Psychiatrist discusses fraud in a family-owned business

SYRACUSE — Fraud is a human being stealing from a business, defrauding the organization in some way. Fraud is not a computer program or an accounting function.

That’s the view of David E. (Daven) Morrison, III, M.D., an organizational psychiatrist who has spent his career working with senior executives. [Daven is a combination of David and his middle name, Evan, and rhymes with “raven,” Morrison says, explaining the name he goes by.]

Morrison’s company is Chicago–area-based Morrison Associates, Ltd., described on its website as a “business-consulting firm helping organizations to become more effective by turning resistance into motivation into performance.” 

Morrison spoke on the topic “Fraud and the Family-Owned Business: Trust But Verify” in an event held April 7 at Le Moyne College in Syracuse. The Family Business Center at Le Moyne’s Madden School of Business organized it.

In an April 17 phone interview with CNYBJ, Morrison discussed his assertion that fraud “is not an invention of computers; fraud is a human act.”

He noted that “it’s basically a point of view, a starting point for why a person ought to be listening to a psychiatrist talk about fraud versus an accountant.” 

Morrison is a co-author of the book, “A.B.C.s of Behavioral Forensics,” described as “an introductory text on the psychology of white-collar crime,” according to the Family Business Center web page announcing the event.

The book’s cover includes “applying psychology to financial fraud prevention and detection,” according to an Amazon web page that’s selling the book.

Lecture title

Morrison said that in his Le Moyne lecture he was trying to highlight the challenge for a family business.

Employees in high-level jobs reach those positions either through hard work, or simply because they are a member of the family that owns the business, says Morrison.

And sometimes the individuals in those jobs “can take advantage of that,” either due to human nature or the way they feel about the business.

The phrase, “Trust but verify” has been credited to the late President Ronald Reagan who used it while negotiating Cold War-era nuclear deals, but it’s also a “central premise” of accounting, says Morrison.

“Just because you’re family or you’ve worked here a long time doesn’t mean I can trust you. I trust the processes, and as I trust the processes, then we can all trust each other,” he adds, explaining the rationale behind the lecture title and his philosophy.

Studying fraud

The people who study fraud are called forensic accountants. As Morrison describes their profession, forensic accountants are the professionals who “come in and check out what happened, how did it work, who did it.”

In studying those committing fraud, they find there’s no particular profile, no particular race or ethnicity, and it’s both genders in the U.S. and Canada equally, he notes. 

“But it is at a certain point in life, which is mid-life, and it’s often long-standing employees with no criminal record,” says Morrison.

Those with expertise in behavioral conditions would call them “psychopaths or sociopaths,” he adds.

But Morrison communicates regularly with investigators in the FBI and other agencies who say fraudsters are “just every day Joes.” 

Then, the question becomes why?, and it’s an issue Morrison’s book examines.

Someone committing fraud might be an “accidental fraudster,” or a person who “finds a hole in the system and, for whatever reason, takes advantage of it,” he says.

A fraudster may be greedy — an explanation that Morrison says is “probably five or six-thousand years old.”

In his book, Morrison theorizes that perhaps people commit fraud for reasons that stretch beyond just simple greed.

“They may be angry at the organization and be seeking revenge. They may have a personal financial need and they tell themselves, ‘I’ll pay it back,’ ” he says.

The motivation isn’t always greed, but it eventually progresses, Morrison notes. The person committing fraud might not remember it and won’t pay it back. The fraudster’s problem might be a gambling or substance-abuse addiction.

In the interview with CNYBJ, Morrison also talked about subclinical psychopathy, noting it was something that he didn’t discuss during the lecture at Le Moyne College.

In describing subclinical psychopathy, Morrison said Joseph Koletar, one of the book’s co-authors, noted the public “can’t be too judgmental” about fraudsters because “we all break the law.”

Koletar is a retired senior executive with the FBI who supervised the white-collar crime division in New York City, according to Morrison. 

He uses speed limits as an example, says Morrison.

“The minute you go one mile over the speed limit, you’re breaking the law … We’re all kind of guilty in that way,” says Morrison, referencing the idea behind subclinical psychopathy. 

So, why are these “every day Joes” or fraudsters breaking the law? In their book, Morrison and Koletar break it down into eight different possible motivations.

“Am I playing a game, or is this a task? Do I follow the rules, or do I break the rules? Do I do it for myself, do I do it for other people?” says Morrison, noting a few of the possible motivations at play.

In offering advice to family businesses, Morrison suggests that business owners shouldn’t get too dependent on any one person and they need to make sure their employees take vacations.

He also shared a piece of advice from Koletar, the retired FBI executive.

“Make sure you have your bank records sent home. You can double check [them] at home,” says Morrison.         

