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The profile of a fraudster: tips for employers

By Kathy Rumleski, Contributor

Despite the Association of Certified Fraud Examiners’ (ACFE) estimate that only four per cent of frauds committed against companies are discovered by external auditors, Toronto forensic accountant and investigator Dave Oswald says there are ways employers can protect themselves from this crime.

“There are certain signs companies can pick up on if they’re watching closely,” Oswald tells

“These are white-collar criminals who have university degrees, are highly respected, often play important roles in the company and they are usually the nicest person in the room. They also keep things close to the vest, but will sometimes become involved in company affairs outside their purview.”

That’s what employers should watch for — along with the person's apparent need to keep up with the Joneses, says Oswald, the founder and owner of Oakville-based white-collar crime investigation boutique Forensic Restitution.

“At the very base level, these fraudsters are propelled by greed. But they are also usually narcissists who believe they are worth more than they are getting paid. They may believe the company is doing so well because of them and use this to justify the crime,” he says.

ACFE estimates that white-collar fraud adds up to $500 billion a year in the U.S., but those who are caught often face light penalties or in some cases, none at all, Oswald says.

“Many have reached a high level in the organization and are trusted as one of the gang,” he says. "When they are found to have their hands in the piggy bank, it’s often not reported to police and they are just let go. And then they can get hired by another organization and continue the behaviour.”

Oswald was also a victim of employee fraud, and suffered a $10,000 to $15,000 loss. He says the female fraudster was a heroin addict who looked after the books and paid suppliers.

“I did the final transfer of money to suppliers, but she worked out how to change the bank account details,” Oswald says."She was eventually caught when she falsified petty cash slips.”

He says employers can protect themselves in a number of ways: by having an outside accountant review company expenses, providing ethics training to staff and watching for employees who always want to be on hand during critical periods of business.

Oswald also suggests running data analytics and company risk assessments, which his company provides.

Employers should engage with their staff and be prepared to ask pointed questions, he says.

“A good way to get information is by simply talking to employees and asking some tough questions," Oswald says. "Many people don’t want to blow the whistle, but if you ask direct questions, it’s hard for people to say, ‘I didn’t know about it,’ when they did actually know.”

He says it’s rare for a fraudster to quit their activity, which usually increases as time goes on.

“Initially the fraud will start off very small but it can grow into millions of dollars. It generally doesn’t decrease.”

In the 30 years he’s been in the business, Oswald says it’s frustrating that only in very few cases does the fraudster face jail time.

“The federal government has suggested it’s an anti-corruption government, but there’s little action taken to stop it,” he says.

In fact, Oswald says there are suggestions the 2008-09 recession was caused, at least in part, by white-collar crime.

“An entire group in a company can get together and manipulate the price of their shares to sell them at a higher value than they’re worth. More must be done to combat this.”

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