Fraud Magazine Online
Login |  Become a Member
 
Share |


Identifying Psychopathic Fraudsters

Interview with Dr. Robert D. Hare and Dr. Paul Babiak



July/August 2008

 
Not all psychopaths become fraudsters, but some fraudsters are psychopaths. A fraud examiner's job is to help deter fraud by discretely noticing those employees who might be exhibiting psychopathic tendencies. Psychologists Robert D. Hare, Ph.D., and Paul Babiak, Ph.D., experts in psychopath studies, explain how these aberrant characters can infect organizations and provide ways to deal with them. 

 
Sam strode into the lobby of Bacme Manufacturing. Impeccably dressed in a tailored suit, carrying a burnished leather briefcase, he smiled at the receptionist. "Hello. I'm Sam Smithson, here to see Mr. Tolliver for my second interview." "Yes, Mr. Smithson. Mr. Tolliver is ready to see you." Eyes turned as Sam walked up the stairs. 

 
"Sam! So good to see you!" "It's great to be here again, Mr. Tolliver!" During the national economic downturn, Bacme was suffering and needed a few "white knights." Sam had the requisite resume, leadership qualities, and enthusiastic spirit the company needed to boost morale and the bottom line as a vice president. 

 
Unfortunately, Mr. Tolliver didn't know that Sam was a textbook psychopath. Behind his smile and relaxed manner, he was dishonest, devious, and manipulative. He pretended to be an empathetic listener, but most of the time he had only one person on his mind. 

 
Within a year, Sam had ingratiated himself to staffers who could benefit him: top executives but also the "informal leaders" - middle managers and administrative assistants who got the real work done. Soon he was controlling vast areas of the company and began embezzling funds. By the time the corporation realized it was missing millions of dollars, smiling Sam, "the white knight," was on to the next corporation. 

 
Not all psychopaths become fraudsters, but some fraudsters are psychopaths. A fraud examiner's job is to help deter fraud by discretely noticing those employees who might be exhibiting psychopathic tendencies. 

 
Robert D. Hare, Ph.D. and Paul Babiak, Ph.D., authors of "Snakes in Suits: When Psychopaths Go to Work" (available in the ACFE Bookstore), have been studying psychopaths and their effects for years. Babiak is an industrial and organizational psychologist and president of HRBackOffice, an executive coaching and consulting firm specializing in management development and succession planning (www.HRBackOffice.com). Hare, the creator of the standard tool for diagnosing psychopathy and author of "Without Conscience: The Disturbing World of the Psychopaths Among us," is an emeritus professor of psychology at the University of British Columbia and president of Darkstone Research Group, a forensic research and consulting firm (www.hare.org). 

 
"Psychopaths invest energy in creating and maintaining a facade that facilitates their careers," said Hare. "During the hiring process they convince decision makers of their unique talents and abilities - albeit based upon lies and distortion. 

 
"Executives are always looking for the best and brightest ... but there are not that many from which to choose," Hare said. "As time goes on, the psychopath will continue to manage this positive reputation for as long as it is useful to him or her. ... Executives view themselves as good judges of people, and few want to be told that they were wrong about something as basic as honesty and integrity. This aspect of human nature works in favor of the psychopath." 

 
Hare will be a keynote speaker at the 19th Annual ACFE Fraud Conference & Exhibition in Boston in July. He spoke to Fraud Magazine from his home in Vancouver, B.C., and Babiak from his home in Dutchess County, N.Y. 

 
Do you believe that most fraudsters are psychopaths or do they just exhibit anti-social behavior? 

 
Hare: There are many reasons why people engage in fraudulent behavior, some related to economic necessity, cultural, social, and peer pressures, special circumstances, opportunities, and so forth. Many of these people are small-time criminals just "doing their job," and their victims are relatively few in number. Much more problematic are fraudsters whose activities reflect a virulent mix of personality traits and behaviors including grandiosity; sense of entitlement; a propensity to lie, deceive, cheat, and manipulate; a lack of empathy and remorse; an inability to develop deep emotional and social connections with others; and the view that others are merely resources to be exploited - callously and without regret. These white-collar psychopaths often are heavily involved in obscenely lucrative scams of every sort. They lead lavish lifestyles while their victims lose their life savings, their dignity, and their health - a financial death penalty as one law enforcement officer put it. The public and the courts have difficulty in appreciating the enormity of the damage done by these social predators, and because their crimes often do not involve direct physical violence, they may receive comparatively light fines and sentences, and early parole. The money obtained from their depredations is seldom recovered, leaving the victims and the public bewildered and convinced that crime certainly does pay when committed by those whose charm, egocentricity, and deception disguise a flabby conscience. 

