Fraud may seem pervasive, but that doesn't mean we need to fall victim to it. Kelly Richmond Pope joins Rotman Visiting Experts to explore what we can learn from fraudsters and their victims, and what steps individuals and organizations can take now to avoid become victims ourselves.
Fraud may seem pervasive, but that doesn't mean we need to fall victim to it. Kelly Richmond Pope joins Rotman Visiting Experts to explore what we can learn from fraudsters and their victims, and what steps individuals and organizations can take now to avoid become victims ourselves.
Brett Hendrie: Fraud is pervasive. You're probably familiar with the big headline names: Bernie Madoff, Elizabeth Holmes, Sam Bankman-Fried. But their crimes amassed millions or maybe a few billion dollars. That's pocket change when you consider that the Association of Certified Fraud examiner's estimated in 2022 that organizations lost roughly $5 trillion to fraudulent activity. That's more than a few bad apples.
From Ponzi schemes to Theranos style cover ups. Car emission scandals to vendor kickbacks. From far flung princes who just need a bit of spending cash to dubious air duct cleaning calls. Whether it's old fashioned account skimming, or exaggerated expense reports, fraud is so pervasive, it almost feels normal.
But is there a way to identify and protect yourself and your organization from fraud? Yes, and it starts by understanding why it happens in the first place.
Welcome to Visiting Experts, a Rotman School podcast bringing you backstage conversations on business and society with the influential scholars, thinkers and leaders featured in our acclaimed Speaker Series. I'm your host Brett Hendrie. I'm joined today by Kelly Richmond Pope a professor of forensic accounting at Chicago's DePaul University. She's here to talk about her new book Fool Me Once: Scam, Stories and Secrets from the Trillion Dollar Fraud Industry.
The book is a page turning deep dive into what drives perpetrators of fraud, what makes victims gullible, and how we can be better protected. Kelly is an award-winning teacher, researcher and documentary filmmaker. In 2020, she was named one of the 25 most powerful women in accounting. Her 2017 documentary All the Queen's Horses explored the spectacular defrauding of a small city and play to acclaim globally. We're excited to have Kelly here at Rotman today. Welcome, Kelly.
Kelly Richmond Pope: Thanks for having me.
BH: Kelly, congratulations on your new book, which I absolutely loved. The title is Fool Me Once, obviously a play on the saying “Fool me once, shame on you fool me twice, shame on me.” And implicit in that is the idea that we should be able to learn from our mistakes. And in the world of fraud, it seems like maybe we're not learning our mistakes, and history continues to repeat itself. So can you share with us some high-level thoughts about why does fraud continue to be so pervasive?
KRP: I think we are trusting. And we believe in people, we believe the good that everyone has, and everyone doesn't have good, not always. Sometimes you just get in a situation and you know a way that you can manipulate a system and you do it. You know, it's like if you ever just made a joke and said, “You know what, if I could rob a bank, all my problems would be solved.” You might have just said it jokingly. But some people might actually do it.
When I was doing my documentary, and I saw how people would respond to Rita in what she did. And I would ask the question: if you had the opportunity to just see an open vault of money sitting in the middle of the street, what would you do? Would you just walk past it? Would you call someone? Would you call law enforcement and say there's money sitting in the street? Or would you take some? Would you look around? Would you take some? And so when I've asked that question in my class, a lot of my students will say, “Well, how old am I? DI think they're their cameras in the room?" They're rationalizing. So I think we all have this inclination that, just, maybe I'll try it, I may not get caught, the probability is pretty unlikely that you would get caught the first time. I think that's why it's so pervasive.
BH: And one of the ideas that you mentioned in your book is the idea of the triangle of fraud. And maybe can you explain that a little bit because obviously, rationalization which you mentioned is such an important part of that.
KRP: So we're talking here about the fraud triangle, so rationalization, opportunity and pressure. And what my book is exploring is just the rationalization component of the fraud triangle because I think I'm just a little bit nosy, but I think there's so much to learn from when people can rationalize bad for good.
