Meet Nathan

In a time when large grocery chains were gaining popularity, Nathan Mueller's parents owned a small "mom and pop" shop in Le Sueur, Minnesota, just an hour south of Minneapolis. Like many small grocery stores, they struggled to stay competitive in the changing business landscape. Financial concerns became a constant stressor in the Mueller household, and this early environment shaped Nathan's view of work and money.

As a result, Nathan was determined to choose a profession that was both stable and financially rewarding, deciding that the ups and downs of entrepreneurship that he grew up around just weren't for him. When he took his first accounting class in high school, something just clicked, and Nathan knew he had found his calling.

He majored in accounting at a small college close to home. While his peers were busy going to parties and meeting new people, Nathan lived a quiet existence. His self-esteem took a hit, as often happens when you graduate as a big fish in a small pond, and he buried himself in his books, focusing on getting his degree as soon as possible.

Nathan's single-minded focus paid off when he earned his degree in just three and a half years, though he only managed to graduate with a C average. He resented the top firms that rejected him due to his low GPA, but he was able to secure a full-time job at the small accounting firm where he had interned during college. After two years, he was hired by ReliaStar Insurance, and maintained both jobs for over a decade.

They Call Me the Working Man

Nathan was an accountant through and through, even regarding his relationships through a financial lens. After getting the second job, he began to feel financially secure enough to propose to his college sweetheart. With two jobs and a fianc??, he started to feel stable in his accounting career, but that wasn't the end of the frustration and resentment.

Nathan noticed that people in his division were being promoted; people that he felt didn't deserve to advance. Part of his job was being able to see what other employees made, which, needless to say, didn't help with his frustration. His sense of self-worth continued to falter (despite not making an effort himself to climb the career ladder). Insecurities tend to be the downfall of us all.

In 2000, ReliaStar was purchased by ING Group, a banking and financial services corporation based in the Netherlands. The merger caused a sudden boom to Nathan's career when he became one of the company's experts on a new enterprise resource planning (ERP) system software called PeopleSoft.

All Access Pass

In his new position, Nathan learned of some aspects that were overlooked during the transition of the merger. About two years after the acquisition, he noticed that he and another coworker had the ability to approve checks over $250,000. This was an oversight by the higher-ups, as that amount was well beyond what his title allowed.

Let's stop for a moment. What would you do in Nathan's situation? Would you immediately tell your boss about the mistake? While his intentions at the time were not to defraud the company, chalking it up to being too busy to deal with a minor oversight, he still kept quiet while the lure of easy cash was right there, ready and waiting.

Adding to the temptation was another oversight: all of the colleagues in his department had access to each other's system login information. This was implemented to create a seamless workaround when someone was out of the office, but it also created an accountability issue if someone abused it. Now he could approve huge checks while also having access to the logins of the people that would take notice. This would have been a red flag, but Nathan was the only one aware of it at the time.

Sitting on Gold

To most, Nathan's life looked pretty great, but he still grappled with his idea of success. Shouldn't he be making more money? Shouldn't his house be bigger? There was also the issue of his credit card debts and unpaid student loans, both of which he was too ashamed to reveal to his wife. The loopholes were right there, and he was sitting on gold. He knew he had the power to write himself a winning lotto ticket and cover his tracks.

He didn't go through with it immediately. A few years went by before he actually pulled the trigger, the weight of his obsession with success finally driving him to take advantage of his position. His wife was pregnant, and his debts sat heavy on his shoulders, both the straws that broke the proverbial camel's back.

Breaking Bad

Nathan worked in ING's reinsurance division, so he and his team members were used to working with high dollar amounts. In fact, it wouldn't be uncommon for him to send out $50 million in a single workday. With high-dollar transactions come high-dollar write-offs, the perfect opportunity for Nathan to write his first fraudulent check.

Nathan knew that it was commonplace for a payment in the hundreds of thousands to be sent, yet no one in his department could identify where it came from. He used the overt oversight to his advantage, knowing full well that with no one looking closely, he could write off an incorrect amount. And that's exactly what he did.

Although Nathan was bringing home a hefty slice of bacon at $80,000 a year, debt continued to loom and squash his self-esteem. With an intense internal pressure and numerous opportunities to embezzle right at his fingertips, he took the plunge, writing his first fraudulent check for $1,100. When reconciling an item that was so much higher than that, he knew that no one would notice such a small amount of difference.

Nathan logged into the system as one of his co-workers, requesting that an $1,100 dollar check be sent to one of his credit card companies. He chose this particular credit card because it had a name similar to a legitimate company that they worked with (a common scheme among embezzlers). Nathan then mailed the check to his credit card company to pay his monthly bill.

