Point of Contact

“From what I’ve read, there’s no one exact trait or indicator that the psychologists can agree on — maybe they’ll find a gene for it someday, but I doubt it. But when people do commit fraud, they’re generally one of four types.” Paul paused and took another bite of rice.

Jack picked up another shrimp and plopped it into his mouth.

“A fraud expert named Allan characterized them as the bully, the egoist, the control freak, and the mouse. People who commit fraud either crave approval, demand control, are territorial, or want to keep things the way they’ve always been.”

“Where’s the mouse in that lineup?”

“The mouse is interesting. That’s the gal or guy who is quiet, doesn’t make any waves, and doesn’t draw any attention to themselves — except that they stand out as the perfect employee.”

“Perfect — as in too perfect?”

“Yeah. Extra-long hours, taking on extra projects, never complaining, never asking for a raise. Of course, all that means is that they’re trying to hide the bad stuff they’re doing.”

You never know about people. Ding’s words on the deck of the fast-attack boat rang in Jack’s head.

“So those are the kinds of people that commit fraud. I suppose their motivation is just greed?”

“Not necessarily. There’s an acronym — MICE. Have you heard of it?”

Only about a million times, Jack said to himself. “Remind me.”

“Money, ideology, coercion, and ego. So, yeah, sometimes it’s about money, but as often as not it’s those other motivating factors, and usually a combination of them.”

“I think I read somewhere that terrorists and traitors fall under the MICE paradigm.”

“That’s right.”

Jack shrugged. “Makes sense. If you’re committing fraud, it’s kind of like an act of terror or treason against the company’s management and stockholders.”

“I never thought of it that way. I suppose you’re right.”

“So how do you go about finding these fraudsters? I’d think if they were smart enough and motivated enough to cook the books, they’d be smart enough to cover their tracks.”

Paul offered a rare smile, then took another sip. The ice tinkled in his glass. “Oh, believe me, they try.”

“So what’s your secret weapon?”

“I have a bunch of them, but data analytics is my best one. In the old days I’d break open some dusty old ledger book and run my fingers down the columns. Now I let the software do all the work. I’ll give you one example — it’s really interesting.”

Paul pulled a mechanical pencil out of his pocket and snagged a napkin.

“Hey, wait a second, I have one of those.” Jack reached down and pulled up a pen he kept clipped to the inside of his pants pocket. “That’s a Zebra F-701.”

Paul grinned. “I didn’t know you had one, too.”

Jack clicked his. “Mine’s ink, not lead like yours.”

Paul held his Zebra between his two hands, admiring the iconic shape of the solid stainless-steel barrel. “I’ve been using Zebras for decades.”

“I started using these the day I graduated from college — my dad gave me a set of them. Told me my Zebra would never let me down.”

“Small world,” Paul said. He pulled the napkin closer. “Have you ever heard of Benford’s law?”

“No.”

“This is pretty cool stuff.” Paul stopped. “Wait, am I boring you?”

“No, it’s interesting. Really.”

Paul smiled, grateful for Jack’s white lie. “Benford was a physicist who began noticing a pattern in numbers. So one day he took a bunch of random figures — numbers he found in a magazine, the surface area of bodies of water, molecular weights — a whole series of uncorrelated data sets, and then he analyzed the numbers, and what he discovered is fascinating and, frankly, hard to explain.”

Paul sketched out a two-by-two graph, with percentages listed on the y-axis and numerical digits 1 through 9 on the x-axis. He plotted his graph out as he spoke.

“Turns out, no matter where you look in nature, there’s a uniform pattern in numbers. What Benford discovered was that the first digit of any number is going to be the number one about thirty percent of the time.” Paul marked an X at the intersection of thirty percent and 1.

“The number two will occur in the first position almost eighteen percent of the time, the number three about twelve-point-five percent, and so forth.” Paul filled in the rest of the graph. “The number nine will be the first number less than five percent of the time.”

“So… if you find patterns of numbers that don’t correspond to Benford’s law, you think you’ve found fraud?”

“If I find a break in the Benford’s law pattern, then I know it’s something worth looking into. But then again, there are lots of reasons why it can be broken. For example, if a company has a regular purchase of an item that costs $97.86, and if that’s the most purchased item on their books, well, that’s not going to conform to Benford, is it? There are many other patterns and incongruences my software can check for besides Benford, but you get the idea.”

“So I take it your Benford template hasn’t pulled up anything?”