THE TERM FRAUDSTER immediately brings
to mind scam artists and shysters but
if you’d like to get an idea of what
a potential perpetrator looks like,
take a glance in the nearest mirror.
Experts say it’s not just the Bernie
Madoffs or Enron executives of the world
that can commit fraud, honest law-abiding citizens can, too.
In fact, a 2007 study by the Association
of Certified Fraud Examiners reported
that most white-collar fraud in Canada
was committed by first-time offenders.
“Given the right circumstances, any-
body can turn to fraud,” says Ari Kash-
ton, Toronto-based senior manager of
business valuation and litigation support
at Soberman LLP.
“The physical red flag is rationalization,” says Pamela Murphy, an assistant
professor in accounting at Queen’s University in Kingston, Ont.
Having interviewed and surveyed
white-collar criminals in U.S. prisons, she
says rationalization is the most common
trait of fraudsters, far more so than having
a criminal mind.
“A rationalization is a way for us to
reconstruct how we view the situation
to justify what we’re doing to ourselves,
to make ourselves feel OK about what
we’re doing because we’re honest, ethical
people. If we think of a good rationalization, it allows us to do it and not feel bad
about it,” she says.
Law-abiding citizens can sometimes
find themselves in tricky situations that
cause them to step outside the norm,
Kashton says, particularly when the
economy falters, interest rates rise and
financial stress increases.
“The prime minister and the governor
of the Bank of Canada have already issued
warnings regarding the personal debt load of
the average Canadian family. Although we
