Walking through the side door

A euphemism is an almost automatic and alternative method we use to phrase possibly negative things in a less harmful fashion. Fraudsters use euphemisms to rationalize their crimes. Fraud examiners can use them to elicit confessions or detect fraud in an organization. Here’s what you need to know to spot euphemisms and when fraudsters are using them to mask nefarious deeds.

You're one of the top executives at a U.S. multibillion-dollar corporation. Your stock has skyrocketed as your company has experienced massive growth. In the most recent quarter, the financial picture isn’t nearly as good as expected, and your stock is sure to plunge. The problem is somewhere in the details because you have this gut feeling that there’s a hidden error in the accounting records that will be discovered shortly after financial results are released. You’re so sure of the error that you authorize changes to accounting procedures, which lead to “adjustments” in the accounting records and the reporting of profits to shareholders.

This scenario, which is exactly what occurred at American telecommunications company MCI Communications, offers a great lesson in the power of euphemistic language. (See Why They Do It: Inside the Mind of the White-Collar Criminal, by Eugene Soltes, 2016.)

Does a clear definition for “adjustments” come to mind if you don’t have the MCI narrative? Take a look at these terms and see if you can define them:

• Alternative facts.
• Grease payment.
• Human capital surplus reduction.
• Creative accounting.
• Under the table.

These terms, including adjustments, are examples of euphemisms.