Oh My Fraud

A review of the 2026 Association of Certified Fraud Examiners’ Report to the Nations on occupational fraud.  


 

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Sources
Occupational Fraud 2026: A Report to the Nations [ACFE]
SEC Staff Accounting Bulletin: No. 99 – Materiality [SEC]

Creators and Guests

Host
Caleb Newquist
Writer l Content at @GustoHQ | Co-host @ohmyfraud | Founding editor @going_concern | Former @CCDedu prof | @JeffSymphony board member | Trying to pay attention.

What is Oh My Fraud?

"Oh My Fraud" is a podcast where the true crime is shocking, gruesome, heinous, but with way fewer dead bodies.

Hosted by Caleb Newquist, each episode explores fraud cases from petty swindles to corporate conspiracies, examining the people involved, their motives, methods, and how they spent the loot before it all came to a spectacular, inevitable end.

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Caleb Newquist: [00:00:00] According to the Association of Certified Fraud Examiners, one of the behavioral warning signs of occupational fraud is excessive internet browsing, which is troubling because I spent approximately four hours on the internet yesterday researching whether or not a raccoon could beat a goose in a fight, and I'm pretty sure the answer is yes. Although I did find a Reddit thread that made a very compelling argument for the goose. I don't know if that makes me a fraud suspect, but it definitely makes me a terrible employee.

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Caleb Newquist: [00:00:49] This is Oh My Fraud, a true crime podcast where bad things happen to be done by good people. I'm Caleb Newquist. How's it going? What's going on? Where are we? Where are you? Are you in the laundry room? Are you in the car? Are you on the tread? The tread. Be careful if you're on the tread. There's been. You know, accidents sometimes happen. Are you in the pickup line at school? That's a good one. Walking outside on a steamy fall day. God. It's been. It's like Denver. It's been so hot. And it's October. I that's all I can. That's that's that's my main, uh, complaint right now is how warm it's been. This is early October. By the time you hear this, it'll be late October, I guess. But, um, it's a little too warm for October. 80 degree days here in the high desert. Technically, Denver is not the high desert, but it's semi arid, apparently. But good God, this place is on track to be Phoenix pretty soon. Or at least, you know. However, we used to think about Phoenix. Now Phoenix is like hell on earth, basically. Anyway. And, you know, it kind of makes me think are like, are people going to just start melting on the street in Phoenix or like, or like, are they going to be driving in the car and it's going to be so hot like that. Their tires melt like right on the street. And then, you know, if they get out and they are they going to start melting? You know, they'll collapse first, but then they'll just liquefy, kind of like, uh, the T-1000 or whatever.

Caleb Newquist: [00:02:22] That's what that's, that's eventually what is going to happen to people in Phoenix. And then the EMTs are going to have to learn all these new life saving techniques. I don't know how they're going to not melt, but I don't know. But then they'll have to refreeze people or something. But is that even going to work? Like nothing's ever as good as when you refreeze it. It just doesn't have the same integrity, you know? It's always deformed, misshapen, taste different, loses something, you know? I don't know where I'm going. Uh, nowhere, obviously. Anyway, if you have questions, comments, or see a good fraud story, uh, for mention or even maybe an episode, email us at fraud@cpe.com and rate the show wherever you get podcasts. It helps us out, helps other people find the show. And who knows, maybe we'll read your comment on a future episode. All right. Okay, that's enough business. Time for some fraud. Okay. Party people or fraud? Party people. Uh, this episode is about the, uh, a fee report to the nations, right? Actually, let me be more precise. This is the a CFE. That's the Association for Certified Fraud Examiners, it is their occupational fraud. 2026 A report to the Nations. This is a biennial report. So that means it comes out every other year or every two years, whichever of those you prefer.

Caleb Newquist: [00:04:11] Greg Kite and I discussed the 2024 report that was episode 58. So as I like to say in this post, Greg era, if you're yearning for some Greg Kite and I know some of you are, then go back to that episode and listen again. And then you can listen to this one. And then you can, you know, see what you like better, see if you change your mind. But anyway, um, there's probably something worthwhile in there. I haven't listened to that one in a while, but, um, you know, it's probably, it probably holds up for the time anyway. This year's report, 2026, it came out in the spring. May I think? And yeah, we're just getting to it now, you know. No rush. Now is the right time. Okay, so here we go. And first things first, let's just cover some basics of this thing. So starting with this report, the definition of occupational fraud. Because this report only focuses on occupational fraud, they define it as, quote, the use of one's occupation for personal enrichment through the deliberate misuse or misapplication of the employing organizations, resources or assets. Okay. This definition comes from the footnote on page seven or the glossary on page 106. If you want to check either of those out for yourself. And I encourage you to do that because what if I'm lying? What if I'm defrauding you right this second? That's what a fraudster would do.