So Donald Cressey developed the fraud triangle to really use that as a way to understand how fraud happens. There's these three components typically exist: there's some pressure, there's the opportunity, and then there's how we can rationalize. I just wanted to expand this rationalization component because we all can do it. We make these small, medium and large rationalizations about a lot of things all the time.
Something else I like to do when I'm doing lectures. I walk in the room, raise your hand, if you're ethical, the whole room raises their hand. And then about four minutes, five minutes later, I'll give them a scenario and ask, "Okay, let's vote. Is this an unethical situation? Or is it an ethical situation?" The room typically is split. And I'm like, "Wait a minute, we're all ethical. Should we all say the same thing?" We all think that we are probably a little bit better than we actually are sometimes. And I just want to talk about that a little bit more.
BH: Well, I love how the book does focus on the rationalization and the psychology of the people who are involved in it. And it's less about the technical aspects of the fraud and more about the people themselves. And I think that's a really unique and important way to approach these stories of fraud. And I'm curious to understand for you, personally, what is it that attracted you in the first place to researching and understanding those personal perspectives, the psychology of what goes into a fraud scenario.
KRP: So when I started teaching, I started doing lectures about some of the research I was doing. I started going around the country and doing these on-camera interviews with white collar felons. And I would use these clips in my presentations. And when people would come, and they would say things like, "Oh, I can't wait to see these bad guys." Or it's, "Look how bad these people are."
And I was starting to think we all are sort of bad. Like, let's not single them out. It's not them. It's sort of us. So trying to look at the human side of fraud, I think makes the concept a little bit more approachable. So I think that there have been other authors that have explained the technical aspects of Ponzi schemes or financial statement fraud. I mean, we've talked about that, but let's sort of talk about the people. Why do they do it? What's the environment that makes the person feel like it's okay.
BH: And I think one of the stories that was most interesting to me in the book is that you came close to a fraud experience with one of your colleagues who had been wrapped up in scenario that you really would not have forecast him being and I was wondering if you could share that story, but also help unpack your own reaction to it and what you learned from it.
KRP: Yeah, you're talking about Bob Landis. So he was a colleague of mine, nice guy, you know, I still talk to today. And he was a successful attorney. And he was one of our instructors.
And so Bob found himself wrapped in this mortgage fraud situation. He was the attorney that represented the seller of these properties. And they had inflated the cost and recruited straw buyers, and he was the attorney that represented the seller. And he noticed red flags around these transactions. For example, there would be groups of people coming to the closings, they didn't know the address, they didn't want the keys — things that seemed a little bit odd when you buy a house. I don't know where you live, but maybe you bought a house before and you probably knew the address what you were buying, and you wanted the keys, right?
And so those kinds of red flags around the transaction, and he didn't say anything. And so there was a huge scheme that he was close enough to that he got involved in.
He was also a CPA. So you have a CPA and a lawyer, you have two credentials. So there's, this idea that you have the public good in mind when you have two credentials, you know financial statements, and you know the law. you're like the police now, right? And his client was engaged in this mortgage fraud and he was wrapped into it, and when the properties went into foreclosure 10 years later, the government started to look into these transactions. And sometimes the person that has the deepest pockets, or the person that is the most successful on the outside is the person that gets taken down. And so that was him.
BH: And that story really resonated with me because it showed how people who we interact with everyday colleagues who we think highly of and who are credentialed can really end up in these scenarios, sometimes inadvertently. And one of the ideas you have in your book is the idea of, of the accidental perpetrator. And to me, that was so interesting, because, as you said before, we think of fraudsters as the bad guys, but sometimes it is accidental. So can you help us understand that difference?
KRP: So all perpetrators are not the same. In the book I talked about there's three types of perpetrators: the intentional perpetrator, an accidental perpetrator, and a righteous perpetrator. Now movies are made of the intentional perpetrators, the Rita Crundwells of the world. Intentional perpetrators, if you turn on any true crime show right now, the main character is probably an intentional perpetrator. We may not identify with that person, because they're not con artists, but they know the inner workings of an organization and use those weaknesses to their benefit.
