Fraudster types

This information comes out of exploratory research results from Terry Sheridan’s PhD in Executive Fraud (2010). This information is put here out of a sense of duty of care to the business community and is released before final conferment of the doctoral degree.

The Likeable Fraudster

Dr Sheridan found that there appeared to be a type of fraudster who flourishes in an organisational environment that she named as the Timebomb, as this type of fraudster is difficult to find, they can detonate at any moment without warning and start their fraudulent activities. With executive fraud you will be unlikely to know about this for a long time, no matter what audits are done or close checking. There was one example in her study, up to 5 years for one company and the trusted fraudster milked over $15M in the process.

The Likeable Fraudster as the name implies is friendly and has the support of his or her staff and are generally liked by them very much. So much so, you have to be careful about the termination of this fraudster, as you will most likely lose your key staff when the fraud is uncovered. But let’s start at the investigation of who is the most likely person.

Apart from using Emotive Profiling, most current technologies involving detecting this type of fraudster, unfortunately, work after the event. The key thing to look for with this ‘happy go lucky’ person is if there are any oddities in their behaviour. Oddities include supposedly happy, but seemingly morose at times. This is likely to be on Mondays, on return to the office after the weekend, where most likely the fraudster has been gambling and been unsuccessful.

Unlike the Arrogant Fraudster, see below, the Likeable Fraudster actually does not like defrauding the company or non-profit organisation. In fact, one fraudster talked about throwing up after each false transaction he put in the books to cover up his fraud. They know that they are doing wrong and it doesn’t sit well with their conscience. This may produce odd behaviours in itself, such as making excuses for other’s wrongdoing, this is known as projection. Or they may in fact through this psychological construct start pointing the finger at who are defrauding companies, for example reading out aloud such misdemeanours from newspaper or internet reports.

They may wear fancy jewellery, watches or talk about moving to new homes etc. Bear in mind their salary when quizzing the employee about these items. Sometimes they will say, or more likely imply, that they inherited the money to themselves or close members in their family. Other times it may be a lucky lotto or casino win. All you have to do as an employer is check out the facts. Probate for wills are public information. Lotto and casino wins can be verified through other channels. Some employers, after the frauds were discovered, were shocked to find out that the employee concerned was a member of a high roller section of the local casino, another was stunned to find out that their trusted person was the best horse punter that the betting agency had. This was after the fact in the last case, a number of items would appear at work from the betting agency, such as cases of expensive wine, perfume and holiday travel tickets.

The Likeable Fraudster will have a highly negative emotional profile, which will be kept from others. They feel that they cannot disclose their negativity as people around them will not like them for who they really are. They put on a mask of being likeable as well as forms of appeasement behaviour. This means that they can hide in the company or NPO for years. For instance, one case served 15 years before he started stealing. Many will be long-serving employees that are known for their trustworthiness, and they stay like that until the moment of detonation.

The detonation is a psychological moment where the person suddenly believes that he or she is wealthy and therefore tremendously happy. This is not true but this belief drives the fraudster to makes statement to others and believe it totally themselves. This is the problem moment, as how can they fuel their lifestyle if they are wealthy? And this is where the company’s money comes in, they are absolutely compelled to defraud to solve their inner problem of what is known as cognitive dissonance. They live a different reality where they are wealthy and happy, to the inner sanctum where negativity reigns and stealing begins.

Do not think that these people will crumble with this dissonance reigning in their minds. It may take years for the next moment to arrive, and that is the implosion effect of realising that they are about to be found out and accordingly they will give themselves up. Sometimes events overtake them and they get to be discovered before that moment, but nevertheless the thinking of wealth and happiness disappears when the reality takes over. They feel utterly worthless at this point.

The warning that was given earlier is now expanded upon. The reality of what they have done, and that others will see them for who they really are, will lead to thoughts of suicide. Some have been successful and have killed themselves. But as an employer, you have a duty of care to all your employees including the fraudster, and it is imperative that this internal threat is taken seriously. Hand the person over to the Police who will know how to deal with such a risk, as well as prosecute for criminal conviction, immediately.

Offer counselling that is truly helpful for all the staff who worked with the fraudster immediately as well. They have to work through their own feelings of anger around the broken trust that they will feel, due to the careful nurturing of this process over many years. If this stage is not handled correctly your key staff will most likely exit over the next few months.

Arrogant Fraudster

This type of fraudster aims their activities at small business, particularly those organisations that are growing or which deal with finance. They are dangerous and have no concept of right or wrong. They are charming, tend to be liked for doing their job by their superiors but considered difficult or unlikeable by their subordinates. They will fire anyone possessing knowledge that could uncover them. They will appear in many disguises and are intelligent quick thinkers, so don't think for a moment that confronting them will stop their behaviour. Their response is to destroy all data and argue over who is right and who is wrong. They may admit to an amount being stolen in the face of incontrovertible evidence but they will contest their way through the court system to the bitter end protesting their innocence. True remorse is unknown to them. They share characteristics with psychopaths and are just as dangerous to a company.

Annual Screening

The answer to the Likeable and the Arrogant fraudsters is to do annual screening of key employees. You can do this yourself using the typology given above. But be aware, you will suddenly be at odds with a person that you trust, and lead to your own feelings of being unfair. It is often better to hire us to do this for you as you too will be very likely under the influence of the their mask.


The cost of annual screens will vary upon number of key personnel and type of screening preferred, please Contact Us for a confidential quotation.

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