Caleb Newquist: [00:05:53] They'd assume that you wouldn't check it out. So that's where I got the definition. Okay, next, as far as the number of cases, the Acwf received over 10,000 total responses to their survey, of which 2402 were used for this report. The report is based only on those 2402 cases. Why did they throw out the other 7900 or so? I don't know. We have no idea. But you know, it didn't. You know, it's safe to assume they failed to meet some kind of criteria. Which speaking of criteria, there are four that are listed in the report. And I'll cover those right quick. Number one, the case must have involved occupational fraud, i.e. fraud committed by a person against the organization for which they work. Okay. Number two, the investigation must have occurred between January of 2024 and September of 2025. Three the investigation must have been completed. No open cases allowed. Okay. Number four, the respondent must have been reasonably sure the perpetrators, perpetrator or perpetrators was were identified. Okay. There's those again also listed in the report if you care to verify. But also there is a second layer of maybe obvious or less obvious things that are factoring in here. And so we'll cover those two. Just so you know, we're covering everything we're covering, getting close to covering everything. Let's say, okay, first of all, the fraud has to be detected, okay? They didn't count the frauds. They didn't find.

Caleb Newquist: [00:07:45] Okay, undiscovered frauds aren't any good. They aren't any good for anybody. Okay. They're not good for this report. They're not good for society. You know, they're not good for the people who don't know they're being defrauded. Second thing, a CFE has to investigate it. Which, sure. Okay. Not sure why a non CFE couldn't submit their case to this. But you know, those aren't showing up here, okay? If a fraud is handled by a non CFE, whether they're an internal auditor or an external auditor or a LA county detective, it isn't going to be in here. They're not CFE. Okay. Now, if they are CFE but they don't answer the survey, then obviously it's not in the report. And I'm sure there's more than a few CFE out there who ain't got time for this. So those cases aren't in here. And also, you were supposed to choose the single, your single largest case. So, you know, they acfi didn't want to waste. Don't waste their time. Where the perp is just swiping, you know, a couple of reams of paper every month. It's just not going to do it right. So what does all this mean as we kind of get our bearings here? It means that the reports of the nation's as good as it is, it leaves a lot of fraud on the table. Okay. And since we're on that topic, let's just acknowledge these limitations. Okay. The the amount of fraud that is quantified in this report approximately is $3.4 billion.

Caleb Newquist: [00:09:38] That immediately will tell you just how limited this survey is because it is a survey and the ACF estimates as a as a as a way to kind of extrapolate from this report, they estimate that worldwide fraud, occupational fraud, remember is about 5.5 trillion every year. Now again, that estimate is based on the assumption that organizations lose 5% of revenue to fraud. That's not a measured total. That's their best guess. But if that estimate is anywhere close to being accurate, the 3.4 billion documented by this survey in this report represents less than one tenth of 1% of annual worldwide losses. To say that that is a drop in the bucket is a Flagrant disrespect to drops. Okay, this is very small, very small. So despite all these limitations, this report to the nations, it is still a very large gathering of data points by a credible trade organization that has a good reputation. And besides, getting a complete picture of fraud is virtually impossible. So I think people who use this stuff, you know, they they take what they can get. Okay. All right. A few more numbers just to still kind of in the introduction here, as we said, 2402 cases, I covered 143 countries, 3.4 billion in losses. Right. 90% of the cases were asset misappropriation, 45% included corruption, 6% included financial statement fraud. Now, theoretically, a case could include all three of these. Could they not? They could.

Caleb Newquist: [00:11:42] There's even a Venn diagram on page 14 that shows this breakdown, where there's overlap. And that overlap is about 3% of cases. Okay. Asset misappropriation and corruption were both present in about a third of cases. Okay. So that's something tips accounted for 43% of the detection. Okay. So a fraud was discovered thanks to a tip in over 40% of the cases, 43%. That's three times greater than the next method of detection, which is internal audit. And these tips are collected via web based forms or whatever submitted through the web or by email. And those two collection methods are greater than by phone. So people aren't ringing up the, you know, the fraud hotline. The hotlines have gone online. That's what we're saying. Most of them, or lots of them, maybe not most of them, but lots of them. Anyway, we'll talk about detection more in a little bit, but for now, I'd like to focus on a fun part of this report, which is dun dun dun dun corruption. Now, as I was reading through this report, corruption just kind of kept jumping off the page at me. And, you know, maybe it's just the times we're living in or I don't know what it is, but corruption seems to be having a moment. It's very hot right now, you know, or maybe it's having a lot of moments. It's been hot for a while now. To be clear, when the ACF talks about corruption there, including four different categories conflicts of interests, bribery, illegal gratuities, and economic extortion.