These other two categories — accidental, and righteous — that's what we need to think about because we could fall victim to becoming one of those. And so an accidental perpetrator is this team player, your boss asked you to do something, you might want to question it, but you don't. Because you trust your boss, you trust the organization, you want to keep the stock price up, because maybe you're going to be acquired, maybe you're going public, you don't want to be that person that delivers that bad news. So you just go along with it. And you might book a transaction, hope that you don't get caught. But you know that it may be wrong, but maybe it's not illegal. I'll fix it later. it'll fix itself next quarter. That's the accidental perpetrator. And when those people have visited my class, my students are like terrified, because they can identify with how it happens. You’re first year, second year in the organization, your boss asked you to do something, are you really gonna push back? Or you're the breadwinner in your family? This, you need the job, you need the insurance, are you really gonna push back. and we can identify with that.
BH: And there are people who think that they're doing something good for the company, because leadership is directing them this way.
KRP: Absolutely. And you trust your leadership, right? you trust the tone at the top.
Now, the righteous perpetrator is a person that has a certain power and privilege within an organization. And they use organizational resources to help someone outside of the organization. So say for instance, your friend has a startup, and it's doing okay, and they need a loan, you have the power to get those loan documents through and maybe sort of increase something just a little bit on that document just to make them get through the process. It’s not a big deal. Everyone trust you, you can get them through. That's the righteous perpetrator.
Interesting about the righteous perpetrators — they typically don't receive any personal gain from what they're doing. There's a big difference between somebody that does something to help someone else and receives nothing to the person that's the intentional perpetrator. And so that's the message I really want it to, to talk about in the book that everyone is not the Bernard Madoffs of the world.
I'll give you another example in Edward Snowden. Now a lot of people, it seems like some people call him a whistleblower. Some people call him a perpetrator. He's the quintessential righteous perpetrator. He thought he was doing good. some people thought that he was giving information that we all needed to know. And there are very credible people that thought he did the right thing. But he broke the law. So how can you do that? That's the righteous perpetrator.
BH: I was so fascinated that for the characteristics of personalities for intentional perpetrators, you highlighted narcissism, but also you made a point of speaking about how the qualities of the intentional perpetrator are often the things that make them strong colleagues and successful professionals. They are charismatic, they're ambitious, they're risk takers. And I was wondering if you could help unpack that a little bit in terms of understanding those personality traits of the intentional perpetrator.
KRP: One thing I wanted to make sure is everything exists on a spectrum. When we think about the intentional perpetrator, they are grandiose narcissists, and they do have those traits. Because you think about any great CEO, is all of the things that a grandiose narcissist is, like you said, a risk taker, not scared of much, the person that will do it and ask for forgiveness later, you know, that attitude. And those are things that we tend to admire.
So when you compare the other categories of vulnerable narcissist is more like the, accidental perpetrator. So they're a lot more quiet, but they have some level of narcissism, but not the same as a grandiose narcissist. it's interesting because you do have to be just a little crazy to survive in an organization or lead large groups of people and force them to be innovative and force them to take risks. There's a little bit of arrogance, overconfidence and narcissism that you need to even survive in corporate America.
BH: Right. And for somebody like Rita Crundwell, who mentioned who was this comptroller in a small town, how would you define her? And maybe for our audience who isn't familiar with that story, could you share that?
KRP: Rita Crundwell was the city comptroller of Dixon, Illinois, and she held that role for a little over 20 years. And during that time period, she embezzled $53.7 million. 53.7 — that’s a lot of money for one person to take from a simple embezzlement scheme.That's Rita-
BH: The city budget was only-
KRP: The city's budget was between $6 and $8 million annually. She took everything, but she made it work. You can stretch money, get the bills paid that you have to pay and then I guess take the rest. But she made it work for years.
And so Rita Cromwell is an intentional perpetrator. She knew the system inside and out. She knew that no one else looked at the numbers. She knew what she said is what everyone did. She had absolute control, she opened the mail, she reviewed everything, she inputted the financial information to the system, she did it all. So there were no internal controls. So it made it really easy. If she decided to steal $5,000 or steal $500,000, who's going to know?