 
You've designed the "Psychopathy Checklist - Revised" (PCL-R), the standard tool for diagnosing psychopathy. Can you briefly describe its methodology and how it differs from other forms of measurement? 

 
Hare: The PCL-R is a 20-item clinical construct rating scale for the assessment of psychopathy in forensic populations. Qualified professionals use interview and detailed file/collateral information to score each item on 3-point scales (0, 1, 2) according to the extent to which an individual matches explicit criteria for the item. The resulting total scores can vary from 0 to 40 and reflect the extent to which the individual matches the "prototypical psychopath." One derivative of the PCL-R, the Psychopathy Checklist: Screening Version (PCL: SV), often is used in community and civil psychiatric research on psychopathy. It has 12 items, with total scores that can vary from 0 to 24. The items in each instrument are grouped into the same four factors or dimensions, each of which contributes to the measurement of psychopathy. For example, the items in the PCL: SV dimensions are: Interpersonal (Superficial, Grandiose, Deceitful); Affective (Lacks remorse, Lacks empathy, Doesn't accept responsibility for own behavior); Lifestyle (Impulsive, Lacks goals, Irresponsibility); Antisocial (Poor behavioral controls, Adolescent antisocial behavior, Adult antisocial behavior). The PCL-R and the PCL: SV are strongly related to one another, both conceptually and empirically and have much the same psychometric, explanatory, and predictive properties. Because of their demonstrated reliability and validity, they are widely used in basic and applied research on psychopathy and for clinical and forensic evaluations. 

 
The personality disorder measured by the PCL-R is similar to antisocial personality disorder (ASPD), described in the American Psychiatric Association's DSM-IV. The difference is that the PCL-R places considerable emphasis on the interpersonal and affective traits associated with psychopathy, whereas ASPD is defined more by antisocial behaviors. As a result, ASPD fails to capture the traditional construct of psychopathy and is much more prevalent in community and forensic populations than is psychopathy. 

 
Self-report personality inventories also are used for the assessment of psychopathic traits and behaviors. The information provided by these instruments reflects the individual's self-understanding and evaluation, what he or she is willing to disclose to others, and impression management. It may be difficult to obtain accurate self-reports of affective experiences associated with psychopathic tendencies. Further, self-report measures of psychopathy are only moderately correlated with the PCL-R and its derivatives. Nonetheless, they provide useful information from the individual's perspective, and contribute to our understanding of the psychopathy construct, particularly in the general population. One derivative of the PCL-R is the B-Scan or Business Integrity Scan, which includes both a self-report version and a supervisor's rating version. We developed the scan out of our experiences with, and research on, the lack of integrity and honesty of corporate psychopaths. Although not a clinical measure of psychopathy, it is designed to tap into the behaviors, attitudes and judgments relevant to ethical business practices

 
You've written that many people, after reading or hearing you speak, begin wondering if their bosses and co-workers are psychopaths - or even themselves! I imagine all of us exhibit psychopathic traits at various times, but what are the prevailing characteristics that you believe a person must exhibit to actually be diagnosed as a psychopath? How do you distinguish a psychopath from a difficult person? 

 
Hare: Television constantly describes the symptoms associated with an endless list of diseases, some real, some contrived. The viewer may have one of the symptoms of disease X, say a sore throat, and worry that he or she has the disease. But this symptom is shared by scores of conditions other than disease X, and sometimes a sore throat is simply a sore throat. What people don't take into account is that a given disease or medical condition is defined and diagnosed by a set of symptoms, a syndrome, and that one or two of the defining symptoms may be of little diagnostic value. One symptom does not a disease make, nor does being impulsive, egocentric, irresponsible, and so forth make someone a psychopath; difficult, perhaps, but not psychopathic. 