Caleb Newquist: [00:13:39] Okay, so we're just not talking your run of the mill bribes, you know, the, uh, the the sack of money, the the sack with the dollar sign on it. It's more than just that. Okay. Now, on page ten, it notes that in the first report, which goes back to 1996, 10% of the cases involve corruption. In 2026, 45% involve corruption. Part of the reason that the increase is so significant is that the report to the nations in 1996 was actually only a report to the nation. That is, the United States. That was the only country that was surveyed in 96. In 26. The cases are coming from all over the world, 143 countries, as we said. And, you know, there are many countries where corruption is more common than it is in the United States. Okay. All right. So a couple things to note here that makes the report better, right? Has better coverage than it did 30 years ago. It's a richer source of data, gives us maybe a better idea of how widespread corruption is. But it also, you know, we, we, we didn't have a good sense of where corruption really was in 1996 anyway, because it was only one country. And we, you know, how they were counting it then versus how they're counting it now. You know, we don't really have that information. We don't really have a good way of knowing this.

Caleb Newquist: [00:15:15] Okay. But in the current report in the United States and Canada, corruption was present in one third of the cases. And so for, You know, corruption to be present in 10% of the cases in 1996 in the United States, to one third of the cases in U.S. and Canada. That's not nothing. I'd argue that that is definitely something. Now, there's a couple other things going on here. Sarbanes-oxley maybe had something to do with this in the 2002 report. Corruption was present in about 13% of cases in 2004. It was present in about 30% of cases. Sarbanes-oxley, as you may or may not know, was signed into law in the summer of 2002. Okay. The report again, the report to the nations. There were no non-U.S. cases until 2010. So those two things are at play here. And to the extent, again, that we understand how much corruption was actually going on in 96, it was probably more than we know. And Sarbanes-Oxley probably didn't cause more corruption, although I'm sure people have opinions about that. But those are bad opinions anyway. It probably did make things more visible. And as we said, now that we're now that the report has gone into other countries, we have a better picture of global corruption. Now, as I mentioned, what's maybe surprising, maybe not, is that corruption is even more common in other parts of the world than in the US and Canada. Now, for example, cases from Western Europe, corruption was cited in 43% of those cases.

Caleb Newquist: [00:17:16] But you go to like Latin America, Asia Pacific, which includes like Southeast Asia, Australia, East Asia, South Asia. Those were all in excess of 60%. So corruption plays a big role no matter what's happening. Also, when you look at the departments where or if you look at the high risk departments for occupational fraud, corruption is a factor in is is one of the most common factors. Okay. So and even in accounting, of course. So in the accounting department, the report says that 35% of the frauds cited corruption, 30% were billing and 27% were check in payments. Okay. Now let's assume that for these cases, more than one type of fraud could be selected. As far as we know, that's that is the case. And a fraud can have multiple elements, of course. But the fact that corruption is the most common thread throughout these cases. Is very interesting. Now, if you listen to our episode with David Sirota from earlier this year, you won't be surprised by this. Corruption, especially these days, is a feature of not just our political system, but the economic system. Right? And again, let's not, you know, think too hard about this. But it is corruption is just it's kind of everywhere in a way that maybe we underappreciate. Okay. And it's even more widespread in other parts of the world. So I just threw a lot at you around corruption.

Caleb Newquist: [00:19:04] But if there's two things you want to remember, it's these number one, corruption was cited in 45% of all the cases in the Acf's report. And for the US and Canada, it was cited in one third of cases. Cool. Cool. All right, moving on to detection. How is fraud discovered? According to this report to the nation's. Most of the time it's a tip. I mentioned that and probably through some kind of web based hotline. But I think we've come to expect this, right? These days, people who see something firsthand, there is usually a way for them to say something, right? The see something, say something that goes back to nine over 11, right? That kind of sounds how things are supposed to work. If you do see something, you should say something. And so there are ways for people to say something. Now, while that's all kind of standard, there are some kind of more weird and fun things that the report has that I will just touch on now. Okay. First 4% of the cases were detected by accident. In other words, dumb luck. And I guess I would say that the role of luck is pretty underrated and just about everything. So I think 4% maybe is kind of low. Think about it. How much luck is there involved in each of these employees reporting the fraud? Or if internal audit is reporting? The fraud management review is the third highest internal audit is the second highest or second most common.