Although he felt worried and a bit guilty, the attraction of easy money was just too hard to resist. Rationalizations came to the forefront of his mind. If he did get caught, would it really be worth it for a measly $1,100? Plus, what he was doing was for the good of his family, right? He didn't want his children to grow up with the same financial tension he did.

Just two weeks later, Nathan used the same embezzlement technique, this time applying $1,800 to his credit card balance. With a sound method in place, Nathan stole $88,000 over the course of just one summer.

He did have one scare. Nathan wrote a $4,500 check to his credit card that vanished. It hadn't posted to his account, nor had it cleared the company's bank account, and he feared the worst. Several weeks went by, and he was certain that this was the end for him. He expected to be questioned by his boss at any moment, plagued with worry and fear. In reality, a small oversight on his part delayed the payment process, and the check finally cleared. Nathan learned his lesson (for the time being), but the timing was pretty perfect. He was finally free of credit card and school loan debt.

Nathan was convinced that he was done with a life of fraud. Yes, he got away with stealing almost $100,000, but the fraud served its purpose, and the major burden of his student loan debt was behind him. He wasn't happy with the way he went about it, but he felt successful. He felt successful, that is, for as long as he could. Six Months Later...

Nathan was fraud-free for six months, and there was absolutely no suspicion about any of the money that he had stolen. He pondered on just how easy it had been to take the money, then another, more toxic thought came to mind: all the money he stole before went towards his debts. All that money, and he didn't even get to enjoy a single cent of it. That's when he started envisioning a new scheme.

The new scheme would involve creating his own company and writing checks to himself through the shell corporation. Nathan gave his "consulting" firm a similar name to one of the legitimate ING insurance brokers. Again, he took advantage of the company's disorganization. He logged into the company's system using the credentials of his co-workers and requested checks. This time, blinded by confidence, he upped the dollar amounts, approving the checks and making sure he was the one assigned to pick them up. Instead of refunding unidentifiable payments, he directed them into his fake company.

The scams didn't stop there. Nathan was also responsible for reconciling a Canadian bank account, and he was the only person in his department who truly understood how it worked. Part of his duty was to convert the Canadian investment amounts to U.S. dollar amounts. As a means of stealing more money, Nathan would purposely weaken the Canadian dollar in order to understate the US dollar value of the income. He took those offsetting debits and directed them into his fake company's account.

Because Nathan paid taxes on all the money he stole, it was important for him to keep his theft organized. He created a ledger account specifically for his fraudulent transactions. In no time, he cut 99 checks totaling $8,455,767.55 between May 2003 and August 2007. A Whole Other Nathan

Nathan was spiraling deeper into his new world. He became farther removed from reality and drifted further and further from his wife, consumed by his newfound fortune. He regretted never having any fun during college, and decided to make up for some lost time. And what better place than Las Vegas?

The Strip became his second home, and his purpose was two-fold: not only would he get to have the party lifestyle that he lacked in college, he'd be able to tell his family and friends that this onslaught of cash was from legitimate gambling winnings. The plan was relatively simple, too. He would wire stolen money before he left. When the weekend was over, he'd bring back the wired cash and report it as gambling winnings.

The fraud that once began out of perceived financial desperation was now maintained as a lifestyle fraud. He spent his cash on throwing parties, picking up bar tabs, and other frivolous wants. Nathan needed the expensive cars, the high-end watches, and the luxurious homes to boost his self-esteem. He described it simply with a term he coined: "Social Laundering."

Despite the money, the cars, and the rock star lifestyle, Nathan's self-esteem had hit rock bottom. So much so, he wanted to remove the only truly good thing he had going for him: his marriage. He chose his new life over his wife, and at the time of their divorce, she was still completely in the dark. How Low Can you Go?

Nathan had reached a low point that money just couldn't fix. He was overweight, drank too much, and suffered from depression. It was his sad state of affairs that ultimately lead to his downfall.

Nathan's ex-wife had developed a close personal relationship with one of his female colleagues. The two were having lunch together when Nathan became a natural topic of conversation. His ex-wife mentioned to the colleague that she never really bought his story of a lucky gambling streak, and that raised his peer's suspicions.

Back at the office, the coworker queried all of the check she had requested or approved back in 2007. She noticed about a million dollars worth of checks to Nathan's shell company. When she asked him for supporting vouchers, his panicked reaction said it all.

Four days later, Nathan was greeted by the company's fraud investigators. Unable to come up with sufficient answers to their line of questioning, he requested an attorney, and his fraud was officially over.

Conclusion

Nathan's four year fraud consisting of 99 fraudulent checks netted him just under $8.5 million. Of that, he estimated that $6 million went towards gambling, $1 million towards a new home in an affluent neighborhood, and the rest was spent on cars, jewelry, and clothes. He let an obsession with success and a fear of failure get in the way of what could have been a promising career and, perhaps, even a happy life.