 
Psychopathy is defined by having a heavy dose of the features that comprise the disorder. How heavy? Like blood pressure, the construct measured by the PCL-R and PCL: SV is dimensional. The threshold for "high blood pressure" or for a label of "hypertensive" is somewhat arbitrary, but typically falls in a range where there is increased risk to the individual's health. The threshold for "psychopathy" also is somewhat arbitrary, but generally is set rather high, at a level where the individual's manipulative, callous, egocentric, predatory, irresponsible, and remorseless behaviors begin to infringe upon the rights and safety of others. For example, researchers often adopt a PCL: SV score of 18 (out of 24) for "probable psychopathy," and a score of 13 for "possible psychopathy." To put this into context, the average PCL: SV score is less than 3 for samples from the general population, and around 13 for samples from forensic populations. Most of those in the general population receive a PCL: SV score of 0 or 1. So, even those who appear to exhibit a few psychopathic features would fall well below thresholds for possible or probable psychopathy. This does not mean that such individuals are saint-like; they could still be very "difficult" for reasons other than psychopathy. Their values, beliefs, or personal style may not be appealing to us, but they may be honest, have integrity, experience emotions at a real level, and contribute to the success of the organization. These "difficult" people also can make sincere efforts to moderate their attitudes and behaviors so as to fit more comfortably into the corporate culture or social norms of their work group. Psychopaths, on the other hand, lack integrity, are dishonest and manipulative, and do not experience deep-seated emotions. They may go through the motions of change in order to achieve their goals, but it will be little more than play-acting. Like Iago in Shakespeare's Othello, psychopaths can be "good" or "bad," depending on what is likely to work best at the time. 

 
What do psychopaths want? What are their motivations? 

 
Hare: They want many of the same basic things that the rest of us want, but, in addition, have an inordinate need for power, prestige, wealth, and so forth. They differ from most of us in terms of how much they "need," their sense of entitlement to whatever they want, and the means with which they are willing to achieve their ends. They also differ dramatically from others in the communal nature of their needs and goals. That is, the sense of altruism, concern for the welfare of family, friends, and society, and the social rules, expectations, and reciprocity that guide most people are irrelevant to psychopaths. They operate according to their own self-serving principle: look out for number 1, no matter what the cost to others, and without guilt or remorse. 

 
Do psychopaths feel emotions and respond to emotions in others? 

 
Hare: The emotional life of psychopaths lacks the range and depth found in most individuals. It often is described as shallow and barren, consisting mostly of "proto-emotions," somewhat primitive responses associated with their own needs and experiences. Their displays of anger, hostility, envy, and response to frustration are likely to be much more intense and genuine than their feelings of empathy, love, shame, and sorrow. While at times they may appear cold and unemotional, they are prone to dramatic, shallow, and short-lived displays of feeling. They are able to mimic emotions rather convincingly, but an astute observer may be left with the impression that they are play-acting and that little is going on below the surface. This, of course, raises an interesting question. If their own emotional life is relatively barren how are they so adept at "reading" and responding to the emotions of other people? The answer seems to be that they have learned that what others describe as a given emotional state is reflected in a distinct pattern of verbal cues and body language. Psychopaths are able to use this information to intuit an emotional state that they don't really understand. In this sense, they are like a color-blind person who "recognizes" color because of the context in which it occurs (the red light is at the top of the traffic signal) and therefore gives the appearance of color perception. However, no amount of training and practice will allow the color-blind person to really understand color or the psychopath to really understand the emotional life of others, except in a vague intellectual, inferential sense. To put it simply, they don't know how you feel, nor do they much care. 

 
You've written that some researchers have said that psychopaths "know the words but not the music." What does that mean? 

 
Hare: It means that psychopaths understand the denotative, dictionary meanings of words but do not fully appreciate their connotative, emotional meaning. Their language is only "word deep," lacking in emotional coloring. Saying "I love you" or "I'm truly sorry" has about as much emotional meaning as saying "have a nice day." This lack of emotional depth in language is part of their more general poverty of affect as described by clinicians and observed in neuroimaging studies. 

 
What are the differences between psychopaths, sociopaths, and those with narcissistic personality or histrionic personality disorders? 