Caleb Newquist: [00:21:00] And I'm willing to bet that in those cases, luck, i.e. by accident, played a non-significant role in most cases. But they don't call them an accident. It's not like, oh no, that wasn't by accident. I just came across it in the normal course of my duties, but that's still kind of lucky, you know? Lucky stuff happens to people all the time in the course of an ordinary day. So sometimes, or maybe lots of times, luck is a factor. All right. Just wanted to get that out of the way. All right. Next finding that is kind of fun or weird or annoying. 2% are detected by an external auditor. So here we go. Greg Kyte's favorite external auditors are two percentage points less smart than fraudsters are dumb. That's what that means. Hopefully I got that right, Greg. But seriously, before the auditors melt down here, we will first state again for the record that these audits, external audits. They are not specifically designed to find fraud. Right? That's what they will say. That's what they still say. That's what they have said. However, external auditors do have a responsibility to obtain reasonable assurance that the financial statements as a whole are free from material misstatement, whether caused by fraud or error. That's their primary responsibility. So the question that raises is this, which is in the course of their duties, how often do external auditors come across material misstatements in the financial statements? And in those cases that they do come across material misstatements.

Caleb Newquist: [00:22:59] How often are those material misstatements caused by fraud? Are they or are they not responsible for calling attention to those instances? Right. I mean, this is the this is the this is what is the the paradox. I hope that's the right word. That's the paradox of all this. It's like, well, we don't design these audits to find fraud, but it is our job to obtain reasonable assurance that the financial statements are free from from material misstatement, whether caused by error or fraud. I don't know, spend some time with that and you're going to wear yourself out. But I guess here's the other thing that is that is. A factor. You could argue, a person could argue that any fraud is material, right? Materiality. If you want to get into the semantics of, you know, auditing, you know, materiality means that something is important enough that a reasonable investor would make a different decision. Okay. Within this context. So for example, if there's a small fraud going on in the accounts payable department, but it's minuscule in comparison to the total assets on the balance sheet, how many quote unquote reasonable investors would be like, what the hell is going on? I want my money back. The answer is probably greater than zero. So isn't that material? I mean, if you if you want to go by the rule book, the Securities and Exchange Commission goes back to almost 30 years.

Caleb Newquist: [00:24:45] It's it's staff accounting bulletin 99. If you want to look it up, that says, then they can't ignore it. They can't immediately dismiss it. If that's the case, you can't you can't go by the the pure number alone. I've linked to Saab 99 in the in the show notes. If you taste the. In case you want to refresh. That's a little too bureaucratic for you. Don't worry. We're moving on. All right. 2% are detected by surveillance and monitoring. Now, a couple of things here. How is this not part of management review? That's my first question. Is it monitoring part of review. I guess I suppose if it's a non manager doing the monitoring. But I also find it odd that more and more companies are kind of tracking their employees activity more closely. You know, mouse movements, badge scans, billable hours, but they, they don't bother monitoring when people are stealing or not stealing. Seems dumb. Okay. Uh, final thing, I'll just mention, uh, 1% of fraud cases in this report were detected by confession. And, um, I am looking forward to the day when confessions are tied with external audits in fraud detection. That'll be a good day. I'm excited for that. Next thing we'll touch on is prevention. Okay. How do we prevent fraud or how do companies try to prevent fraud? Because if they're in this report, they failed to do that, did they not? Yes they did.

Caleb Newquist: [00:26:32] Now, one thing I love about these reports is, you know, they're they're designed to get your attention. And there is the probably the best example or one of the best examples is on page 39. And that is that it's a statement that the mere presence of an anti-fraud control reduces the fraud loss by 37%. And you might say, wow, you know, it's, it's good to know that just having a control does something. And sure. Smaller losses are great, but I think lots of people would say that any loss from fraud is bad. In other words, if a loss occurs, the control didn't prevent the fraud. It didn't stop it from happening. So having something in place will help. Cool. But the fact that a fraud still occurs means that something's not working or it's not working that well. I don't know, maybe I'm just asking for too much. You know, anti-fraud controls to expect them to just stop it from happening. Call me an idealist, you know, collusion. I know people are shouting collusion at the at the at the at my at the sound of my voice. You might be shouting collusion. Yeah. We will mention that. We'll get to that. Okay. All right. The other thing that comes up in this report quite a bit is training. Okay. Training helps mitigate fraud and not fancy schmancy training where you learn about Benford's law or regression analysis and all that shit. No, we're just talking about fraud awareness training.

