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Perpetrator’s Employment History Behavioral Red Flags
Figure 37 shows that 85% of occupational fraud Displayed by Perpetrators
perpetrators had never been punished or termi- Individuals who are engaged in occu-
nated for fraud-related conduct prior to the crimes pational fraud schemes often exhibit
in this study. This also tends to indicate that most certain behavioral traits or warning
occupational fraudsters are first-time offenders, signs associated with their illegal activ-
but as with criminal conviction data discussed ity. We presented survey respondents
earlier, this data might understate the real number with a list of 17 common behavioral red
of repeat offenders. According to Figure 41 on pg. flags and asked them to tell us which,
47, 28% of fraudsters in our study either received if any, of these red flags had been
no punishment from their employers, were permit- displayed by the perpetrator before the
ted to resign, or entered into private settlement fraud was discovered.
agreements (which are typically confidential).
Therefore, the true number of repeat offenders Figure 38 on pg. 45 shows the fre-
may be higher than what is indicated by employ- quency of behavioral red flags in our
ment background checks. 2018 cases. The six most common
behavioral indicators of occupational
fraud were: (1) living beyond means; (2)
FIG. 37 Do perpetrators tend to have prior financial difficulties; (3) unusually close
employment-related disciplinary actions for fraud?
association with a vendor or customer;
(4) excessive control issues or unwill-
ingness to share duties; (5) recent
divorce or family problems; and (6) a
general “wheeler-dealer” attitude in-
volving shrewd or unscrupulous behav-
ior. These six red flags have been the
six most common behavioral indicators
in every report since we began tracking
this data in 2008. (See “The Red Flags
of Fraud” on pg. 44.)
Never punished or terminated (85%)
Previously terminated (9%)
Previously punished (6%)
Other (1%)
Perpetrators Report to the Nations 43