 
Hare: The terms psychopathy and sociopathy refer to related but not identical conditions. Psychopaths have a pattern of personality traits and behaviors not readily understood in terms of social or environmental factors. They are described as without conscience and incapable of empathy, guilt, or loyalty to anyone but themselves. Sociopathy is not a formal psychiatric condition. It refers to a pattern of attitudes, values, and behaviors that is considered antisocial and criminal by society at large, but seen as normal or necessary by the subculture or social environment in which it developed. Sociopaths may have a well-developed conscience and a normal capacity for empathy, guilt, and loyalty, but their sense of right and wrong is based on the norms and expectations of their subculture or group. Many criminals might be described as sociopaths. Narcissistic and histrionic personality disorders are described in DSM-IV, and their differences from psychopathy are outlined in "Snakes in Suits." Briefly, narcissistic personality disorder involves an excessive need for admiration, a sense of superiority and entitlement, and a lack of empathy. It does not necessarily include the lifestyle and antisocial features of psychopathy, outlined earlier. Histrionic personality disorder is defined by excessive and overly dramatic emotionality, attention-seeking, and a strong need for approval. It lacks the lifestyle and antisocial features of psychopathy. 

 
Do we have research that indicates that a person is a psychopath because of genetics, the environment, or both? If it's partially environmental, what could happen to a person so he or she develops into a psychopath? 

 
Hare: All personality traits are the result of genetic-environmental interactions. Recent research in behavioral genetics indicates that callous-unemotional traits and antisocial tendencies, likely precursors to the dimensions of psychopathy described earlier, are highly heritable. There is no evidence that psychopathy can result solely from social or environmental influences. This doesn't mean that some people are destined to become psychopaths, only that the process of socialization is much more difficult for those with early indications of the precursors of the disorder. 

 
Do male and female psychopaths practice their deceptions in different ways? If so, how? 

 
Hare: There are many clinical accounts of female psychopaths but relatively little empirical research. The available evidence suggests that male and female psychopaths share similar interpersonal and affective features, including egocentricity, deceptiveness, shallow emotions, and lack of empathy. All will make maximum use of their physical attributes to deceive and manipulate others, but female psychopaths may be less prone than males to use overt, direct physical aggression to attain their ends. The term femme fatale comes to mind. 

 
What are some ways that companies can screen out psychopaths during the interview and background check processes? This has to be extremely hard because psychopaths exhibit all the right qualities (and fake the rest) when companies are vetting them for jobs. 

 
Babiak: Psychopaths make great first impressions and have extremely effective interviewing skills, so relying on employment interviews alone when making hiring decisions can lead an organization to make the wrong choice. The risk is increased by the use of untrained or inadequately trained interviewers who are unaware of the psychopath's skill at lying and deception, and therefore don't take the necessary extra steps to verify all information collected. 

 
Improving one's chances of detecting psychopathic lying during the employment process requires verification of all details presented (knowledge, experience, expertise), and exploring and challenging discrepancies. Psychopaths talk a good game on a surface level, and will use technical jargon and glib, superficial charm to convince the interviewer of their experience and expertise. As much as possible, rÈsumÈ data should be checked before the interview. Then, by using structured interviewing techniques and multiple interviewers from different functions and levels in the organization, inconsistencies can be explored further and details drilled down. 

 
It is critical that all interviewers get together to share their findings and impressions before an offer is made. During this important meeting, the discrepancies noted and possible deceptions will be uncovered. Relying on a group decision removes the psychopath's advantage in manipulating just one interviewer successfully. 

 
Can you talk briefly about the "three personalities" that are within all of us? 

 
Babiak: Deep down we all have a private experience of ourselves, our personality, which consists of our needs, values, emotions and so forth. This self-perception includes things we know about ourselves that we are comfortable sharing, other characteristics we wish to keep private, and even some parts that are unknown even to us. This is our inner or private personality. When we deal with others, though, we tend to limit the presentation of our personality to those things we like, are socially acceptable, and can positively influence those around us. This is our persona, or public self. We wear this mask in public. The third point of view of the personality is our reputation among those who know or interact with us; that is, our attributed personality. 