Caleb Newquist: [00:28:23] Now, I don't know about you, but when I hear fraud awareness training, I take that to mean as where you're in a class and the instructor gets up and says, hey, there's this thing where people steal from the company. And if you're unsure, stealing is bad. It's against the law and it's happening all over the place right this very second. I know, can you believe it? And that's the class that when someone says fraud awareness training, that's what I think of. But an actual fraud awareness training has a bit more to it than that awareness includes things like defining fraud, learning how to recognize it, how it hurts people and organizations, and how to report it if you see it. You know, still basic stuff. But if you don't tell the employees of your company all about that stuff, there's no guarantee that they'll know fraud when they see it and know what to do if they do. Right. We just mentioned that slogan we've all heard. If you see something, say something. The funny thing about that is it assumes you know what you're seeing and you know who to say it to. Okay, that came out of September 11th, right? Terrorism. And so if you see a guy with a brush cut wearing fatigues, loading a box truck with a ton of fertilizer, then, you know, you probably call the cops. But fraud, unfortunately, does not work that way.

Caleb Newquist: [00:30:05] Fraud is committed by dorks in frumpy business, casual clothes or fast talking deal makers, or the pastor of a megachurch. Now, some people know that's how fraud works. But do most people know? Probably not. And again, it should probably be said simply having training won't eliminate fraud. It'll catch it faster. It'll reduce the damage, but it won't stop it dead in its tracks. Not even close. All right. Victims. Should we move on to victims? Uh, let's. Let's do some victim blaming. Just kidding. We're not. We we don't really blame victims. Most of the time, the vast, vast majority of the time. All right. When it comes to victim organizations in the ACF report, nobody gets left out. Private companies, public companies, non-profits, governments, big, small, medium, whatever. Everybody's represented. Okay. However, what I don't particularly care for in this report is how it classifies small business or small organizations. Not all businesses. Sorry. But this report, it classifies anything as small if it has fewer than 100 employees. Now that's a problem because the vast majority of businesses have fewer than 100 employees. In the US, for example, it's like 98% of businesses have fewer than 100 employees. And so this report is kind of treating your local coffee shop with a handful of nerds working there, like a small manufacturer with a few dozen engineers and a small back office. They're, you know, they're treating those things as the same, but they're not really the same at all.

Caleb Newquist: [00:32:01] So, you know, that's a little misleading. I don't know that. I know that sounds bad, but I it just misrepresents business size in a way that isn't super helpful. You know, it's actually much worse when it comes to what constitutes a small business in terms of revenue. The smallest bucket of revenue is less than $50 million in annual revenue. And $50 million is a lot. I want a business that makes $50 million a year. This podcast does not make $50 million a year. I'm I'm I would settle for 5 million. It doesn't make that either. Okay. On page 44 of the report, you see charts that show the gap between what big businesses do and what small businesses do. And I think some of these are unintentionally hilarious. Okay. First one I'll mention is that the one that shows that 57% of businesses with fewer than 100 employees have a code of conduct. Okay. So what that means is 43% of small businesses do not have a code of conduct. Now, I'm willing to bet that the smallest of organizations are pulling this number way, way down. Right. A five person dentist office doesn't have a code of conduct, probably doesn't have a code of conduct, but a 50 person dentist office almost certainly does. And I would be willing to bet that the same is true for virtually every type of business with five employees. And it has a peer company that has 50.

Caleb Newquist: [00:33:41] All right, here's another one. 25% of companies, 1 in 4 with more than 100 employees do not have an anti-fraud policy. But. 95% of them do have a code of conduct, so they must just think that the code of conduct covers anti-fraud stuff. And just they just called it good. They are not explicitly saying, yeah, don't do the fraud. Just kind of weird. Look, I'd love to victim blame all day, but we have other stuff to get to. So the last thing I'll just note about this section is that in one third of the cases, a lack of internal controls was the primary weakness at the organization where the fraud occurred. Okay. They just didn't exist. Didn't have them. One third seems like too much. Seems like way too much. All right, what's next? Oh, how about perpetrators? The people doing the fraud. This is a fun one. We'll start with the obvious thing that is, in general, frauds that are committed by owners, executives, people in positions of power and influence. They are doing the greatest damage. And it's not even close. The report found that the median loss for an occupational fraud committed by a male owner executive is $500,000. That's more than three times greater than frauds committed by their male manager counterparts, and nearly ten times greater than ones committed by male employees in the aggregate. Small frauds they obviously add up, but a single, experienced senior executive can do vastly more damage with their fraud than one or even a few employees.