And one of the things I like to say is, this is why accounting is so important for everyone to understand, because a lot of times fraud is sitting right there in the financial statements. If you read it all, read the notes. There are little red flags in them that just sometimes don't make sense and don't add up. And so if you understand it just a little bit, you can start asking questions that would have alerted someone like a Rita that you were on to them.
BH: And I think your book does a great job of illustrating how accounting, which I think to people outside of the profession, probably appears to be a very linear and highly defined area actually has a lot of gray zone. And so that there's so many things that are open to subjectivity and open to interpretation and things that might be unethical but not illegal or, or things that are illegal, but look okay, on paper. How do you teach your students to understand those gray areas?
KRP: That's a really great question. One of the things that accounting is built on generally accepted accounting principles, generally accepted auditing standards, with those operative phrases being "generally accepted," so that screams subjectivity. And so what I try to tell my students is, it's not if a questionable situation presents itself, it's when, and how are you going to respond? Because there's so much judgment that goes into the decisions that executives, business managers, analysts, staff, accountants, or just entry level employees are privy to. It's going to happen to you, what are you going to do?
I like to say to my students, "Who you're going to go to jail for? Take out a piece of paper, write it down, who are you going to jail for?" And they look at me, like, Is she crazy? But think about it, who is that going to be? If it's no one, then you really have to think about how you're going to respond when someone asked you to do something, make a transaction, turn a blind eye, what are you going to say?
So one of the stories in the book I talked about — and I tried to use my personal life, because I feel like if it's happening to me, it's happening to other people, too — I talked about I purchased a handbag from this designer in California. And the bag came on a Tuesday, I was super excited. And then on Wednesday, another bag came. I only bought one. And so I said, wow, they sent me two bags, but I only pay for one. What kind of inventory system do they have is what I started thinking. So I was on the phone with one of my friends. And she said to me, "You have two bags? Are you gonna sell it? You should sell it on eBay, and you could pocket the money." I said, "Are you insane? Like, no, I'm not doing that." And she's like, "But you could?" And I said, "Yeah, I could. But that will make me sort of like an accidental perpetrator." Right?
I mean, so I started thinking, if I kept this purse, sold it, and then they called me and said, "Oh, our inventory system showed that we had mistakenly sent you another purse? Could you send it back?" Am I gonna lie and say, "Oh, I don't have one?" What am I gonna say, "I sold it?" Like, I don't want to be in this situation, right? But it was interesting how many people I asked that said, "I'd keep. It wasn't your fault. You didn't ask for it. I'd keep it and sell it." I was shocked. Like, okay, you all need to come to my graduate forensic accounting class, because this is not the answer that you're supposed to be saying to me. But those kinds of things happen, which would be fraud, right?
BH: And maybe a great example, to have something that is unethical, but not maybe technically illegal,
KRP: Right, but definitely unethical. Like, I don't want to be I'm gonna have to explain that. You know?
BH: Do you as a professor of forensic accounting, and somebody who teaches and lectures and share stories of fraud, do you feel like you are under a particular microscope and people might be tested?
KRP: I will tell you this. After all the interviews, it changes you. I mean, you think about people in a different way. You think about your actions in a very different way. Maybe, Kelly Pope 20 years ago might have done something different with the bag, maybe just saying, hypothetically speaking. But now after sitting with people, because when you start hearing their stories, you almost can see yourself in what they're going through.
Like you can see yourself sitting in a meeting with your CEO, and your CFO and your team. And they're saying, "Just make these numbers work. I don't care how just get it done. You're the greatest employee, you're the greatest team member for doing that." And that feels good, that praise feels good. And then when you can see yourself in those stories. You're like, whoa, I don't want to ever go to jail. So let me think about things a little bit differently. It affects you.
I got a grant from my university. And I had the opportunity to hire some vendors to work on this grant. And I knew a friend of mine that worked in the event planning space. So I asked her, "Hey, do you want to apply and I'm sure that you have the perfect skills. Would you like this role?" Seems fine, right? There's nothing wrong. I'm like, I know she's good. Let me give this opportunity to her.
