Have a "Most Trusted"? Watch Out!

Scams hide behind smiling faces.

"People who think they can spot investment scams can't because they're suckers for smiling faces," says the Council of Better Business Bureaus website. "They look professional and appear successful."

To be sure, fraud is prevalent. According to the Association of Certified Fraud Examiners (ACFE), U.S. organizations lose 5% of their annual revenues to fraud. Applied to the United States Gross Domestic Product, this 5% figure would translate to approximately $700 billion in fraud losses.

Small businesses suffer disproportionate fraud losses. The median loss suffered by organizations with fewer than 100 employees was almost $200,000 per scheme, and most involve the accounting department or upper management.

Research also shows that when fraud is perpetrated by employee on employer, it's typically carried out by the employee who is most trusted. The golden boy. Your closest confidante.

When it occurs in a single event, it's made possible, in part, with pressure, stress or emotion. A skilled fraudster finds a way to bring these elements to bear on the victim, usually the person who must provide approval, access or authorization. Or the fraudster waits patiently and strikes when outside forces rise up and conveniently apply pressure, stress or emotion.

In the case of investment scams, a la Bernie Madoff (United States) or Pacific Continental Securities (United Kingdom), it might be a hot stock tip that must be seized on right away. In the case of fraud in the workplace, it might be that you are under considerable time pressure and stress from unrelated matters, and the perpetrator presents you with the resolution to the problems that you have been having in your relationship with him/her. "I really want to get this resolved now. Do me a favor and just sign this. It's not perfect and I know it's deficient in these areas, but trust me. We'll work the rest out later."

In short, watch out for:

• "I'm insulted."
• High emotion.
• Territorialism.
• "Do we really need these formalities?"
• "Don't you trust me?"
• "Just let me handle it!"
• Unreasonable or irrational claims of "it can't be done that way."

Watch out when you feel yourself really needing, or wanting, to accommodate someone. Watch out when you feel yourself really wanting to make another person feel that you trust him/ her or feel that you approve of his/her efforts. Finally, watch out when you find yourself listening to the assurances of others rather than the voice inside your own head that's saying "this smells funny!"

Trust your gut instinct. If you feel pressure or uncertainty, back away!

Copyright © 2009 by D.L. Perkins, LLC. All rights reserved under International and Pan American Copyright Conventions. Reproduction, in any form, in whole or in part, is prohibited without written permission from an officer of D.L. Perkins, LLC. Issn. No. 1556-2026. Vol. 4, No. 6