How to Spot Unusual Behavior in the Seemingly Ordinary

Fraud perpetrators. On the surface, they’re just like everyone else. Married employees with kids; active in both school and at church. A dedicated staff member who refuses to take vacations, and even works from home. The plain, low-key person who just seems to blend into the background.

Fraud perpetrators have one thing in common. They are morally flexible. They bend rules, and they break them. Embezzlers come from all economic levels. Some are serial embezzlers, leeching what they can from a victim organization before moving on. But most are otherwise honest people who see the opportunity for easy money, and take it. Often, they learn their trade by accident, when they made an error that slipped by unnoticed, or borrowed from their employer and were never questioned.

You can spot fraud warning signs if you know what to look for. Here’s how to pinpoint the red flags of fraudulent employee behavior, with help from the Association of Certified Fraud Examiners:

  • Living beyond means: Prior to discovery, co-workers often attribute an employee’s new clothes, electronics, cars and signs of excess wealth to other sources, like an inheritance, spouse’s job, even an affair. In other cases, this red flag leads to the discovery of the theft.
  • Control freak: Look for control issues, especially an unwillingness to cross train or share tasks.
  • Irritability, suspiciousness or defensiveness. Moral flexibility takes a lot out of a person – and leaves behind stress, irritability and defensiveness.
  • Related party transactions: Embezzelers often have a close association with a third-part vendor that would allow them to carry out fraud more easily. Others try to hire family and friends who will follow their instructions without question.
  • Wheeler/dealer attitude. Absolute power corrupts absolutely. (Thank you, Lord Acton)
  • Divorce or family problems. Difficult family issues create stress that can drive honest people to behave in ways that are completely out of character.
  • Addiction problems: These include gambling, drugs and/or shopping.
  • Complaining about inadequate pay. Employees who feel they have been treated unfairly can more easily rationalize stealing. It’s only fair.
  • Conscientious Connie: Refusing to take vacations, or calling in frequently when out of the office to check in and check up on what’s going on. Often combined with Control Freak behaviors.
  • Check ambush: Asking check signers for signatures at the busiest time of the day.
  • All in the family: Hiring friends and family members, especially for key tasks.
  • It’s here somewhere: Supporting documents are “lost”. Imagine that!
  • No response: Displaying a lack of follow through on report preparation, especially if reports are for a CPA or other business advisor.

Taken individually, no one sign defines a criminal, but suspicions do add up. Suspect fraud?