Well, then one day I met a person in the book named Kayla Ravello, and Kayla Ravello was a corporate attorney. She worked on Wall Street. Some of her clients Citibank, Visa, MasterCard, like she was a big-time lawyer. And what she did was she had power. She had privilege in her organization. And she had the opportunity to hire some vendors. And they were had a lot of photocopying for the litigation cases that that were coming up. And she said to her husband, "Hey, you need a job. You could go set up a printing business, and you could become one of our vendors." I thought about myself like, is that any different from me saying, "Hey, my friend, you have these skills? Why don't you become a vendor?" Now, on the surface, they're the same. What happened is Kayla's husband started submitting fictitious invoices. And so then she found herself in the position of what do I tell my partners “I hiredmy husband?” Or do I tell my husband, “I'm not paying you.” And then my marriage is in shambles, right? So now she's in a situation. Now, that never happened with me but I could see the parallel. It makes you think, and I think that's why like storytelling, getting in the details, getting in the human side of it is important, because you see your own actions, and some of their stories.
BH: Let's jump to the other side of the ledger and talk about the victims, and you categorize them into innocent bystanders and organizational targets, can you talk about why that division was a structure that you wanted to present.
KRP: I wanted to break it into two components, because the innocent bystanders are just at the individual level, what we all experience. I flew today, and I have no idea the condition that the pilot was in. I assumed he was rested and happy. And so we are we put ourselves in vulnerable situations almost 24 hours a day. So I wanted to highlight the aspects of control that we don't have as innocent bystanders. Organizational targets, on the other hand, do have some level of control. A bank or a government entity, they're structures that we can put internal controls around that can protect organizations. But innocent bystanders are a lot more vulnerable. I wanted to make a distinction. If you're an innocent bystander, it's scary, because I mean, we assume that we drink water, it's fine. We assume the air we breathe this. There's just so much that we can't control. But the aspects that we can control, we should control. I wanted to make sure that they were distinct situations.
BH: And I appreciate it in your book, how you also focused on whistleblowers, which are such an important part of the equation, especially in terms of bringing a lot of these fraud scenarios to light. It was interesting to me that you focused on the negative perceptions of whistleblowers, which I thought it was fascinating, especially because in a lot of media, the whistleblower is the, the Erin Brockovich character who's celebrated for bringing-
KRP: Celebrate it at the end, at the end at some point, but there was a long journey for Erin right, right. But what I was thinking about whistleblowers, I did a TED talk a couple years back, and it was entitled “Why do we hate whistleblowers?” When you think about a whistleblower, the words that come to mind: snitch, rat, tattletale — things that are not good characteristics, but we need them.
In coming up with the categories for whistleblowers, I was hoping to try to change the narrative because that “snitch, rat, tattletale,” those characteristics are for vigilante whistleblowers. Now, on any given day, I could be a self-proclaimed vigilante whistleblower. If I see something wrong, I'm gonna say something, doesn't really have to do with me. But if I know it's wrong, I'm going to speak up. So that's a vigilante whistleblower.
But there are these other two categories that I want us to think about, because Kathy Swanson was the whistleblower for my documentary, and she is the person that blew the whistle on Rita Cromwall.
BH: The comptroller.
KRP: The city comptroller of Dixon, Illinois, and Kathy is an accidental whistleblower. What I mean by that is she wasn't suspicious of Rita. She was just doing her job, noticed some odd transactions and reported it by accident. She stumbled upon it. She had no reason to think Rita was doing anything wrong. That's an accidental whistleblower. They actually don't even identify as being a whistleblower. Now, Kathy was celebrated. She received awards. No one ever hated her. She never received a demotion. She never received death threats. She was never retaliated against — the things that you hear the negative things that happen to whistleblowers. So Kathy, in the accidental a whistleblower is a category that I want us to think about, because they're necessary too.
The noble whistleblower, they're sort of caught in the middle. Because imagine that they are part of a team, they noticed that their team members aren't doing something correct. And they speak up, they step outside of the team, they don't turn a blind eye to what they're seeing, and they report it. And when they do, people don't trust them. And so that category came from the interviews from Mary Willingham, she was a whistleblower from the UNC University of North Carolina academic fraud scandal. She spoke out against a very tight-knit collegiate athletic system, saying that students aren't taking real classes, and it was a big deal for a really long time. But when she took that step outside of the group, people attacked her. And so she's an example of a noble whistleblower. We need them too. But I wanted people to understand that all whistleblowers are not the same. Accidental, noble, vigilante — they whistleblow for different reasons. And their reception from the public is very different to
BH: So if you survey the landscape of all of the laws and policies and best practices within corporate and academic and nonprofit sectors, in terms of how they treat whistleblowers, what would you like to see enhanced or changed?
