The Easy Way Out: How Seductive It Can Be

Aaron Beam is the former CFO and co-founder of HealthSouth. For his role in participating in the HealthSouth financial statement fraud in 1996 (soon after which he had left the company), he was prosecuted and sentenced in 2003 to 3 months in a minimum-security prison and had his CPA license revoked.
For over 10 years, he has been speaking to several audiences, including more than 50 college and university campuses. Last year, he spoke to Prof. Sri Ramamoorti’s internal audit class at Kennesaw State University. He has also written books such as The Wagon to Disaster (about the HealthSouth fraud), and The Ethics Playbook (guidance on ethics to those pursuing careers in business).
The HealthSouth fraud, with a particular focus on Aaron Beam, is covered in A.B.C.’s of Behavioral Forensics: Applying Psychology to Financial Fraud Prevention and Detection (Ramamoorti, Morrison, Koletar & Pope, 2013). Mr. Beam has agreed to write future guest blogs for

A comment I hear often is that once someone commits a fraudulent act, it is easier to repeat that act. This suggests that fraud becomes easier to commit the more you do it. This comment has always troubled me, and I have not been able to put my finger on why it troubles me.
This morning while mowing my lawn (I do some of my best thinking while cutting my grass), the answer came to me: It is not true. Frauds like Healthsouth do not go on for years because it becomes so easy. In my case, for sure, it was not true. Just the opposite: The initial “cooking of the book” was the easiest compared to subsequent acts.
To understand the point I am trying to make, look at the emotions that were influencing me before and after the initial fraud. Before, I was riding high, I was rich, I was respected, and I wanted this scenario to continue. Plus I did not want to disappoint my boss, stockholders, my family, and Healthsouth employees. In the heat of the battle, I took the “easy” way out and agreed to change some numbers. However, within minutes, my emotional state changed. I was disappointed with myself; I was fearful of being caught and that night I could not sleep. The next day at work I found it hard to look people in the eye. The thought that we might commit the fraud again terrified me.
There are people that do find it easier to commit fraud again and again: Sociopaths. It is easy for them because they are unable to feel real empathy. Their emotions are different from most of us.




The Behavioral Forensics Group is a team of professionals with vast experience in detecting fraud, understanding why it occurs, and in recommending steps to mitigate fraud incidence within the corporate workplace, particularly within higher-level (and therefore more costly to the enterprise) executives.  The fields of investigation, organizational psychiatry, accounting and behavioral forensics, and law enforcement are represented within the Behavioral Forensics Group.  Acting in synergy to help organizations prevent, find, and/or reduce fraud, BFG is a premier, pioneering practice in this field.

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