Caleb Newquist: [00:35:26] Also, the olds perps over 60 years of age. Their median loss is 850,000. 51 to 60. It's only 210,000. You know, sometimes you get close to retirement and you just gotta. Gotta make some moves, I guess. Anyway, here's the observation from the report, which is, quote, while fraud committed by older individuals tends to be more costly, occupational fraud most frequently originates from mid-career employees. 70% of cases, in fact, where the perps were between ages 31 and 50. All right. So so what that means is there's a couple of key risks that I guess all organizations have to be aware of. And the first is because fraud is higher amongst mid-career people, you have to have these countermeasures that would be implemented, you know, just for statistical reasons. You would have to put countermeasures in place for those those people in your organization. The second risk is that for the fraud to be significant to the point where it isn't just monetary loss, It's you know, monetary loss is significant, of course, but Reputationally social capital credibility when an owner or executive level perp commits the fraud, those things are at risk, too. Like if you're an AP clerk at a company and you shovel money into a phony company created by, you know, making phony invoices and billing your employer when you get caught, it's highly unlikely that scores of customers or vendors are going to take their business elsewhere.

Caleb Newquist: [00:37:16] Right? But if you're the CEO of a business or an executive director of a nonprofit, and you commit the fraud and people find out there's, you know, the chance that there's going to be splashy headlines are greater. And that also increases the chance that people are going to question how they engage with your organization. And they might want to sever ties. This is doubly worse for nonprofits because they rely on donations. And if fraud of any kind committed by anyone shows up. Donors are far more likely to find a different place to bestow their money. Besides owners and executives, you've got the other usual suspects in fraud accounting people, operations people. Salespeople. Why? Why those? And the answer is access. Access. Access. It's kind of like, you know, the rule of real estate is location, location, location, or whatever that expression is. You know, it's in in fraud, it's access. Anyway, accounting has access to the books and records and the checkbook. Real or digital? Right. Operations has access to stuff, inventory supplies. You know, the goods. Remember Pappy Gate? Sure you do. If you don't, that's episode seven. Those guys, they worked in ops and then their sales. All right. Well, what is sales doing? Well, they're taking kickbacks. Bribes. They're trying to meet quotas, sales goals, sales. You know, they have they they need, by the nature of their job, they like to build close relationships with customers and vendors. And they're always under pressure to perform.

Caleb Newquist: [00:39:06] Like who's got more pressure than sales? Okay. Maybe executives, but sales is in a dead heat with accounting, because those two areas are the areas where management can kind of squeeze people and squeeze numbers to make them work. However, they need to work. What else? Oh, I know, conspiracy so hot right now. And we're not talking about QAnon, which we don't hear nearly as much about anymore, do we? What's that about? Any ideas? I don't know. Anyway, conspiracies or collusion as it's referred to here. And yes, I know they're technically different, but can we just roll with it, please? Okay. Um, nothing too surprising here. If you are familiar with the fraud averse, when collusion happens, the impact of the fraud is far greater in terms of losses. The report found that if there's one perp, the median loss is $55,000. If there's two perps, the median loss goes up to 125,000. And if there's three or more, the median loss is $324,000. So that's what's going on here. In short, multiple perps allow frauds to do more damage faster. Now, solo frauds are just as common as conspiracies. We just did an episode on James Hams in episode 120. Or you could go all the way back to episode three. Rita Crundwell. These people, they pulled off huge frauds on their own for a very long time. But then you can look at a case like Lernout and Hospi. That's episode 96.

Caleb Newquist: [00:40:51] You have a conspiracy with multiple people involved, and that allows the fraud to scale, making the damage much, much greater. Behavior. This is one of my favorite parts. Let's talk about behavior A perps behavior specifically. And before we get too deep into it, I just want to play a short game. Okay. Everyone has to play. Take a guess at how many times gambling is mentioned in the ACF reports of the nations. Go ahead. Oh, fine. I use clod to do a word count, and the entire report is about 25,000 words. So guess how many times gambling is mentioned? Go ahead. I'm waiting. Okay. It's zero. Not a single time. Addiction is mentioned. Addiction was present in 8% of cases. But obviously addiction is many things, including drugs and alcohol. Financial difficulties was present in 29% of cases. Living beyond means the number one behavior. Red flag behavior, 39% of cases. Gambling could roll up into those to any of those really, right. But the problem is there are plenty of people out there that have financial difficulties, for example, who don't piss away money like Charles Barkley. No offense, Chuck. Okay. What's also strange, and we've talked about this on the show before, is that some fraudsters don't exhibit any behavioral red flags. At least, you know, the people completing the survey, they didn't notice any. If you want to be, you know, precise about it, the 2026 report found that 16% of cases involved perps with no red flag behaviors.