KRP: Well, I think one thing is important is to make sure internal whistleblowing policies work. A lot of companies will say, “Oh, we have a way to report.” But do we? Do people really understand it? Do we test it to make sure it really works? Do we follow up with it? Do we communicate it do we do, we let people know that we are an environment that we want to know, because we're sort of this environment that we only want good news, we want to be happy all the time, if you have something bad to say, I don't want to hear about it. We sorta operate that way. We sometimes operate our teams like we're family. And we don't want to step outside the family and say anything wrong, that messaging can be dangerous, when you have something to report. I think being self reflective of your organization to see what kind of tone that you're setting, I think is really important.
I had a just a different kind of whistleblower story. I was teaching my class at final exam time. And I decided to walk outside and get some water, I was going for four minutes. And when I left, everybody was working. When I came back, everybody was working. Exams over they come up to the desk, turn in their exam, I think it's fine.
I get a text message from a student, she comes by the office and said, "I want to tell you that when you left the room, this kid stood up and started getting answers from everybody in the class. He said, 'for number 16, I have C. Number 17, I have D. What do you have?' And there were a few people that started sharing answers." I'm thinking, oh, goodness, now I gotta deal with this.
But what bothered me, I had 40 students, only one person reported it.I always thought that I created this environment. Where Oh, yeah, Professor Pope, she's nice. I feel I felt like I could talk to her. Like, she'd be understanding. They didn't say anything. I was angry, because why did only one person speak up? So I sent an email, and I said, "Hypothetically speaking, what if I told you that when I left the room, there was a camera that was recording all of your actions? And I'm going to review the footage. Is there anything I need to know before I look at the tape?" Then text messages, emails, "I didn't see anything." "I didn't do anything." "I just kept my mouth closed."
I think we need to test our systems to make sure that people really would tell you something, if they saw something. Hack your own system, ask your colleagues, if you were actually going to steal money from here, what would you do?
Now you got to create a safe space. You can't use that against them in some performance review six months later, but you have to learn, so you got to test your system to make sure people would actually come forward because again, I say hypothetically speaking, I didn't want to lie to them — they probably didn't see the hypothetically speaking part but I underlined it — but I wanted them to know like, is there something I should know before I see what I'm gonna see? And then — only then when they thought I was looking — did they say something.
BH: That is, I suppose the ultimate exam for a course on fraud. Do the students cheat on the exam?
KRP: Well, this was my managerial accounting class. So, and they know what I teach so I teach financial accounting and managerial accounting, but I teach a graduate forensic accounting class. So in all of my classes, I'm talking about ethics and fraud. they get it, even though they're not formally in that class. This is the one class that you never would want to cheat in, right? Because you can't cheat and I don't do anything about it. When when professors do that, they, they minimize the student that told, and you want to, you want to embrace that student, the person that was brave enough to come to you and say, "This person was doing something, she stepped outside, and she said, something I wouldn't have known otherwise." I knew I had to handle it. I knew I had to do something. But if I did nothing, and said, "Oh, thanks for telling me that it just went on about my business," then-
BH: It's a disservice to her.
KRP: Absolutely. And the other students? Absolutely.
BH: Your book has lots of very practical stories and red flags for people to think about. And you talk as well in the book about how you watch out for red flags. And you've even been concerned about being defrauded as well and came close to that. And you're an expert, and you almost ended up in this this fraud scenario. As we wrap up here, maybe you could share that story. And also just share with our audience, if they had one or two things to think about in terms of looking out for red flags. What should they keep in mind?
