leadership in a fraudulent world: lessons learned
TRANSCRIPT
Leadership in a Fraudulent World
May 12, 2016
Program Agenda
I. Introduction
II. Leadership Characteristics
III. Fraud Diamond
IV. Case Studies
Frank RudewiczPartner, Marcum LLP
Education:
University of Connecticut School of Law, JD
Central Connecticut State University, BS, Industrial Technology
Certifications:
Private Investigator
Certified Protection Professional
Certified Anti-Money Laundering Specialist
Admitted to CT and Federal Bar
Leadership
Be a Leader
What’s the most important
quality of a leader?
The ability to create followers
Be a Leader
How do leaders get followers to do what they want them to do?
The Power of Presence
If there is any leadership posture
that disturbs a potential follower,
it’s aloofness.
Presence as Personal Concern
“The tragedy of leadership today is that many who are in great need, many who seek an attentive ear, a word of support, a firm hand, a tender smile or even a stuttering confession of an inability to do more, often find their leaders distant men and women, who do not want to burn their fingers.”
Henri Nouwen
Leadership Paradox
Those who want to be in charge of everyone, often find themselves unable to be close to anyone
Leaders without Followers
Angry
Stressed out
Too busy
Preoccupied with the “hard” skills
Narcissistic
Managing up
Sheltered
Unpracticed
Leadership is not . . .
Being in charge, being the CEO or a Managing Director is not the same as leading
Reaching the top, being first, or being the best is not the same as leading
Having the highest income is not the same as leading
Setting a strategic direction, or developing a great plan is not the same as leading
Leadership Fundamentals
Leadership is the ability to mobilize a group of followers toward a desired and common objective
Leadership requires the ability to motivate followers
A person will not follow unless they’re convinced that the leader “gets” them, will work for their interests, and will lead them in a direction that is good for them and those they care about
Be a Leader
What actions create great
personal relationships?
Treat Relationships as
Bank Accounts
What actions make deposits?
What actions make withdrawals?
Use the Platinum Rule
What’s wrong with the Golden Rule?
Treat others the way
they want to be treated
Deal with Incompetence
“A” Players hate to work with “D” players
Hold team to standards
Treat those who leave with respect
Give Praise
Timing
Own it and make it personal: “I think . . .”
Drop the “but”: don’t join praise with criticism
Remember “Platinum Rule”
Self-fulfilling Prophecies
People strive to live up to your expectations
Praise given in advance is predictive of future behavior
Praise the small to get the big
Constructive Criticism
Timing is everything
What is the purpose of criticism?
Is criticism about you or them?
Leadership
Six common traits in effective Leaders:
1. Ability to Bring About Change
2. Competence/Subject Matter Expert
3. Confidence
4. Excellent Persuasion Abilities
5. Honesty
6. Optimism/Can Do Attitude
Leadership Traits
In a Fraudulent World
The Origins of Fraud
The Fraud Triangle
Opportunity
Pressure
Rationalization
The Fire Triangle
Fuel
Heat
Oxygen
The Fraud Triangle
Opportunity is generally provided through weaknesses in internal controls:
o No separation of duties
o Little supervision and review
o Lack of management approval
o Few system controls
Pressure can be imposed due to:
o Personal financial problems
o Personal vices such as gambling, drugs, extensive debt, etc.
o Unrealistic deadlines and performance goals
Rationalization – justification for fraudulent activities:
o “I really need this money and I’ll put it back when I get my paycheck…”
o “I’d rather have the company on my back than the IRS…”
o “I just can’t afford to lose my home, car, everything…”
o “I need to make my numbers for this quarter…”
The Fraud Diamond
David Wolfe and Dana Hermanson
Incorporates the human element – CAPABILITY
“Opportunity opens the doorway to fraud, and incentive (pressure) and rationalization can draw a person toward it; but the person must have the capability to recognize the open doorway as an opportunity and to take advantage of it by walking through, not just once, but time and time again.”
Pressure
Opportunity
Rationalization
Capability
Fraud Diamond, cont’d
Six traits in the personality of the fraudster associated with the capability element:
1. Positioning
2. Intelligence and Creativity
3. Ego
4. Coercion
5. Stress
6. Deceit
Comparative Traits
1. Positioning - Ability to Effect Change
2. Intelligence and Creativity - Competence
3. Ego- Confidence
4. Coercion- Excellent Persuasion Abilities
5. Stress- Optimism/Can Do Attitude
6. Deceit- Honesty
MADISON RUTHERFORD
Emergence of the Laboratory Scandal
-Annie Dookhan
CLARK ROCKEFELLER
CLARK ROCKEFELLER
• http://www.youtube.com/watch?feature=player_embedded&v=SYx
0lAfC2Wo
http://www.youtube.com/watch?feature=player_detailpage&v=_-cn5k2Nur8
Contact Information
Contact Information
Frank E. Rudewicz
Partner
Marcum LLP
53 State Street, 38th Floor
Boston, MA 02109
617-226-0487
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