The results are in… 2012 will be another difficult year

In December 2011, I created a poll on LinkedIn that asked the following question:

“What do you predict will happen to corporate fraud in 2012 versus 2011?”

Here are the final results:

Increase – 55 (70%)

Decrease – 9 (11%)

Stay the same – 11 (14%)

Not Sure – 4 (5%)

The poll generated 79 responses, and numerous insightful comments (see below).


“Interesting question, Paul. And interesting current responses indicating expected uptick. My expectation is increased and even explosive EXPOSURE of fraud, including increased enforcement, willingness to come forward, and EXPOSURE also of enforcement failure points and beneficiary parties.”
-Dean Levinson

“It is interesting that the crash of 1907 was fueled by “bucket shops” or financial investment firms operating out of store fronts that sold derivatives. They also were famous for “pump and dump” schemes of giving advice to people on how to buy and sell, but really created false lows and false highs on a given investment. After the crash the bucket shops were outlawed in every state because of how terrible the financial fraud was. In the years prior to the 2008 crash, legislation was passed to allow the sale of derivatives and the federal legislation mandated that all existing laws on the state level outlawing bucket shops were voided….so much for greater state and local control as going hand in hand with deregulation. Well, now you can get an investment account on line….they give suggestions to investors in a manner very similar to the pump and dump schemes from the bucket shops, and they still trade derivatives. Even since the 2008 crash, the bad practices that were once outlawed due to the terrible effects they had are still practiced. 100 years ago, if fraud was discovered, it was outlawed. Today, if the govt. outlaws something, it is seen as too much regulation and prevents job creation, so fraud is legalized. If the govt. tries to regulate that, it is claimed as too intrusive, so the industry tries to make new guidelines for derivative trading and such. If fraud is discovered, it will be legalized. Once it becomes legal, it is not fraudulent. And once there is money to be made through legalized theft, it will fund lobbyist money to make sure the laws remain in tact to enforce the fraud rather than to remove it.”
– Paul Peck

“In the US exposure of corporate fraud will increase in 2012. The key words here are exposure of existing frauds. On the law enforcement side, the FBI is currently inundated with tens of thousands of fraud complaints (over 63,000 reported) and it will take years to catch up. The FBI reported that the sub prime mortgage frauds, misused bailout funds, green frauds, and others would make this true several years ago. On the political side we have groups such as Occupy and the Tea party demanding corrections to government policy that have created and nurtured a culture of corruption and fraud. A new justice department in 2013 will likely have a mandate to clean up some of the problems created during the last four years; this will place pressure on the current justice department to file cases and create the appearance of doing something about it during an election year. I agree will all the previous comments about financial pressures leading to increased corporate fraud; cooking the books is far less likely to occur when profits are growing through honest efforts.”
– John Evangelisti

“Sadly, Paul, I have voted increase. Scott has pretty much nailed it right on the head – as financial distress increases, the “need” increases, many times, to the point where otherwise honest people feel that they have no other option. In the upper echelons, the pressure to meet targets will be immense, and there will be many instances of overstating revenues and understating expenses by said echelons to meet they targets that they have put out in the public eye.That will be exacerbated by potential drops in overall remuneration packages due to lower or non-existent bonuses, again, heightening the perceived need.”
– Alan Hunter

“I believe that fraud will continue in the rise unless whistleblowers are more protected and/or compensated accordingly.”
– Edward Sotomayor

“While the poor economy will continue to trigger fraud, I’m thinking the number of major conspiracies exposed in the corporate world will likely decrease in 2012, given the awareness that has occurred over the past couple years.”
– Don Crocetti

“Thanks Paul for the poll. It would be all too easy to point out that historically in times of recession and economic downturn, corporate fraud increases. With predictions of very slow (if any) economic growth both in the US and UK and the Eurozone crisis, the global picture looks a little gloomy for the foreseeable future. With the aforementioned and the austerity measures across the public sector starting to bite early 2012, I believe the financial pressures on individuals will increase and therefore increase the likelihood of financial misconduct across both private and public sectors. Looks like I will be taking that easy option after all and voting for the increase based on my own experience and history!”
-Scott Grant

Thank you to everyone that took the time to vote or comment. Buckle your seats, it is going to be a bumpy ride in 2012!

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

2 Responses to The results are in… 2012 will be another difficult year

  1. Pingback: Courage and one economic forecaster who predicted the 2008 crash, financial crisis, and housing collapse « JRFibonacci's blog: partnering with reality

  2. Pingback: A billion dollar industry and ain’t legal (Hint: it used to be a secret) « Fraud Happens

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