Caleb Newquist: [00:43:04] Now, 16% doesn't sound like very much. But when you put it another way, we're talking about roughly 1 in 6 frauds that feature a perp with no behavioral red flags. That is frequent enough to me. I'm not sure what you all think, but, I mean, you know, if 1 in 6 frauds, if if no red flag behaviors are showing up in one of six frauds that shouldn't make anyone feel good. Now, if it was 1 in 4, that would make you feel worse. 1 in 8. Maybe you'd feel a little better. But I'm honestly not comfortable with anything above 10%, if I'm being honest. Like, even 1 in 11 is a little too high for my liking. I don't know. I guess I just don't like the idea of so many people sort of just sitting around out there. Only a little bit of bad luck, or 1 or 2 mistakes away from thinking fraud is their best option. You know what I mean? That's disturbing. That's a little disturbing. Or these people have just convinced themselves that they're a good person and they wouldn't do anything bad. But as regular listeners of the show know, we have had story after story after story of good people getting caught up in doing a bad thing. They just break bad As Pinkman said, you know, there's rarely a single moment where a person goes, yep, fraud's what I'm doing now. No. It's these small, seemingly innocuous events that eventually add up to a big fucking mess.

Caleb Newquist: [00:44:51] All right, enough of that. Here are some of the oh my fraud greatest hits when it comes to behavioral red flags. We've talked about these in many different episodes. If you if you're a long time listener, you've heard us mention these. The ACF report is a bit of a greatest hits report. So we'll go through these again. But if they're new to you, this is this is this is very exciting. Okay. First 11% of perps exhibited irritability, suspiciousness or defensiveness. And so what this means to me at least, is that literally every married person on earth is a fraud suspect. Fact. Okay. 6% of perps complained about inadequate pay. And I am definitely calling bullshit on this. It is far too low, especially in the United States where. I mean, I don't know how the report breaks it down. I don't think it does. But I would have to guess that complained about inadequate pay is probably in the 90s, 90% plus 4% of perps complained about lack of authority. And I just want to know who these losers are, these people who want to be in charge, but they're either too stupid to actually get the job, or too stupid to know that being in charge is for the birds. I immediately have a deep distrust of anyone who wants to be in charge. No offense to all the people who I've worked with over the years who are in charge, but these people, these people who want to be in charge, but they're not in charge, and they're so bent out of shape about not being in charge that they steal.

Caleb Newquist: [00:46:34] Yeah. Commit a crime. That'll show em. Moving on. 4% of perps social isolation was a behavioral red flag. So I guess this means lonely people commit fraud. Who knew? I guess fraud investigators should be keeping a closer eye on those incel forms, huh? Huh. Still, I thought part of the fun of committing fraud was that you got to spend all that money, all those ill gotten gains. You got to spend all that on your friends. Or if you don't have friends, you can buy some, buy some friends. There's there's friends for sale out there. I assure you. Okay. And finally, 2% exhibited the red flag behavior of excessive internet browsing. So literally, we're all suspects. Every last one of us. All right. If we've got crime. Got to have punishment, right? Right. Well, most of the time. For example, only 75% of the non owner perpetrators in these cases were terminated from their jobs. Now, call me a purist if you like, but if you're a non owner employee of a business or someone who answers to a board of directors like a CEO, and it's been determined that you have committed fraud and your company is the victim and you haven't had the good sense to get the hell out of there.

Caleb Newquist: [00:48:05] I just don't understand why the termination rate isn't like 90% plus. I'm sure there are good reasons, but I just need to hear them, you know? So if you know what those are, send them my way. But to be fair, respondents were able to select multiple options for this punishment question. For the survey. So even if someone was, let's say, put on probation that later could have resulted in a termination, right? It's like, oh, we put them on probation to find out what's going on and then terminate them later. And so that would show up in, in those responses, both of those things would show up. Other options for the punishment, uh, include, quote were no longer with the organization, which means, I guess, that they got out of there before the shit hit the fan. Or maybe they ghosted, you know, kind of like Jim Hamas, a k a Bismarck from episode 120. You know, I said it before, but I just love the image of him having that meeting, being confronted with evidence of his fraud. And then he just leaves and never, never comes back. Um, Nathan Mueller, his case. You go way back to episode four, and Greg and I interviewed him in episode 28. That's another one where he goes into a meeting. They they show him evidence of a fraud. Uh, ask him if he knows what's going on. And he excuses himself to go to the bathroom and he and he doesn't go back to the meeting.

Speaker 3: [00:49:38] Look, we can talk this over. No more talk. It is time for us to take you for a ride. Oh, no. Mind if I go to the bathroom first? I see no harm in that.

Speaker 4: [00:50:01] When he's done in there, I gotta go.