KRP: It's seems funny, but it's actually, pretty serious, because I come up with a list of my personal red flags. Because when you're dealing with people so frequently, you're trusting and the question is, should you be? I think you're talking about some of the red flags... Here's a funny one, if you have a Hotmail account, I'm thinking a cyber fraud, because who has a Hotmail account? Like, if you don't have a Gmail account, I'm just sort of suspicious, not to say it's fraud, but I'm just sort of looking at you like, "Okay, what's the problem here?" If you don't have a picture on LinkedIn? Why not? What are you hiding, when you really start thinking about them, you're just sort of like, it’s worth a second look.
If you are a working professional, and you still have your mail go into your parents house, that's odd to me. Like why? Or, as silly as it may sound, when you think about some of the phishing emails that happen, they may have a tone that's off, like, you might know that you're your boss is somewhat aggressive. And then they see this super friendly message from a Hotmail account. That should be a red flag to you. Because you know, that person is not that friendly. And why did they have a Hotmail account? So as silly as some of that may be, you have to think about when your guard is down, that's when fraud can happen.
And the story, I mean, I've been close to being defraud, many times, and it's when I'm not thinking.
There's so many stories I include. I think you might be talking about the IRS. That's right. what happens a lot of right around this time, is a lot of tax scams, a lot of people calling you saying you have debt that you need to pay, you can handle this right now, if you give me your credit card number. what happened to me it was right around this time, when I had not filed my taxes yet. So could it be legitimate? Yeah, I hadn't filed. So someone says, "We're calling because we see that you have a debt of $7,500." I'll say like do I? Because 50 things are on my mind. And I said, "Well, I guess I could"... and as I kept listening, because I kept I thought 5 per cent of you thought it could be fraud. But 95 per cent me thought like this could be legit. And so I kept them on the phone because I thought if this is fraud, this would be really fun to do. So I kept him on the phone. And I started noticing things it sounded like a very, very loud noise in the background, like a huge call center, which is IRS typically doesn't sound like that. And the IRS rarely rarely, if ever calls you. You will rarely get an IRS call from a 847 which was an area code number in my area. And I'm like this is all weird, but it could be so let me just keep going and keep going. This was the first red flag. The second red flag was [they said], "If you don't pay this debt today, the police are coming to arrest you within the next 15 to 20 minutes." Then I was like, "Okay, let's keep playing that I'll keep playing along with you." That's when I knew.
But people fall victim to this all the time. So when they asked my credit card number, like you can handle this right now, just give us your credit card number and it'll be all settled. That's when I was like, okay, I knew then, but at first I'm busy. You know, busy is not our friend. Because when you're busy, you're not thinking about all of these things that could be wrong. Like when you get a random email, you're not thinking that the name Michael is spelled wrong or that the .com looks off. Like you're not thinking about some of those things, because who's inspecting it that way?
BH: And I think a lot of people are susceptible to the threat of arrest and might be in precarious situations. And so it's easy to say that people are gullible, but it can also be scary for people. Sure,
KRP: I mean, urgency if I told you right, if you don't do this right now, if you don't give me $150 right now, someone's going to bust through that door and take you away in handcuffs. You might pull out your wallet and start saying okay, yeah, here’s your money. And you know, that can you can create that kind of fill in…maybe not, you're looking at me like no... but you get the point like people start getting nervous. I think our human nature is just to be trusting. And we don't feel comfortable saying you're lying. You know, you're lying. We don't feel comfortable saying that. So we trust and that's how you can get taken advantage of.
BH: And I think that really underscores maybe one of the key lessons from your book, which is understanding human nature, which is at the core of so much of this. Kelly Richmond Pope congratulations on the book. It's Fool Me Once Scam Stories and Secrets from the Trillion Dollar Fraud Industry. Thank you for being here at Rotman. If people want to find out more about you, Kelly, where can they find you?
KRP: They can find me on my website, KellyRichmondPope.com, on Instagram @KellyRPope, on... I don't tweet a lot though... but Twitter — we have to be there right? And that's all @KellyRPope.
BH: Fabulous. This has been Rotman Visiting Experts, backstage discussions with world-class thinkers and researchers from our acclaimed speaker series.
To find out more about our upcoming speakers and events visiting us here at Canada's leading business school please visit Rotman.utoronto.ca/events.
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