(By Joe Koletar) Whistleblowers have, to many, achieved an aura of James Bondesque mystic. The lone wolf, privy to sensitive information, who shrugs off risk. The lone voice in the wilderness, borne on the wings of truth and justice, who navigates the reefs and shoals put up by the opposition, to arrive at the shores of recognition and reward. (OK, no lethal gadgets or beautiful assassins now in thrall of the fearless hero, but the basic idea is the same,)

Were that always true. Numerous studies have shown over the years the typical fate of most whistleblowers is termination, joblessness, social isolation, alcohol and drug use, divorce, and sometimes suicide. A recent column in The CPA Journal, June 2015, page 5 may help illustrate this point.

Tony Menendez was a CPA employed by Haliburton, a major oil field services company. In the course of his duties Memendez discovered that revenue recognition practices were contrary to accepted accounting practices. He spent months trying to bring this to the attention of his superiors. Eventually even senior executives accepted his position, but the accounting practices which enhanced the company’s balance sheet, continued. This was in 2005, often referred to as the “Enron” era. Frustrated by corporate inaction, Menendez filed a confidential report with the SEC that same year.

The company immediately struck back (it appears it learned of the SEC contact,) and identified him to many of his co-workers. Per the CPA Journal article, this was in conflict with not only the provisions of the Sarbanes-Oxley Act of 2002, but also contrary to Haliburton’s own policies.

Let us return to Mr., Bond. Did Menendez receive praise, perhaps a note from the Queen, and the pleasure of the beautiful assassins for years to come?

Not quite. After nearly a decade of legal battles Menendez was awarded $30,000 by the courts. That works out to roughly $3,300 a year, or about $.1.65 an hour, based on a 2000-hour work year.

Should his experience be seen as a warning to keep your mouth shut? Hopefully, no. Consistent statistics compiled by the Association of Fraud Examiners indicate that tips, usually anonymous, are the single most effective means of discovering organizational fraud.

Is there a moral to the story? Yes, do it because it the right thing to do, especially if you have a professional obligation to do so. If you want to go for the money, that is fine, but prepared to wait.

Copyright 2015
Joseph W. Koletar

Join us for more insights into behavioral forensics (behind fraud and similar white collar crimes) from the authors of A.B.C.s of Behavioral Forensics (Wiley, 2013): Sri Ramamoorti, Ph. D., Daven Morrison, M.D., and Joe Koletar, D.P.A., along with Vic Hartman, J.D. These distinguished experts come from the disciplines of psychology, medicine, accounting, law, and law enforcement to explain and prevent fraud. Because we are inspired to bring to light and address the fraud problems in today’s headlines, we encourage our readers to come back and revisit us regularly at BringingFreudtoFraud.com.

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