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Fraud Triangle Rationalization: A Real Stockbroker Example

A glitch, a Palm Trio, and the sentence Justin Paperny told himself. A real example of how fraud gets rationalized, one commission at a time. Part 4 of 30.

Justin Paperny

Founder White Collar Advice · Recently Published

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Rationalization is the story you tell yourself so a crime feels fair. Mine was that my partner owed me money, so the commissions I kept through an accounting glitch were mine to collect. A judge wants to hear that story in your own words.

The Palm Trio on the side of the road

A week after Kenny turned me down, a client called to buy 5,000 shares of Amazon. The commission was $5,000. My share was $1,250.

I had found a glitch in Bear's accounting system. I kept all $5,000. Two weeks later he sold, and I kept that commission too.

On the drive home from Century City to Studio City, I'd pull over, take out my Palm Trio and its little stylus, and work the numbers: what I'd taken that day against what Kenny would owe me if he paid me fairly. That's how I convinced myself it was okay.

I didn't think I was stealing. I thought I was collecting.

Judge Stephen Bough told Michael that when a defendant gives probation a full account of how he got there, that's "good advocacy."

For years, my full account was that Kenny owed me.

What to do this week

Write the sentence you told yourself, in the words you used at the time. Keep it for yourself.

Book a free call.

Questions people ask

What are common fraud rationalizations?

"I'll pay it back." "They owe me." "Everyone does it." "Nobody gets hurt." The exact words you used matter more than the category.

Should I tell probation how I rationalized my crime?

Talk with your lawyer first about what to put in writing. Judge Stephen Bough has said a full account of how you got there is good advocacy.

Related: Brenda Campbell booked personal charges as business expenses at an RV dealership. Before she knew her sentence, she stood in front of business students and explained how she talked herself into it: Federal embezzlement sentencing

Read next: Part 5: Afraid You'll Get Caught for Fraud at Work? What It Costs

Written by

Justin Paperny

Founder White Collar Advice