Is It Romance… or Malfeasance?

How charm, seduction, and trust can be weaponised in modern corporate fraud

There is a reason magicians employ alluring assistants fawning around the stage while they perform their shows: distraction. Even the briefest lapse in attention allows the magician to execute the illusion or deception. In the world of fraud and scams, this method of distraction is constantly used, and those best practiced are the ultimate fraud weapons. Be it charm, humor, or red-hot seduction, the practiced artist can draw their prey into their web, with the utmost feeling of trust, excitement, lust and even love.

Modern fraudsters and scammers have become even more formidable with the advent of new technologies, such as AI, smartphones, and virtual meetings amplifying their skills. The coupling of AI with the forever mind traps associated with the heart and desire, we have become an evolving class of victims. Whether we like it or not, humans are fallible to their own weaknesses and vices, and perhaps the weakest link in the human DNA is those that we associate with companionship. Be those short interludes or meaningful relationships, this area creates massive blind spots for scammers and fraudsters to exist in.

I was asked to examine a company with substantial cost leakage and gratuitous expenses attributed mostly to the CEO and his executive team. As we do, my team and I set about examining the details of expenditure and aligning this chronologically to company events, corporate travel, entertainment, capital works, basically legitimate and reasonable company spending. All good detective work starts with establishing a timeline and then filling it with detailed and logical evidence . Once the timeline is complete,  we can then plot significant events or issues and thus start to recreate a reasonable understanding of the facts.

The evidence here showed us a number of significant facts that aligned with the genesis of the leakage and expenditure. It started with a romance, leading to a marriage breakdown, and led to a double life of extravagance to impress the new source of affection. The culprit used his position of trust and power to manipulate the internal financial systems of the business to systematically exfiltrate millions of dollars, but his manipulation did not stop with the financials. He also manipulated lower-level female employees, wooing them with expensive gifts, dinners and holidays, and where he could promote them within the business ahead of others. His return was financial benefit and individuals who trusted him, and who had fallen for him romantically, and in essence would do anything for him. To commit his frauds, he required these women to initiate certain systems entries and then later shared their own login details with him so he could run amok within the systems and create vendor accounts and payment instructions that all funneled to himself. Such innocent agents as these women pay a huge price, not only with their own positions of employment but also emotionally –  and as one described to me “I will never trust anyone ever again, I was in love.”

This deceptive behaviour is not gender specific, although in my experience it is often male dominated. I investigated a case involving a young woman who had seduced two high powered executives in a fortune 500 company. Her modus operandi was to gain their trust through seduction (both older married men) and then acquire their access passwords and details into various financial systems within the company. She then went about methodically setting up ghost accounts for payroll, travel, expenses and accounts payable, where she executed her plan by extracting frequent but modest amounts out of the company over a long period of time. She also leveraged both men’s marriage situations to embellish their attention toward her, in what could only be described as blackmail. This all came unstuck when the men found out that both were involved with extra marital affairs with her, and feeling morally corrupted one of them confessed to the HR department of the company saying that he felt he had been unduly influenced to approve some of her own noncompany travel expenses. As we do, we commenced an investigation, and uncovered substantial amounts of electronic communications, messages, pictures, emails, and videos which indicated that this was more than an extra marital affair situation. We then completed financial reviews, and interviews that led to the unravelling of a multi-million-dollar fraud scheme over the period of 14 months. All three were terminated from their roles, and the woman was convicted of multiple fraud offences awaiting sentencing.

Like most things in life, please ask yourself “is this real, what am I committing to here, and what are the consequences?” In my experience, in matters such as these combined with the emotions of love and lust people get too far along before they ask themselves these questions or in fact have the guile to ask others probing questions that may be awkward but are essential to disrupt deception.

Mathew Fleming – Partner, KordaMentha

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