X hits on this document





7 / 48


Exhibit 1.1

The Fraud Triangle

earlier time, those who had an opinion expressed the equivalent of one or more of the following quotations: (a) ‘There was no need for it like there was this time.’ (b) ‘The idea never entered my head.’ (c) ‘I thought it was dishonest then, but this time it did not seem dishonest at first.’ ”12

“In all cases of trust violation encountered, the violator considered that a financial problem which confronted him could not be shared with persons who, from a more ob- jective point of view, probably could have aided in the solution of the problem.”13

Nonsharable Problems

What, of course, is considered “nonsharable” is wholly in the eyes of the potential oc- cupational offender, Cressey said. “Thus a man could lose considerable money at the race track daily but the loss, even if it construed a problem for the individual, might not constitute a nonsharable problem for him. Another man might define the problem as one which must be kept secret and private, that is, as one which is nonsharable. Similarly, a failing bank or business might be considered by one person as presenting problems which must be shared with business associates and members of the community, while another person might conceive these problems as nonsharable.”14

Cressey divided these “nonsharable” problems into six basic subtypes:

  • 1.

    Violation of ascribed obligations

  • 2.

    Problems resulting from personal failure

  • 3.

    Business reversals

  • 4.

    Physical isolation

  • 5.

    Status gaining

  • 6.

    Employer–employee relations

Violation of Ascribed Obligations

Violation of ascribed obligations—the specter of being unable to pay one’s debts— has historically proved a strong motivator. “Financial problems incurred through


Document info
Document views173
Page views173
Page last viewedWed Jan 18 20:07:37 UTC 2017