(By Jack Bigelow) Corporate fraud prevention and detection tools include organizational structure design, tests, checklists, “healthy skepticism,” and other nonpersonal procedures targeting financial mischief. But there’s growing interest now in looking at the deep psychological influences on managers committing fraud, to see why (beyond the surface factor of greed) they do it. We call this “Behavioral Forensics,” oft mentioned in this blogsite and deeply explored in our bloggers’ book, A.B.C.s of Behavioral Forensics. One aspect of behavioral forensics—a research stream in personality psychology only about 15 years old—is The Dark Triad Personality.
The Dark Triad Personality is explored in an article by Barry Jay Epstein and our blogger Sridhar Ramamoorti, a founding member of our Behavioral Forensics Group. The article, “Today’s Fraud Risk Models Lack Personality (CPA Journal, May, 2016, pp. 15-18, 20, 21),” describes the dark triad of human personalities comprising narcissists, psychopaths, and Machiavellians.
• Narcissists are grandiose, proud, egotistic, focused on personal power and prestige. Their vanity and lack of empathy make them unable to see the destructive damage they impose on selves and others. Sound like anybody you know?
• Psychopaths are antisocial and impulsive, selfish, glib, and irresponsible for their actions and therefore without remorse for them. Easily becoming bored, they crave stimulation, whether lawful or not. And committing fraud can be stimulating.
• And then there are the Machiavellians, and we’ve all experienced them: Manipulative and exploiting of others, cynical about morality, calculating, conniving, deceptive, and abusive of others who grant courteous treatment expecting reciprocation.
Dark Triad Personalities exhibit these behaviors—usually from more than one category. Some examples of the Dark Triad Personality: Jordan Belfort, “The Wolf of Wall Street,” Barry Minkow of ZZZZ Best notoriety, who “got religion,” became a pastor, defrauded the church he led, and is back in jail (the leopard didn’t change its spots). Epstein and Ramamoorti specifically mention “Chain Saw Al” Dunlap, “Crazy Eddie” Antar, and former Enron CFO Andrew Fastow, to name a few. “Not surprisingly,” they write, “….evidence suggests that corporate management contains a much higher proportion of dark triad personalities than the general population (italics added).” For these abnormal personalities, all that’s needed is the opportunity to commit fraud. Why is there a higher proportion of dark triad personalities within the corporate ranks? Our Bringing Freud to Fraud blogger Joe Koletar sheds some light: “The logic is simple: you do not look for trout in a corn field, and you do not look for pheasants in a trout stream. Every species learns to seek prey where it is most common.”
Thus, corporations are the most fertile sources of “food” for dark triad personalities. Corporations do not breed them. They attract them. They are their food source.

Several points for consideration emerge from this CPA Journal article:
• A fraud risk assessment protocol is incomplete without some examination—by professionals in the field of behavioral forensics—of the personalities of key corporate executives;
• Internal controls, audit procedures, segregation of duties, and other nonpersonal anti-fraud techniques are presently inadequate when one or more key executives may demonstrate Dark Triad Personality behaviors;
• Fraud control techniques based on “greed” alone as the motivator of fraudsters are doomed to fall short of targeting the potential for and actual commitment of fraud.
Could a wolf in sheep’s clothing—a Dark Triad Personality—exist within your corporate ranks? Might you have some wolfish traits yourself? What might trigger your DTP behaviors? In either case, what can you do about it?

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.