 
In a business world, where "perception is reality," this last view of our personality - our reputation - is the most important. It influences how others will treat us and how decisions are made about us, and can ultimately foster or derail our careers. Unfortunately, many people are unaware of or discount this view of themselves. Sometimes it is only upon receipt of hard data, often in the form of "360-degree" feedback given during training programs, that they learn how others really perceive them. 

 
The psychopath operates on the surface level, presenting a mask or persona that is in keeping with the expectations of the organization and its members. Typically, this mask is: "I am the ideal employee and leader." The psychopath invests considerable effort creating and managing this faÁade through impression management techniques. Those who have power and authority will be shown only this mask - that is, the faÁade of an employee who is honest, productive, caring, with leadership potential, and so forth - and will integrate it into their evaluation of the psychopath - in effect, the psychopath's reputation. Those who are of little value to the psychopath will not receive such careful impression management, and may come to see the psychopath for who he or she really is. Unfortunately, however, they are often in positions least likely to influence the thinking of those in power. 

 
In a nutshell, how do psychopaths judge the personalities of others? 

 
Babiak: Psychopaths often come across as good psychologists, but in reality they are just more observant of others and are motivated to take advantage of the traits, characteristics, and personal situations of those around them. Psychopaths use the same three-part personality model to build strong relationships with others. They initially present a charming, charismatic mask, persona, which is often quite likeable. When they want to deepen the relationship (because the target has something they want), they first convince the target that they truly like him or her (that is, like his or her own persona or outward self). Then, they convince the target that they are more similar than different in many ways (including at the deep psychological level). Thirdly, they convince the target that they fully understand and accept the target's own true, private, and inner personality (the one with all of its secrets), and, therefore, because of this acceptance, they can be trusted. Finally, they convince the target that they (the psychopaths) are the ideal friend, partner, coworker, and so forth; this forms the "psychopathic bond." This bond is quite seductive, as few people reach this level of psychological intimacy with others in the work environment. Once this bond is formed, it is very difficult for the target to see the truth about the psychopath as he or she continues to be manipulated. 

 
In business situations, do psychopaths target particular individuals? If so, what kinds of persons? 

 
Babiak: Psychopaths are always on the lookout for individuals of whom they can take advantage. We often correctly assume that they target those with high status and power in the organization, but they also identify those with subtle, informal power in the organization. For example, many secretaries control access to their principals whom a psychopath will want to influence. Middle-level managers control the flow of materials, information, and processes that might prove useful to a psychopath. Individual contributors in professional positions (for example, those in IT, finance, and auditing), despite the lack of authority over staff, have great amounts of influence over information and other resources useful to the corporate psychopath. Any person with perceived utility to the psychopath will be targeted. 

 
I know this is complex, but how are psychopaths able to manipulate people within an organization to be, as you call them, "pawns," and "patrons"? 

 
Babiak: This model evolved out of our observations of how the "psychopathic drama" unfolds. It captures the theatrical nature of the psychopaths' view of organizational life. Psychopaths see themselves as the writers, directors, and producers of the dramas that are their lives - on and off their jobs; other people only exist to fulfill the supporting roles required of them - the pawns, and patrons. 

 
Psychopaths form bonds with many people in the organization; that is, psychopathic bonds, not real ones. The psychopath views as pawns those who have the power, status, or access to desired resources, to be used until their utility is gone, and then dispensed with or even sacrificed. Patrons are those key power holders whom the psychopath relies upon for protection and defense when things get uncomfortable, much like the "mentors" or "godfathers" who exist in many large companies to assist high potentials negotiate their way through the political minefields to the top. 

 
In addition, there is the patsy - a former pawn or patron whose organizational power and influence has been effectively neutralized by the psychopath. Finally, there are the organizational police, those in control positions such as accounting, HR, IT, and security who are in the best position to unseat the psychopath, but who often are not listened to by those in power, and who have already been trapped in the psychopathic bond. The psychopath prefers to avoid the organizational police (they tend to have ethical and professional values which are anathema to the psychopath), but having one in his or her vest pocket can be invaluable. 

 
It makes sense that psychopaths would try to influence recognized top managers, but how do they manipulate and use "informal leaders," those who wield influence but might not be high on the organizational chart? 