He was sentenced to eight years and one month in federal prison. He was released early for good behavior and completed a residential drug abuse program for his problems with alcohol. Nathan has paid about $860,000 of the stolen money back to ING, and continues to pay monthly through a repayment program. Reflection

White-collar crime can be explained by three factors: a supply of motivated offenders, the availability of suitable targets, and the absence of control systems (Ramamoorti, 2008). While management at the time may not have known it, many of these factors were present in Nathan's situation.

Example #1: Nathan had a high fraud risk due to his large debts.

Preventative Method: Organizations can implement a hiring policy. Hiring policies are especially important in situations where corporate acquisitions have or will take place. Incoming employees do not normally have the same level of loyalty to the new company as to their former employer. In fact, there may even be resentment due to pay cuts or a loss of title. A hiring policy should include past employment verification, background check, credit check, and education verification.

Example #2: Nathan had easy opportunities to commit fraud. Not only did he know the login credentials for all the co-workers in his department, they were given to him.

Preventative Method: Many companies, both large and small, use workaround methods to avoid a slowdown in accounting processes. However, this became a very costly mistake for ING. Forcing users to regularly change passwords or giving an employee a smart card along with their password may have helped in Nathan's situation. A more cost-effective method could have been to have employees sign an ethics statement.

Example #3: Nathan was accidentally given authorization to approve checks up to $250,000 for two years before management caught it.

Preventative Method: This one was clearly a huge oversight. The ability to approve high-dollar amounts should be limited to employees in authorized positions.

Example #4: Nathan created a ledger specifically for his fraudulent debits.

Preventative Method: Nathan had complete control of the ledger accounts that were debited. On top of that, he was the only employee who even had an understanding of the system he had in place. From the outside, his fraud looked legitimate.

Example #5: Nathan's fraud was a lifestyle fraud.

Preventative Method: A simple fraud awareness training program could have stopped Nathan's fraud in its tracks. Nathan was making good money in his position, but his expensive cars, million-dollar home, and weekly trips in first class to Las Vegas should have left his colleagues at least a little skeptical. Even a simple statement from a co-worker could have made Nathan nervous enough to stop what he was doing.

Nathan's case is a good example, but the potential for white-collar crime varies depending on the supply of criminal opportunities to commit a fraud alongside internal control weaknesses (Ramamoorti, 2008). A simple mantra for co-workers who worked with Nathan could have been: "If you see something, say something." Sometimes, just knowing that someone is paying attention can make all the difference.

1. Why did Nathan choose a career in accounting?

a. He wanted to continue in his father's footsteps

b. He was eager to join a Big 4 firm

c. He failed at all other subjects in school

d. He was looking for a stable and financially rewarding profession

2. Which lax internal controls allowed Nathan to perpetrate his fraud? (Check all that apply)

a. Nathan and his co-workers shared system login information

b. Nathan was never taught how to properly use the company's accounting software

c. Three signatures were required on every check

d. Nathan and his team rotated job roles every 6 months

3. What was Nathan's pressure to steal?

a. He and his wife wanted to live a more lavish lifestyle

b. He wanted to provide money towards his parents' retirement fund

c. He had student loan and credit card debt that his wife didn't know about

d. His wife had an accident, and they needed money to pay the hospital bills

4. Nathan directed stolen money into a shell company he created.

a. True

b. False

5. How many fraudulent checks did Nathan write during his scheme?

a. 150

b. 400

c. 49

d. 99

6. How did Nathan spend the stolen money? (Check all that apply)

a. He put money towards debt

b. He bought expensive cars

c. He went gambling in Las Vegas

d. He donated most of the money to local charities

7. How was Nathan's fraud uncovered?

a. The IRS discovered that Nathan had extra income that he had not paid taxes on

b. Nathan confessed to his fraud while in a state of depression

c. ING's auditors found the fraud while performing a forensic audit

d. A coworker found check approvals in her name that she did not authorize and contacted her supervisor

8. In order to keep track of the amount that he was embezzling, what did Nathan do?

a. Nathan's wife kept track by writing everything in a notebook

b. He created a ledger account

c. He kept receipts in a safe

d. Nothing, he thought it would be best to not track the embezzled money.

9. Nathan was sentenced to _____ years in federal prison but was released early for good behavior.

a. 8

b. 10

c. 2

d. Nathan was not sentenced to federal prison

10. Which of the following describes how Nathan used Canadian investment accounts to defraud his company?

a. Nathan would weaken the Canadian dollar in order to understate the U.S. dollar

b. Nathan opened up a second account at a Canadian bank using the ING name

c. Nathan met a Canadian bank employee and used his relationship with the employee to defraud ING

d. None of the above