About twenty years ago, at an executive protection training school, I found myself reading a lot of books on terrorists and the terrorist philosophy. Some of the books dealt with the structure and organization of a terrorist unit, and it was obvious why I should know this information. However, I also found myself reading books that attempted to sell me on the author’s ideas and win me over to the terrorist side. Early in my career, I understood the importance of knowing all I could about what motivated my “enemies” and what makes them “tick.” Two years after these terrorist studies, I began working in the casino industry, investigating thefts committed by both employees and customers. The largest share of those thefts was committed by employees.
Many people are surprised to hear that casino employees commit thefts, despite knowing that all of the cameras are around. I have asked myself the same question on several occasions, why a good employee would risk everything for a few extra dollars? To answer that question, I began reading and studying criminology. I learned that the reasons and causes that I had seen in many cases are essentially the same as those documented in studies conducted as early as the 1950s. In one of the most well-known of these studies, Dr. Donald R. Cressey conducted research on about 200 incarcerated embezzlers, whom he called “trust violators.” As a result of his research, Dr. Cressey developed a hypothesis that is commonly known as the “fraud triangle,” and published his research in 1973, in Other People’s Money: A Study in the Social Psychology of Embezzlement.1 His fraud triangle theory held that there were three factors present in all of the cases he studied; 1) a non-sharable problem, 2) a means of rationalizing their actions, and 3) the opportunity to steal.2
Why Do Some Employees Steal
The first of these factors, a non-sharable problem, has also become known as a “pressure.” This pressure could be real or perceived, such as an overdue bill or feeling obligated to provide the latest fashions for one’s children. When I conduct interviews with employees who have confessed to thefts, I am amazed at the wide range of pressures employees associate with the reason they commit thefts. I have seen employees give in to peer pressure and throw away years of hard work, just to impress a friend with an unauthorized discount or free meal. Some employees will work two and three jobs just to provide for their families, while others will fall to the slightest temptation or pressure.
The second factor is a rationalization or a means of justifying the crime. The rationalization aspect of the triangle is the one in which I have seen the most change. In years past, when I interviewed theft suspects, most of the rationalizations were real and understandable. In recent years, I have seen a lot less effort by employees to rationalize their crimes. It is not uncommon for an employee to blame the company for making it too easy to steal. Others I have interviewed essentially tell me that they didn’t really need the money; they just felt the company needed it less.
This brings us to the last factor needed for a theft to occur – – – opportunity. The opportunity to commit theft is the only factor a business owner has control over. By eliminating the opportunity, the business owner can greatly reduce losses suffered as a result of employee theft. A large majority of the employees I have caught stealing are “opportune” thieves. Most employee thefts are committed by two types of individuals, the opportune thief or the “predatory” employee. The predatory employee is just what it sounds like – – an employee who comes to a business to steal and prey. These thieves are often the easiest to spot, once they start to steal. Often times, these predators will have committed similar crimes elsewhere and may have a criminal record. On the other hand, an opportune thief is often perceived as one of the company’s best employees. They are usually hard-working and otherwise good employees who find themselves faced with an opportunity to steal. Sometimes this opportunity is unexpected and sudden. On other occasions, the employee happened upon a weakness in the company’s internal controls and did not report it to management. This weakness may have been discovered by accident or through a careless mistake. Once the weakness is discovered by the employee, all that is needed is a pressure and a means of rationalizing the theft. This can best be illustrated with the following example:
Joe worked as a front desk clerk for a local hotel. Several months after he was hired, he was asked to train a new employee. While training the new employee, he learned her employee login code and password. A few months later, the new hire decides that she doesn’t like working there and leaves the company. The hotel’s policies and controls state that after an employee completes his/her training period or when an employee is terminated, his/her codes and password are deleted or changed. However, the front desk supervisor rarely had time to update the computer, and, in this case, did not delete or change the new-hire’s codes. One night while Joe was working late, he accidentally entered the wrong code and logged in under the terminated employee’s name and number. As a result, the transaction that he completed was not recorded in his daily activity and it went unnoticed. A few weeks later, on his way to work, Joe picked up his mail. In the mail that day was a late notice for his credit card, threatening to cancel the card if payment is not made immediately. That night at work, while trying to figure out how he was going to make this payment, Joe remembered the accidental login. Just then, a guest arrived and paid a deposit of $100 in cash. Instead of entering his login code, Joe entered the former employee’s information. He then posted the transaction under that employee’s name and no record of the deposit appeared on his activity log at the end of his shift. He pocketed the $100 and a good employee became an “opportune” thief.
Although Cressey’s theory and model fit nicely with most of the cases I have investigated, I have seen a new trend emerge, similar to the one I mentioned about employees finding it easier to rationalize their crimes. I now find that employees are very quick to fall to temptation. Others have said these employees simply lack the moral character to overcome temptation. Once an employee falls to this easy temptation and commits that first theft, it is rarely is the last.
Employees will not stop stealing in the workplace. As investigators, we must work to better understand what causes some to steal while others pass up the strongest of temptations. By educating ourselves and our clients, we can help prevent opportunities and other conditions that lead to a good employee becoming a good thief.
1. Dr. Donald R. Cressey, Other People’s Money: A Study in the Social Psychology of Embezzlement, Monticlair; 1973
2. Joseph T Wells, Occupational Fraud and Abuse, Obsidian; 1997
Robert “Jerry” DeFatta, BAI, CFE, CRT, (www.DeFattaPI.com), is the owner of DeFatta & Associates Investigative Services, a Louisiana firm that specializes in business related investigations.