 
Babiak: While formal power holders are credited with leading their organizations, it is often a group of informal leaders who gets things done on a day-to-day basis. Unfortunately, in many companies, these informal leaders are the unsung heroes - and feel as such. What better person to convince that they have value and a friend in high places, as the psychopath moves up, than these individuals? They are the perfect targets from the up-and-coming psychopath's point of view. 

 
How can a person avoid becoming ensnared in a one-sided relationship with a psychopath? 

 
Babiak: Knowledge certainly is power in this case. It is important to learn as much as one can about psychopaths - their traits and characteristics, and how they operate. Furthermore, one should learn more about oneself, particularly those things that would make one attractive to a psychopath. These can include power and control of resources (formal and informal), as well as any psychological or emotional weak spots or hot buttons that can be used to unduly influence you. Psychopaths don't operate in a social vacuum, and those with whom they have worked or interacted can be valuable sources of information. 

 
You've written that once psychopaths are within an organization, they revert to their natural three-phase behavior pattern - assessment, manipulation, and abandonment. Can you briefly describe those three steps? Can you also describe the ascension phase? 

 
Babiak: In society, psychopaths exhibit a fairly consistent pattern of behavior. They identify targets (assessment phase), use them (manipulation phase), and dispense with them when their utility is used up (abandonment phase). In organizations, the abandonment phase is difficult to manage, as the psychopath cannot just move on, in the physical sense. This can lead to confrontations with former pawns who now feel like patsies. But the psychopath has already prepared for this, having spread disparaging information about these individuals - that is, "poisoned the water" - among those in positions of power. Those who ultimately confront a corporate psychopath often come to find themselves on the chopping block. 

 
In some cases, psychopaths see opportunities to move up in the power hierarchies by unseating those who have mentored or protected them, their patrons, in the ultimate acts of betrayal. This form of ascension can be particularly rewarding to a psychopath who has played both the patron and other members of the organization. 

 
Are most corporate and organizational psychopaths loners or do they sometimes team up with other psychopaths to pull off fraud schemes? 

 
Babiak: Most of the individuals we have met have been "loners" in the sense of only thinking of themselves; however, they do surround themselves with supporters and followers to facilitate their activities. To the degree that the psychopath can get these naÔve supporters to believe that their actions are consistent with their own personal values, the game remains in play. 

 
Occasionally, two psychopaths may work as a team in the same organization, at least for short periods. Inevitably, there will be a falling out: two stars is one too many. In one case, two corporate psychopaths worked in the same company but were in different divisions and rarely interacted. Historically, there may have been instances of psychopaths working together. One wonders who was "more" psychopathic: Joseph Stalin or his henchman, Lavrentiy Beria, chief of the secret police. 

 
Have the Internet and other technological developments aided psychopaths? 

 
Hare: Immeasurably! The Internet and technology have given psychopaths and other predators access to a virtually unlimited pool of potential victims. They can promote phony stocks, circulate crooked investment schemes, siphon off bank accounts, commit identity theft, and so forth, all with little risk to themselves. They also can promote themselves by constructing fake or greatly embellished Web sites and credentials in order to lure unsuspecting victims. In a very real sense, the Internet and associated technology represent a paradise on earth for fraudsters, with even better things to come. 

 
The business world of the 1980s and 1990s went through startling changes after decades of relative stability in culture and procedures. And now we're in an economic slowdown or possible recession. Have these changes helped or hindered psychopaths in organizations? 

 
Babiak: While economic slowdowns can lead to layoffs and plant closings, there is still the need for seasoned, experienced leaders who have the wherewithal to meet the challenge of recovery and turnaround. These individuals are rare. What a perfect scenario for the psychopath to enter as the "solution," replete with the skills (faked), abilities (faked), and background (faked) necessary to take over and makes things right. 

 
There is also greater access to higher education in general than before, as well as questionable online degrees that can be bought and used by psychopaths to pad their rÈsumÈs. Losing one's job no longer bears the stigma - or provokes as much concern - as it once did; layoffs and plant closings have left many truly stellar executives with gaps in their employment histories. Economic conditions can be a convenient explanation for short tenures listed on the resume. While a psychopath would be expected to blame the former boss's personality or colleagues' underhandedness for losing his or her job, a really clever one can feign some sadness at having to leave "a great job at a great company" due to economic conditions. 

