But don’t neglect the “why”… If you really want to make a difference, ask about the how and the why.

Never make any promises to entice the employee to provide the “why” (That can really create much bigger problems down the road). There are a number of tactics to help employees through this phase of the interview. I personally like the “5 Whys” approach.

Why did you take the money?”

“Lots of reasons. I don’t really want to tell you why.”

“It would really help if you did. I know this has been bothering you for a long time. Why take all that money? What made you take the first step?”

“I didn’t get promoted last year. I deserved it. I did all the work, and he (pointing to his supervisor seated in the far corner) took credit. For everything.”

“But why commit fraud, though? You might have been promoted this year”

Bob looked down and bit his bottom lip.

“I know other people took money and got away with it.”

“In this office?” I asked. “How do you know?”

“I know because I saw them. They gave me money to keep quiet. I shouldn’t have taken it. But then I wanted more.”

Why take the money? Why not tell someone about what you saw?”

“My kids need clothes and we just don’t have it. My wife hasn’t been able to find a job and we don’t have anyone to look after the kids anyway. The others were fired so I couldn’t get any more money from them.”

It turns out that 2 employees were fired six months prior for absenteeism. Upon further investigation, both had been involved in stealing inventory and selling it on eBay. Bob stumbled across the fraud and agreed to accept kickbacks to keep quiet.

Sometimes the “5 Whys” works. Other times, no matter how you ask the questions, the employee declines to share anything of value. In fact, I had one employee tell me that they needed the money, and then run out of the room! Not much you can do in that type of situation.

Remember: how fraud is committed is always important, but so is the why. Don’t neglect one over the other as understanding both can help your company prevent fraud. Take the time to learn from each fraud. After all, you’ve paid the entrance price; why not watch the entire movie?

Need a writer that understands fraud? When you hire me to write an article, blog post, newsletter or white paper you get an accomplished writer that is also an expert in fraud.


About Paul McCormack
I have over 20 years of experience in corporate fraud and intellectual theft prevention, detection and investigation. Unlike many fraud experts, I have both industry and professional services experience. To date, I have conducted over 800 interrogations of fraud suspects including numerous senior corporate executives. As a freelance writer, I have written over 1,000 articles on a broad range of topics. My areas of expertise include: • Asset Misappropriation • Big Data • Bribery, Corruption, and Collusion • Check, Wire, ACH, and Credit Card Fraud • Consumer Fraud • Corporate Security • Cybersecurity • Data privacy (Europe, Brazil, Russia, India, and China) • Drug Trafficking • Embezzlement • Employee Fraud • Executive Protection • Fintech • Financial Statement Fraud • FCPA • Healthcare fraud • Identity Theft • Intellectual Property Theft • Internal Audit • Interrogation Tactics • Loss Prevention • Mobile Fraud • Money Laundering • Operational Excellence • Organized Crime • Payments Fraud • PCI Compliance • Retail Fraud • Risk Management • Terrorism and Counterterrorism • UK Bribery Act • Workplace Violence

One Response to The confession – the “how” and “why” of employee fraud

  1. Bhagirath KS says:

    It was a nice article. Really there is an absolute necessity to know “WHY” the person has committed a fraud. It was a learning experience for me.

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