Published on September 30th, 2015 by Alan L. Sklover
“No one will find me to have knowingly committed fraud.”
– Bernard Ebbers
(Inmate #56022-054, Oakdale
Federal Correctional Institution)
ACTUAL “CASE HISTORY”: Every two years, Hal had to certify to his employer, a large law firm, that he had completed the Continuing Legal Education (“CLE”) courses necessary to maintain his law license. He did so although he had been so busy he had not completed two of them. He figured he could make it up during his upcoming vacation. When he was asked to attend a meeting with the Managing Partner, he thought it was to discuss his anticipated promotion to partner status. Instead, he was told he had committed a very serious fraud by his CLE certification misstatement, and was therefore fired, with a recommendation that he report himself to the Attorney Disciplinary Board for possible license suspension or disbarment. Hal’s misstatement sure was a costly mistake!
Gilbert was a Marketing Director for a company that sold franchise opportunities for a new “healthy” fast-food chain. The marketing brochures highlighted how fast-growing the franchise was. In fact, it noted that 23 new stores had opened up in just the last 12 months! Months later, he was quite taken aback when he was named in a lawsuit by three franchise purchasers who had lost money on their franchise investment. Their lawsuit alleged that Gilbert had participated in a fraud. Why? Because while it was true that 23 new stores had opened up in the previous 12 months, it was also true – and not mentioned in the marketing materials – that 41 had gone bankrupt in that same period. A fairly costly omission, no?
Ariana was perplexed. Her offer letter stated that she would be awarded a 3% ownership interest in her employer “upon approval of the Board of Directors at their next meeting.” She had resigned her previous job for this very opportunity to become an owner of a company. After hearing nothing in six months, in exasperation, Ariana asked for a meeting with the company President, and a clear answer at the meeting. Sure enough, she got her clear answer: the Board had voted not to award her any stock ownership interest, without reason. It sure didn’t seem like they ever really intended to give her the ownership interest in the first place. She felt fooled and tricked; even defrauded. A costly lesson for her.
LESSON TO LEARN: What Hal did, what Gilbert failed to do, and what happened to Ariana were, in each instance, kinds of fraud that can happen at work. It could happen (1) to you, (2) by you, (3) by your employer, (4) against your employer, and (5) in any number of other ways. If you are not careful in your statements and actions, and mindful of those of others around you, you could be harmed by fraud at work. I hear about such situations often.
The word “fraud” sounds so negative, so scary, and so accusatory. It is all of those things, but at the same time “fraud” is a simple concept, and one you should try to “avoid like the plague” in light of its implications and possible consequences to you. Being accused of “fraud” – or similar words, like deception, misrepresentation, misleading, and dishonest – can ruin your reputation and end your career. Likewise, being the victim of fraud can be both costly and hurtful.
Four different aspects of today’s workplace each mandate that you understand, and avoid, any situation that could be characterized as “fraud”:
First, “zero tolerance.” We live in a very “zero tolerance world” when it comes to workplace allegations of improper behavior. Even “whispered” allegations against you can be devastating. If your colleagues, your employer or your customers come to believe, rightly or wrongly, that you have not been honest with them, it could well result in immediate dismissal. That can happen to any employee, even one with a signed, long-term contract.
Second, the internet. We live in a very information-rich world, in which accusations against you – even if you are not “found guilty” – can become known worldwide, follow you into your future, and be near-impossible to erase.
Third, increased competition. So many companies and organizations are under so much financial pressure these days that we are seeing many of them encouraging their employees to “bend the rules,” “stretch the truth,” and “cut corners” in any number of ways. An employee can easily get caught up in a fraudulent scheme hatched by others, and even blamed for it. And companies have to keep a keen eye out for others – including customers and vendors – from defrauding them.
Fourth, seemingly lowered integrity standards. The world, and that includes the world of work, seems at times to have recently suffered from “lowered standards” of honesty. Everyone seems a bit less confident that showing good faith will result in others showing good faith in return. When it comes to collecting what you have been promised and are due, it seems to be a bit of a less dependable world. And there seems to be more “fraudsters out there” than ever before.
In recent times, Volkswagen has been accused of fraud by deceiving environmental regulators as to the fuel efficiency of their diesel automobiles. General Motors has been accused of fraud by failing to tell auto safety regulators of over 100 deaths resulting from a defective ignition switch. Investors in mortgage-backed securities have collected billions in damages for being defrauded by mortgage processors. Surely, certain individuals were at fault, and certain others were not. If there is a problem where you work, will you be accused?
But, “forewarned is forearmed.” There is a lot you can do to protect yourself, your interests, your career, and your reputation, from fraud against you, your company, and your clients, and accusations that you engaged in fraud, as well.
No matter who is to blame, and who may be victimized, it is wise to be vigilant to the possible occurrence of such situations, and be cognizant of their telltale signs. Prevention is the name of the game in this context.
WHAT YOU CAN DO: Basically, there are three kinds of fraud, and all are sometimes seen at work. Learn to recognize them, and consider what you will do if you find fraud in your midst:
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