CORPORATE FRAUD HANDBOOK
One of the most fundamental observations of the Cressey study was that it took all three elements—perceived motive, perceived opportunity, and the ability to rationalize— for the trust violation to occur.
Cressey concluded that
[a] trust violation takes place when the position of trust is viewed by the trusted person ac- cording to culturally provided knowledge about and rationalizations for using the en- trusted funds for solving a nonsharable problem, and that the absence of any of these events will preclude violation. The three events make up the conditions under which trust violation occurs and the term “cause” may be applied to their conjecture since trust viola- tion is dependent on that conjecture. Whenever the conjecture of events occurs, trust viola- tion results, and if the conjecture does not take place there is no trust violation.27
Cressey’s classic fraud triangle helps explain the nature of many—but not all—occupa- tional offenders. For example, although academicians have tested his model, it has still not fully found its way into practice in terms of developing fraud prevention programs. Our sense tells us that one model—even Cressey’s—will not fit all situations. Plus, the study is over half a century old. There has been considerable social change in the in- terim. And today many antifraud professionals believe there is a new breed of occupa- tional offender—one who simply lacks a conscience sufficient to overcome temptation.
Even Cressey saw the trend later in his life. After doing this landmark study in em- bezzlement, Cressey went on to a distinguished academic career, eventually authoring 13 books and nearly 300 articles on criminology matters. He rose to the position of Pro- fessor Emeritus in Criminology at the University of California, Santa Barbara.
It was my honor to know Cressey personally. Indeed, he and I collaborated exten- sively before he died in 1987, and his influence on my own antifraud theories has been significant. Our families are acquainted; we stayed in each other’s homes; we traveled together; he was my friend. In a way, we made the odd couple. He, the academic, and me, the businessman. He, the theoretical, and me, the practical.
I met him as the result of an assignment, in about 1983. A Fortune 500 company hired me on an investigative and consulting matter. It had a rather messy case of a high-level vice president who was put in charge of a large construction project for a new company plant. The $75 million budget for which he was responsible proved to be too much of a temptation. Construction companies wined and dined the vice president, eventually pro- viding him with tempting and illegal bait: drugs and women.
He bit. From there the vice president succumbed to full kickbacks. By the time the dust settled, he had secretly pocketed about $3.5 million. After completing the internal investigation for the company, assembling the documentation and interviews, I worked with prosecutors at the company’s request to put the guy in prison. Then the company came to me with a very simple question: “Why did he do it?” As a former FBI agent with hundreds of fraud cases under my belt, I must admit I had not thought much about the motives of occupational of- fenders. To me, they committed these crimes because they were crooks. But the com- pany—certainly progressive on the antifraud front at the time—wanted me to invest the