 
You've written that organizations have become more "psychopath friendly." What do you mean by that? 

 
Babiak: The change of organizational structures from large and bureaucratic to lean, mean, and flat has inadvertently made companies more attractive to psychopaths (fewer rules) and, at the same time, easier to negotiate (faster progression). There is more opportunity for a motivated psychopath to stand out amongst his or her peers, less hoops to jump through, and shorter distances to the top. Changes in work values among employees have also facilitated entry by psychopaths. Many companies, initially puzzled by the demands of "younger" workers for large sign-on bonuses and promotions at least every two years, are beginning to accept this as part of a new work style that needs to be accommodated in some way. A young psychopath would fit in quite nicely in this culture. 

 
You've written that you doubt that psychopathic individuals would be very successful in a highly structured traditional bureaucracy. Why is that? 

 
Babiak: Bureaucracies, by design, are rule-bound structures. They are the result of a stage of organizational development in which companies attempt to systematize their operations in pursuit of consistency, quality, and productivity. An unfortunate outcome also is that they can become quite boring, slow to respond, and intolerant of creativity and innovation. 

 
During the 1980s and 1990s, the speed required of businesses to maintain their positions, and perhaps grow market share, increased. This put a tremendous strain on organizational systems - the bureaucracy - as well as on employees and managers - the culture. The mantra became "do more, better, faster with less" - a difficult task, at best. In response to accelerated market demands, organizations began to jettison parts of their bureaucracy - policies and procedures - in the interest of speed. Entire levels of management were eliminated under the theory that communications would improve from top to bottom. Systems once thought to be helpful were eliminated or "reengineered" away. By eliminating those policies and procedures that could help uncover psychopathic behavior - formal performance appraisals are a good example - and systems that help prevent their hiring - structured employment practices - it became much easier for someone with psychopathic tendencies to slip in and look successful. 

 
Unfortunately, this is where the psychopath has an advantage; these new structures are always in a state of flux and never reach the "ideal" state. We call them "transitional organizations" because the transitioning never ends. This frustrates and confuses those who have grown accustomed to the stability that large organizations used to provide. Being a thrill seeker by nature, the psychopath relishes the chaos. On a practical level, a constantly changing work environment provides the psychopath an endless source of new coworkers to target and many opportunities to move from project to project when boredom sets in. 

 
Can you talk about how psychopathic fraudsters use affinity groups (religious, political, or social entities in which all members share common values or beliefs) to pull off their schemes? 

 
Hare: We refer to these schemes as affinity fraud. They rely on the fact that members of an affinity group typically are very trusting of others who profess to share their values, beliefs, and interests. Those who are most adept at perpetrating affinity fraud are psychopaths who gain entry into the group by developing an acquaintance with a member who then introduces the fraudster as "one of us." The result is a "fox in the henhouse," with predictable results. Religious groups, are particularly vulnerable; belief in the inherent goodness of others and uncritical acceptance of professions of faith are tailor-made for an enterprising psychopath. Sadly, even after being victimized, many members of a group will refuse to face the truth, continuing to believe that the scamster is basically good at heart or that there must be a reason why he or she took advantage of the group. Even sophisticated members of financial and business groups - such as investment clubs - often are no match for the charm and seduction of a good-looking, well-dressed, and apparently well-connected psychopath. A suspicious view of newcomers might help but is no guarantee of immunity to infiltration by someone intent on doing the group harm. Even organizations that by their very nature are extremely cynical and suspicious - such as intelligence agencies and criminal gangs - cannot protect themselves completely from those who misrepresent their credentials, connections, and intentions. 

 
Joseph Wells, the founder and chairman of the ACFE, has concentrated on teaching not just about fraudsters' actions but their psychological motivations and aberrations. How can a group like ours aid its members in spotting possible psychopaths and prevent them from transforming their behaviors into crimes? 

