Ponzi schemer Bernie Madoff is serving a 150-year sentence at a federal prison in Otisville, N.Y., about 75 miles from his former Upper East Side penthouse. 
 - Photo by thierry ehrmann via Flickr

Ponzi schemer Bernie Madoff is serving a 150-year sentence at a federal prison in Otisville, N.Y., about 75 miles from his former Upper East Side penthouse.

Photo by thierry ehrmann via Flickr

A Hall of Fame football player narrowly escapes a murder conviction, then stages an armed robbery. The head of a home and garden media empire engages in insider trading. A billionaire investor is found to have perpetuated the world’s biggest Ponzi scheme. Two TV actresses are among those accused of committing fraud to get undeserving children into good colleges.

Why would any successful person risk it all by committing a crime?

Last month, Andy Gabler, former president of the National Independent Automobile Dealers Association, was indicted on conspiracy and fraud charges. The feds say Gabler and an F&I manager at one of his Pennsylvania dealerships defrauded banks by falsifying credit applications.

Gabler is only the latest dealer or dealership staffer to be accused of fraud. The headlines dedicated to noncompliance continue to stack up in what was supposed to be a new era for transparency.

Why would any business owner gamble their livelihood to sell a few more contracts?

Watching “Lockup” on MSNBC years ago, Harvard business professor Eugene Soltes was fascinated by the show’s interviews with violent felons. And he found himself wondering what motivated white-collar criminals, who typically enjoy at least a middle-class lifestyle. They should be happy.

Soltes started writing to former bankers, investors, and executives serving time for fraud. His list included Bernie Madoff, Andrew Fastow of Enron, Tyco’s Dennis Kozlowski, Allen Stanford of Stanford Financial Group, and ImClone Systems’ Sam Waskal. He summarized his findings in “Why They Do It: Inside the Mind of the White-Collar Criminal” (PublicAffairs, 2016).

"You become consumed a little bit by your own arrogance, and you really think you can do anything."

Among the first respondents was Stephen Richards of Computer Associates. Richards was one of eight executives convicted of backdating signed sales contracts to inflate quarterly earnings. He told Soltes he was only doing what he thought was right for the company, and its owners and investors prospered from the doctored financial reports. There was no “theft.”

Believing that one’s crime is committed in the best interest of the company, and that it took real courage to pull off, was one of the three most common defenses Soltes documented. Others said they only planned to move money around for as long as it took to balance the books.

But Soltes also found that many of his sources really enjoyed committing fraud. They had special skills and hard-earned insights. They were drunk on power and wanted more. And they certainly didn’t want to lose any.

Kozlowski is one such example.

“When the CEO is in the room, directors — even independent directors — tend to want to try and please him. The board would give me anything I wanted. Anything. … With myself and others — even the board — you become consumed a little bit by your own arrogance, and you really think you can do anything,” Kozlowski wrote.

Success in any field requires a certain amount of intelligence. Reaching the heights of success typically requires high intelligence. Australian criminologist James Oleson set out to discover why high-IQ criminals commit crimes and summarized his findings in “Criminal Genius: A Portrait of High-IQ Offenders” (University of California Press, 2016).

Oleson asked 465 adults with an average IQ of 149 whether they had committed crimes of any severity and, if so, what motivated them to do so. The self-reported transgressions ranged from petty fraud to capital murder. Respondents said they felt isolated by their intelligence. They were often bullied and typically struggled to form social bonds, even in academia. They felt like outsiders and, ultimately, unbound by generally accepted standards for good behavior. So they created their own.

Whatever their motivation, “elites are just as likely to lie, cheat, and steal as anyone else,” Oleson writes, concluding the majority of those convicted — be they rich, poor, sharp, or dull — are “unlucky people whose real crime was getting caught.”

Author

Tariq Kamal
Tariq Kamal

Associate Publisher

Tariq Kamal is the associate publisher of Bobit Business Media's Dealer Group.

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Tariq Kamal is the associate publisher of Bobit Business Media's Dealer Group.

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