SYRACUSE — Fraud is a human being stealing from a business, defrauding the organization in some way. Fraud is not a computer program or an accounting function.

That’s the view of David E. (Daven) Morrison, III, M.D., an organizational psychiatrist who has spent his career working with senior executives. [Daven is a combination of David and his middle name, Evan, and rhymes with “raven,” Morrison says, explaining the name he goes by.]

Morrison’s company is Chicago–area-based Morrison Associates, Ltd., described on its website as a “business-consulting firm helping organizations to become more effective by turning resistance into motivation into performance.” 

Morrison spoke on the topic “Fraud and the Family-Owned Business: Trust But Verify” in an event held April 7 at Le Moyne College in Syracuse. The Family Business Center at Le Moyne’s Madden School of Business organized it.

In an April 17 phone interview with CNYBJ, Morrison discussed his assertion that fraud “is not an invention of computers; fraud is a human act.”

He noted that “it’s basically a point of view, a starting point for why a person ought to be listening to a psychiatrist talk about fraud versus an accountant.” 

Morrison is a co-author of the book, “A.B.C.s of Behavioral Forensics,” described as “an introductory text on the psychology of white-collar crime,” according to the Family Business Center web page announcing the event.

The book’s cover includes “applying psychology to financial fraud prevention and detection,” according to an Amazon web page that’s selling the book.

Lecture title

Morrison said that in his Le Moyne lecture he was trying to highlight the challenge for a family business.

Employees in high-level jobs reach those positions either through hard work, or simply because they are a member of the family that owns the business, says Morrison.

And sometimes the individuals in those jobs “can take advantage of that,” either due to human nature or the way they feel about the business.

The phrase, “Trust but verify” has been credited to the late President Ronald Reagan who used it while negotiating Cold War-era nuclear deals, but it’s also a “central premise” of accounting, says Morrison.

“Just because you’re family or you’ve worked here a long time doesn’t mean I can trust you. I trust the processes, and as I trust the processes, then we can all trust each other,” he adds, explaining the rationale behind the lecture title and his philosophy.

Studying fraud

The people who study fraud are called forensic accountants. As Morrison describes their profession, forensic accountants are the professionals who “come in and check out what happened, how did it work, who did it.”

In studying those committing fraud, they find there’s no particular profile, no particular race or ethnicity, and it’s both genders in the U.S. and Canada equally, he notes. 

“But it is at a certain point in life, which is mid-life, and it’s often long-standing employees with no criminal record,” says Morrison.

Those with expertise in behavioral conditions would call them “psychopaths or sociopaths,” he adds.

But Morrison communicates regularly with investigators in the FBI and other agencies who say fraudsters are “just every day Joes.” 

Then, the question becomes why?, and it’s an issue Morrison’s book examines.

Someone committing fraud might be an “accidental fraudster,” or a person who “finds a hole in the system and, for whatever reason, takes advantage of it,” he says.

A fraudster may be greedy — an explanation that Morrison says is “probably five or six-thousand years old.”

In his book, Morrison theorizes that perhaps people commit fraud for reasons that stretch beyond just simple greed.

“They may be angry at the organization and be seeking revenge. They may have a personal financial need and they tell themselves, ‘I’ll pay it back,’ ” he says.

The motivation isn’t always greed, but it eventually progresses, Morrison notes. The person committing fraud might not remember it and won’t pay it back. The fraudster’s problem might be a gambling or substance-abuse addiction.

In the interview with CNYBJ, Morrison also talked about subclinical psychopathy, noting it was something that he didn’t discuss during the lecture at Le Moyne College.

In describing subclinical psychopathy, Morrison said Joseph Koletar, one of the book’s co-authors, noted the public “can’t be too judgmental” about fraudsters because “we all break the law.”

Koletar is a retired senior executive with the FBI who supervised the white-collar crime division in New York City, according to Morrison. 

He uses speed limits as an example, says Morrison.

“The minute you go one mile over the speed limit, you’re breaking the law … We’re all kind of guilty in that way,” says Morrison, referencing the idea behind subclinical psychopathy. 

So, why are these “every day Joes” or fraudsters breaking the law? In their book, Morrison and Koletar break it down into eight different possible motivations.

“Am I playing a game, or is this a task? Do I follow the rules, or do I break the rules? Do I do it for myself, do I do it for other people?” says Morrison, noting a few of the possible motivations at play.

In offering advice to family businesses, Morrison suggests that business owners shouldn’t get too dependent on any one person and they need to make sure their employees take vacations.

He also shared a piece of advice from Koletar, the retired FBI executive.

“Make sure you have your bank records sent home. You can double check [them] at home,” says Morrison.