Caleb Newquist: [00:50:04] What I really love, though, is that 6% of the perpetrators. Their punishment included a written slash verbal warning. In other words, someone told him, hey, knock that shit off, Okay, just knock it off. And they put that in a memo or something. And then there's the 4% who got no punishment at all, which is. I don't even know what to think about that. You know, we can't know for sure how many perpetrators keep their jobs, but we do know that the number is greater than zero. And so, for example, what's even more. What's even more kind of astonishing is that only 52% of owner executives got terminated, which means 48% did not. They did not get thrown out of their business. And so it's like, you know, if you're an owner of a business, it's basically a coin flip. And then 12% of owners got no punishment at all. So if. And that reminds me of the case where we discussed Greg's workplace, where there was some chicanery going on. And the person responsible for that chicanery was an owner and that person was not fired. So some really, you know, kind of strange circumstances in the realm of punishment and what happens and what doesn't happen to people. Finally, I'll just mention that on page 75. It talks about civil litigation. Okay. So not surprising that civil litigation is something that would happen. You know, you sue the person who defrauded you get the money back. Right. However, in 13% of the civil cases, the result from that case was decided in favor of the perpetrator.

Caleb Newquist: [00:51:57] And I don't know what kind of comedy of errors has to occur to make that happen. I mean, maybe Lionel Hutz was representing all the defrauded companies in those cases too soon for another Simpsons reference, I don't know. I don't know what explains that, but that is hilarious to me, that the perpetrator would somehow prevail in a civil case. Maybe they just meant that they didn't have to pay anything. Maybe it wasn't a question of whether or not they actually committed the fraud. They're just like, hey, they're not responsible. It's like, but still, that just doesn't make any sense to me again. I'm sure someone at the ACF could explain the circumstances, but I think it's just kind of funnier to think about it and wonder. All right. The aftermath. Finally the aftermath. No, really, this is it. This is the last section. Um, kind of more astonishing facts from this report. And you know, last time Greg and I did this, the numbers were similar, but it just never, you know, ceases to amaze me what people do. And then aren't nothing, just nothing happens. Right. So In this year's report or the 2026 report, 46% of the cases were not referred to law enforcement, 46% in 35% of those cases that were not referred. It was because the company did not or the organization did not want bad press. And in 51% of the cases, the feeling was that the internal punishment was sufficient. So, you know, one way to think about it is that it's kind of bonkers, or at least it's, it's, it's crazy to me that so many companies would prefer to handle a fraud as a quote unquote, family matter.

Caleb Newquist: [00:53:53] In other words, you know, if Kendall Roy and a caterer drive into a pond and only the caterer drowns, then that's totally fine. Logan will clean things up from here. But the practical kind of downstream effect of all this, right? So again, 46% of these cases are referred to law enforcement at all. And at least statistically speaking, most of these perps lost their jobs in some kind of way. Right? They either left or were you know, they were fired, but again, weren't referred. The case wasn't referred to law enforcement. So you're talking somewhere in the range of 70, 80%. How likely of it, how likely is it that most of those people or all of those people just decide, oh, you know, we'll hang it up, call it a career, you know? You know, we we don't know. It's, you know, it's safe to assume that it's not all of them. And so what that means is a significant number of people who have committed fraud and are not being publicly held accountable are just out there walking around getting a different job, working somewhere else where they could commit fraud again. Okay. And if you remember, or if you remember, I don't know if we mentioned it specifically. We've cited many numbers, but 88% of the perpetrators have no previous record.

Caleb Newquist: [00:55:23] So how many of those people committed a fraud and then weren't held accountable in any public way, but then got a job and then committed another fraud, and they don't have a record. And the record shows that they don't have a record. Again, it's got to be greater than zero. So the only thing to really say about all that is not good. Really not good. Okay. So did we learn anything? Holy shit. If your answer is no, then go back. Listen to the whole thing again. And, you know, just try to pay attention this time. That's it for this episode. And remember, if your employer catches you committing fraud but doesn't call law enforcement, just do us all a favor and retire. If you have questions, comments, or suggestions for stories, drop me a line at oh my fraud at earmark cpe.com. This episode of Oh My Fraud was written by Zach Frank and me, Caleb Newquist. Oh my fraud is created, produced and hosted by me, Caleb Newquist. Zach Frank is my co producer, audio engineer and music supervisor. Laura Hobbs designed our logo rate review and subscribe to the show wherever you listen to podcasts. If you listen to earmark, you can earn CPE for listening. Isn't that fun? You get all that and you can just get some CPE credit. Yeah. You're welcome. That's what I mean to say. You're welcome. Join us next time for more average swindlers and scams from stories that will make you say, oh, my fraud!