3 Common Archetypes of Employees Who Commit Fraud

To prevent fraud, you need to be able to recognize it.

by

Kelly Richmond Pope

and

Vairam Arunachalam

by

Kelly Richmond Pope

and

Vairam Arunachalam

August 15, 2024

Martin Poole/Getty Images

Summary.

Fraud is estimated to be a multi-trillion-dollar problem — and this doesn’t even include undetected and unreported fraud. So how can senior leadership teams fortify their organizations against massive fraud schemes? By recognizing three archetypes of employees who commit fraud — intentional perpetrators, accidental perpetrators, and righteous perpetrators — leaders can spot red flags quickly in order to prevent future losses and reputational damage.

At the heart of the largest municipal fraud case in U.S. history lay a secret bank account, a prized stable of quarter horses, and a web of falsified invoices. Rita Crundwell, the former comptroller of the city of Dixon, Illinois, boldly siphoned off a staggering $53.7 million right under the community’s nose. This audacious act was facilitated by lax internal controls, complacency from the auditing firm, unsuspecting bank personnel, and a general lack of vigilance from city council members and residents alike for over 20 years.

Kelly Richmond Pope is the Dr. Barry Jay Epstein Endowed Professor of Accounting at DePaul University. She is the author of Fool Me Once: Scams, Stories, and Secrets from the Trillion-Dollar Fraud Industry published by Harvard Business Review Press. Her 2017 documentary All the Queen’s Horses chronicles the $53 million Dixon, IL fraud, known as the largest municipal fraud in U.S. history. Pope is co-founder of edtech startup Red Flag Mania, Inc and one of the national instructors for Becker, the largest provider of training for candidates who are preparing to sit for the U.S. CPA exam. In 2024, Pope was appointed to the board observer program of Superior Group of Companies, Inc (NASDAQ: SGC). In 2023 and 2020, the AICPA and CPA Practice Advisor named Pope among the top 25 most powerful women in accounting.
Vairam Arunachalam serves as Director of the School of Accountancy & PricewaterhouseCoopers / Joseph A. Silvoso Distinguished Professor at the University of Missouri. His research and teaching interests are in the areas of fraud examination, forensic accounting, and information systems. He has served as a member of the Missouri Society of CPAs Education Foundation Board and of the Board of Regents of the Institute of Certified Management Accountants. He currently serves as a member of the Accountancy Board of Advisors for the Gies College of Business at the University of Illinois at Urbana-Champaign and as Chair of the Institute of Management Accountants Research Foundation (IRF). He has been a member of and chaired several AACSB accounting accreditation review teams. Professor Arunachalam has also taught management accounting to graduate business students and business executives in Vietnam.

3 Common Archetypes of Employees Who Commit Fraud

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