 
Babiak: Increasing the professional standards and training of fraud examiners is a good foundation. Knowledge about the nature of psychopaths and of the strategies and tactics they use is important. Even so, it can be very difficult to spot them without detailed information from a variety of sources about their behavior and manipulations especially if you are the one being targeted. It is also important for examiners to understand themselves and how their own personality traits and vulnerabilities may play into the hands of a psychopath. A confidential "hot line" could be made available to members who have suspicions and need coaching and advice on how to proceed. 

 
Are most psychopaths in organizations exposed or do they remain or go on to greater positions? 

 
Babiak: With one exception, all of the psychopaths that we have studied are still in positions of authority in their companies. In some cases, they have risen within the ranks, and in others, they have solid positions from which they continue to use their organizations for personal gain. The one psychopath we studied who was fired ended up leaving with a sizeable financial package and a company car. He was hired by a competitor at a significantly greater salary. Unfortunately, in their effort to rid themselves of problems and to avoid embarrassment in front of corporate or financial communities, some organizations will cover up their messes and even write favorable letters of recommendation thus facilitating psychopaths' devious journeys up corporate ladders. 

 
Since the publication of "Snakes in Suits," we have received an increased number of calls from executives, entrepreneurs, and principals who now suspect that someone on their staff - or even an equity partner - is a corporate psychopath. We see that awareness of the problem has increased, as has the willingness to take action to remove or otherwise deal with the problem person. 

 
How does a fraud examiner identify possible psychopaths after they're hired? I imagine it's a sensitive issue to put the psychopath label on anybody, but how should a fraud examiner proceed to prevent a possible fraud or should they even try? Is it ever possible to discern the potential for fraud in a suspected psychopath? 

 
Babiak: In business situations, it is rarely useful to label someone a psychopath; organizations can only respond to the overt behaviors of fraudsters and others. Suspecting that a client (or even a coworker) has psychopathic traits can help sensitize an examiner to search out and investigate subtle forms of lying and deceit. If the client is highly psychopathic, the odds are that some form of corporate misbehavior, perhaps fraud, is underway, but hidden from view. If inconsistencies and improprieties begin to surface, it is important that the examiner's focus remain on the facts of each case, as the psychopath will try to distract him or her through flattery, misdirection, questioning the examiner's competence or authority to investigate, and so forth. 

 
What steps lead to the confrontation of a psychopath and how is it carried out? Can a psychopath ever be rehabilitated? 

 
Hare: Like anyone suspected of corporate misbehavior or fraud, confrontation of a suspected psychopath should occur after all the facts have been obtained, verified, digested, and interpreted, and in accordance with corporate policies and due process. In addition, however, it is important to anticipate the potential reactions of the psychopath, which may include "plausible" indignation and denial, diffusion of blame and responsibility, appeals to a "higher" authority, verbal abuse, and threats of litigation. In such cases, it is essential to ensure that the case against the individual is factually and legally sound and to "stand one's ground." 

 
A somewhat different tactic sometimes employed by those accused of misbehavior is to admit it, claim that the behavior was out of character, and solemnly pledge to change. However, when dealing with a suspected psychopath such tactics should be treated with a healthy dose of skepticism. There is little evidence that psychopaths can be, or even believe that they should be, rehabilitated. Their behavior reflects a well-established, stable personality structure. Most people have some insight into the motivations for their own behavior, and will accept that changes need to be made in order to be a good corporate citizen. Unfortunately, psychopaths already are aware of their own motivations, see little wrong with them, and do not believe they need to change. However, if they think that "rehabilitation" can serve their own selfish, pragmatic ends, then they are quite capable of playing the game, portraying themselves as a "saved" or "redeemed" sinner. 

 
Dick Carozza is editor-in-chief of Fraud Magazine 
 
The Association of Certified Fraud Examiners assumes sole copyright of any article published on www.fraud-magazine.com or www.ACFE.com. ACFE follows a policy of exclusive publication. Permission of the publisher is required before an article can be copied or reproduced. Requests for reprinting an article in any form must be e-mailed to: FraudMagazine@ACFE.com. 

 

 

 

 

 

 

 

 




Click here to Login and leave a comment...

Reviews

 

 

 
©2014 Association of Certified Fraud Examiners
Privacy Policy | Advertise With Us
Association of Certified Fraud Examiners Global Headquarters
716 West Ave | Austin, TX 78701-2727 | USA | FraudMagazine@ACFE.com