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).  This is his second guest blog, and Mr. Beam has agreed to write future guest blogs for

(By Aaron Beam) “I don’t think human beings are bad. They’re weak. And that’s what makes them bad.” This was a quote from a “60 Minutes” TV interview with Michael Caine the movie star.
When I heard Michael Caine make this paradoxical observation, it really struck a chord with me. A corollary to his statement is the often quoted phrase “there are not that many evil people in the world but there are many, many people who let others do evil things.” Philosopher Edmund Burke remarked, “The only thing necessary for the triumph of evil is for good men to do nothing.”
For the past 20 years I have been asking myself, why did I take part in the Healthsouth fraud? I always come back to the answer that I was not inherently an evil-doer but I was weak and I lacked the courage to do the right things. I took the path of least resistance—the easy way out.
Fortunately, one of the great things about being human is that we can learn and build courage. An excellent book by Mary C. Gentile titled “Giving Voice to Values” was published in 2010. The book’s main focus is how to develop the “scripts” and implementation plans for responding to the commonly heard reason and rationalization for questionable practices and practicing the delivery of those scripts. The book is about building the skills, the confidence, the moral muscle and the habit of voicing our values.
Looking back at my life, I realize that I would nearly always run away from problems and confrontation. When I faced the pressure of being the CFO of a Fortune 500 company, my approach typically was to take the easy way out. I took the course that caused me the least pain. Many times these choices were borderline–on the edge of ethical.
With the help of Dr. Gentile’s book and other ethics authors and professors, I now realize courage can be learned. As you learn to voice your values, you develop confidence. This in turn helps build even more ethical strength. It is like most things in life: you have to practice to become proficient and strong.
Numerous studies have documented that CFO’s are likely to become involved in material accounting frauds because they succumb to CEO pressure, not because they seek immediate financial benefit (e.g. Feng et al. 2011). During the fraud at Healthsouth, the CEO received $265,000,000 in compensation. I took part in the fraud for less than a year and my last bonus was $300,000. This was in line with bonuses I had received before the fraud began.
In retrospect, I would gladly give up the $300,000 to keep my personal integrity and reputation intact. Of course, that would have required great reservoirs of moral courage that I simply did not seem to have at the time. This is one of the key points made in The Ethics Playbook—hopefully, the younger generation can learn from my experience.
Beam, A. & Womble, G. (2015). The Ethics Playbook: Winning Ethically in Business.
Feng, M., Ge, W., Luo, S. & Shevlin, T. (2011). Why do CFOs become involved in material accounting manipulations? Journal of Accounting and Economics, Vol. 51, pp. 21-36.
Gentile, Mary C. (2010). Giving Voice to Values: How to Speak Your Mind When You Know What’s Right. New Haven, CT: Yale University Press.



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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