Don’t Let Grief Sabotage Your Internal Fraud Investigation

Emotions can drive victims to act irrationally and make critical mistakes

Posted by Dawn Lomer in on November 28th, 2012

When a trusted employee turns out to be the perpetrator of a long-term workplace fraud scheme, it’s understandable for the employer to feel shocked and betrayed. And since most fraud schemes are, in fact, conducted by long-term, trusted employees, this is more often the case than not.

But when shock and disbelief give way to denial and then anger, emotions can spark action that the employer may later regret. The initial actions that an employer takes on discovering the evidence of internal fraud can have a dramatic impact on the entire investigation.

“Victims can be highly emotional,” says John Tonsick, CFE, CPA and Director of Forensic Auditing at Broadcom. “These emotions can drive them to behave irrationally and lead them to make critical mistakes.”

5 Stages of Grief

FREE Investigation Report Template

Prepare thorough, consistent investigation reports with our free report template.

Download Template
Tonsick compares the feelings an employer experiences on being betrayed by a trusted employee to the stages of grief experienced when a person loses a loved one. And he knows this from experience. Upon discovering that his previous co-worker, mentor and friend had embezzled two million dollars from clients, Tonsick had a strong emotional reaction.

“I felt like I had just been punched in the chest,” he says. “And I realized that what I was experiencing was exactly what my clients went through.” As Tonsick experienced the first stages of shock, denial and anger, he began to understand why his clients sometimes took irrational action before calling him to investigate.

Top 6 Errors

“You are shocked; you are hurt. You’re angry that this person betrayed your trust. Nothing feels like that,” says Tonsick. And that’s why, in a deeply emotional state, victims of fraud sometimes make critical errors of judgment. “They’re acting out of that anger, rage and shock. And it’s always a mistake.”

The most common errors victims make during this stage are:

  • Confronting the perpetrator prematurely
  • Doing nothing
  • Making deals with the perpetrator
  • Firing the perpetrator prematurely
  • Mishandling or overlooking critical evidence
  • Calling the police immediately

In order to avoid making one of these errors, employers need to realize that fraud is not something that only happens to other people. Awareness of the risk can help victims be more prepared and less shocked when it does happen.

“Raising awareness is the toughest thing that I have to do. I meet most of my clients for the first time when they think there’s trouble. The reason it happens to them is because they think it never will.”

Get Your People On Board

The most basic action every employer should take is to implement an anti-fraud program in the organization and the first step is to raise awareness. “Fraud awareness training should happen for everybody in the organization,” says Tonsick. “Everybody needs to know what the risk is; they need to understand the basics of how it happens, why it happens so they’re more attuned to it.”

Tap into your employees, advises Tonsick. “85 per cent of the people who come to work every day are trying to do the best job they possibly can,” he says. “They’ll work with you to minimize the fraud risk most of the time but they have to know you’re serious about it, and you have to tell them that. And then you have to tell them what to look for.”

And then if you do find fraud in your organization, take a deep breath, put your emotions aside and consider your next steps rationally before you make a mistake that will jeopardize the investigation.


Dawn Lomer
Dawn Lomer

Managing Editor

Dawn Lomer is the managing editor at i-Sight Software and a Certified Fraud Examiner (CFE). She writes about topics related to workplace investigations, ethics and compliance, data security and e-discovery, and hosts i-Sight webinars.