White collar criminals try to justify their actions to themselves, experts say

A hospice society dedicated to dying patients and a hockey club trying to send teenage players on a European tour are just two of a number of Okanagan organizations hit by fraud in the past couple of years.

Fraud experts say there are usually three elements in play when white collar criminals deceive the innocent: financial pressure, rationalization and opportunity.

Those factors may be behind more than 1,200 incidents of fraud in Okanagan cities in 2017. The rate of fraud in some of the region's cities is nearly double the national average, according to Statistics Canada.

The "fraud triangle" described by American criminologist Donald Cressey is a starting point to explain these crimes, said forensic accountant Glen Jackson.

Someone is motivated to get more money by pressure to attain a certain lifestyle or feed an addiction and they convince themselves their action is justified. Then, they need the chance to act. 

Forensic accountant Marilyn Mellis gives the example of finding a $20 bill on a restaurant table. 

"I'm looking at that and I didn't come into the restaurant to steal $20. It just happens to be there. I'm there. The opportunity's been made available to me," she said. 

Pressure

Financial pressures can take many forms, but it's often related to the desire to live a lifestyle beyond one's means. 

In a case currently in civil court, a Kelowna community support agency, Access Human Resources, alleges former bookkeeper Carey Earl defrauded the company of nearly $1.8 million between 2005 and 2018.

In court documents, the company alleges Earl transferred money to her bank account and also those of her family members. Access Human Resources also alleges she used stolen money for a number of personal expenses, including buying  properties, vehicles for her family and even chipping in for her child's wedding.

Addiction — whether to drugs or gambling — is another factor.

The former executive director of the Central Okanagan Hospice Association, Susan Steen, has been charged with fraud and theft for allegedly stealing more than $100,000 using the association's credit card. Steen reportedly has a gambling addiction and is expected to appear in court on this charge later this month.

Steen was sentenced to jail in January after pleading guilty to stealing almost $6,000 from another hospice society, this time in Nanaimo, in a job she took after leaving the Okanagan. She was caught using the company credit card at a casino. 

Earlier this year, the Central Okanagan Hospice Association's office administrator Melanie Gray was sentenced to five months in jail for stealing nearly $70,000 from the organization.

Rationalization

Those who perpetrate fraud often rationalize their actions by creating elaborate excuses to justify their deeds. In some cases, they convince themselves they will eventually pay it back, said Mellis.

"Day after day you're saying 'Okay, I am changing the name on a cheque that belongs to my not-for-profit and I just did it the first time because I was short of rent', so [you] rationalized it," she said. 

"Each time they do it, it's a small rationalization. It's not a great big one. And it just adds up and adds up and adds up."

Opportunity

Forensic accountant Glen Jackson said eliminating the opportunity for fraud is the one aspect of the triangle that businesses can control.

"No opportunity, no fraud," said Jackson.

Company credit cards, for instance, should be a privilege  with strict oversight. 

"I refer to it as bookkeeping fraud, because really they're bookkeepers who understand the basic system and they use it to their advantage."

Sticky Fingers: Fraud in the Okanagan is a series that looks at  white-collar crime in B.C.'s Southern Interior. It's produced by Chris Walker and Christine Coulter and airs on CBC Radio One's Daybreak South from May 6-10.