The Psychology of White Collar Criminals

Toby Groves is a fraudster turned researcher, having served time for mortgage fraud in income tax fraud committed while running Groves Funding Corporation. He was sentenced to two years in federal prison, and it was in prison that he began researching the psychology behind white collar criminals.

Earlier this year, Toby posted a five part article about his research and his findings.  You can read the series here: Part I, Part II, Part III, Part IV, Part V. Most interesting to me was that overwhelmingly, the men doing time in prison for financial crimes considered themselves ethical people, and they didn’t even consider the possibility of going to prison. (In 2008, I wrote that I didn’t think that extended prison sentences for white collar crimes would have a significant deterrent effect. Maybe I was right?)

Mr. Groves is currently working on a documentary called “Viral Ethics,” which is scheduled to be released in 2013. I’m looking forward to continued research and blog postings from him.

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5 Comments

  • James Ulvog says:
    12 July 2012

    Thanks for pointing out Mr. Groves research. Lots to think about. In particular, the idea that more and more rules may undercut the ability of a person to make ethical decisions needs more discussion.

    As I have gained more experience in looking at ethical failures, whether in context of my CPA work or reading from a distance, it gets more unsettling how easy it is to fall into illegal behavior.

    Perhaps a possible motivator is the idea that all of us are only one or two decisions away from jail or betraying our dearest friends.

  • Mitchell McConnell says:
    12 July 2012

    The article was interesting, but I am not 100% convinced. Just think about it. If everyone did the right thing, rules wouldn’t be necessary. Rules are put in place so that even someone who doesn’t instinctively know what to do can follow them. Also, rules provide a good check even for those who do always want to do the right thing.

    I am sympathetic to the idea of how someone can get trapped almost before they know it. But I believe a bigger problem is the “not wanting to know” or not wanting to “rock the boat” on the part of middle and upper management.

    If a truly open environment is not in place, or if people are punished (even just verbally) for bringing issues to management, they will simply stop bringing them up.

    Finally, people are scared because even if one *only* makes a modest salary, the prospect of having to make an ethical decision to (say) resign rather than continuing down the wrong path is substantial. I don’t know a way around this, as the evolutionary pressure to support oneself and more importantly, one’s family, is immense. I suspect that this latter motive is why most people get trapped.

  • jon says:
    13 July 2012

    The article might be biased, I disagree that Chinese think about context and American think about memorization. Anybody who knows Chinese education knows it’s the other way around. Chinese-American is not the same as Chinese. The first one gets american education, the second one chinese education. So the article has a flaw. Also I said it might be biased because it claims less regulation is better, we all know that not to be true, because when regulation is not followed or there are no criminal sanctions, just fines which are 10% of the criminal fraud profits it doesnt matter if there is more or less regulations. The problem is there are regulation, but due to the fact that americans dont like to criticize their leaders for fear of their careers, regulation is ignored. Then when it gets discovered the fines or sentences are very small.

  • Howard says:
    12 December 2013

    I am familiar with this case and I can tell you that it wasn’t quite as cut and dry as Toby made it sound. The ethics of this case were not solely on the basis of am I doing something wrong. The real ethics case here is how did Toby hurt the people around him and lay waste to the lively hood of his employees. He was not re-leaved he got caught as he stated in his NPR article. He actually accused those around him and tried to involve them in the courts even knowing they had no idea what he was doing.

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