We all probably think that we know the difference between right and wrong, and wouldn’t get caught up in something we aren’t supposed to be doing, but according to Kelly Richmond Pope, it can be a slippery slope. Some people get into legal trouble by starting small or by not speaking up when someone sneakily gets them involved. On this episode of the How’d It Happen Podcast, Mike and Kelly discuss the three categories of fraud perpetrators: intentional, accidental, and righteous.
Kelly wants to turn fraud upside down and allow people to see themselves in these unethical decisions. She wants to stop the language of “it’s them, not me” and be more inclusive in understanding that it can be us. She explains that anyone can be talked into anything under the right circumstances and that we have a great ability to compartmentalize levels when it comes to what we will and won’t do.
Dr. Kelly Richmond Pope is a nationally recognized expert in risk, forensic accounting, and white-collar crime research, and an award-winning educator, researcher, author, and award-winning documentary filmmaker. Her area of expertise lies in understanding and identifying financial fraud risk within financial statements, assessing corporate culture and compliance systems designed to confront internal control challenges. Pope’s research on executive misconduct culminated in directing and producing the award-winning documentary, All the Queen’s Horses which explores the largest municipal fraud in U.S. history. Pope’s TED Talk entitled “How Whistle-blowers Shape History” has been viewed over 1.6 million times.
In this episode, Mike and Kelly explore the trillion-dollar fraud industry. They discuss the power of persuasion and the importance of embracing internal whistleblowing. Learn how to recognize and prevent fraud and protect yourself from being a victim of fraud or getting involved in the wrong situation.
- Fraud perpetrators: intentional, accidental, and righteous
- The problem with our culture encouraging people to mind their own business
- Different types of whistleblowers and their importance
- How to protect yourself from fraud and getting involved in unethical or illegal situations
Connect with Kelly Richmond Pope:
LinkedIn: Kelly Richmond Pope, CPA
Check out the video version of this episode below:
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Episode transcript below:
Kelly Richmond Pope, Mike Malatesta
Mike Malatesta 00:00
Hey everyone, Mike Malatesta here and welcome back to the how that happened podcast on this podcast. I dig in deep with every guest to explore the roots of their success to discover not just how it happened, but why it matters. My mission is to find and share stories that inspire, activate and maximize the greatness in you. On today’s episode, I’m talking with Kelly Richmond Pope. Kelly is a professor and author of filmmaker and a fraud expert. We talked about her desire to turn fraud upside down, how anyone can be tucked into anything under the right circumstances. What’s the deal with how we treat whistleblowers, and much more, we also talk about Brett Johnson, a reformed cyber criminal who’s featured in her new book and was also on episode 370 and 372 of the podcast. So please go check out those episodes as well.
Kelly Richmond Pope 00:52
What I wanted to do with the book is sort of turned fraud upside down, you know, this is something that we all have the propensity to do. And when I started thinking about how people are so easy to say, it’s them, not me, I started to think about like, How can I change this conversation a little bit, so that people can see themselves reflected, and these types of unethical decisions that sometimes people can make.
Mike Malatesta 01:19
Kelly is a great storyteller, a great teacher, and a great talent. I know you’ll enjoy this conversation. Hi, Kelly, welcome to the podcast.
Kelly Richmond Pope 01:35
Thanks so much for having me today.
Mike Malatesta 01:38
I’ve been very, very, very excited about this for a month and a half. I’d say since the first time I heard you and the first time I heard about your book, which I picked up and read and consumed over spring break trip. And yeah, it’s like you guys are in for a treat, as I mentioned in the intro, because Kelly not only is she an expert in all things fraud, but she is a dynamic, very dynamic person and you’re gonna get a lot out of this. So before we go further, let me tell you a little bit more about Dr. Kelly Richmond Pope. She is the Dr. Barry J. Epstein Endowed Professor of forensic accounting at DePaul University in Chicago. She is a nationally recognized expert in in risk forensic accounting and white collar crime research and who isn’t interested in white collar crime research, right? It’s everybody, everybody. I mean, the Wall Street Journal loves a story like that, right? It just has a lot of it’s got a lot of, I don’t know life to it. Everybody loves those stories. Yeah, so and an award winning educator, researcher, author and award winning documentary filmmaker, as well. Kelly teaches managerial and forensic accounting, both at the undergraduate and graduate level. And when she’s not in the classroom, Kelly’s engaged in fraud and white collar crime research. She loves films and always dreamed of having the ability to merge accounting with filmmaking. And she did so in her documentary, which is called all the Queen’s horses, which we will definitely talk about today. Kelly’s TED talk entitled How whistleblower shape history has been viewed more than 1.6 million times. Congratulations, translated into 20 languages and serves as a resource to help organizations and individuals embrace internal whistleblowing. Kelly’s new book for me once scams stories and secrets from the trillion dollar fraud industry is amazing. If I opened this up, you would see that I’ve got tons of bookmarks and, and underlines, which I then made into an auto recording, so that I could just read all of my notes out of here and then put them all together it was and I’ve never done that for a book before. So something about your book made me want to do that. So the books amazing and has greatly broadened her stage. If you follow her on LinkedIn, or social media, she is speaking all over the world with cases in cases of books that she’s giving out and signing as well. So, so it’s been a I’m sure, it’s been a great experience. And we’re going to talk more about that Kelly’s passions are fraud, film, and lifelong learning. And you can learn more about Kelly at Kelly Richmond hope.com. So Kelly, I start every podcast with the same simple question and that is, how did happen for you.
Kelly Richmond Pope 04:25
So the operative word, is “it.” What it are we talking about? Or you talked about the issue of fraud or talking about the issue of writing the issue of being a filmmaker, the issue of being a professor or what’s the it’s a mom? Mom? Yeah, that you
Mike Malatesta 04:46
get into that into the side for today? Maybe, but
Kelly Richmond Pope 04:51
maybe the it is. How did I get interested in this field? Yeah, maybe that’s the way it looks. We’ll start with that. Let’s start with that. And I think for me, what I started to notice as a, as a professional accounting, professional accounting academic, is when I would go to conferences, and the people I knew at the time that would do these on camera interviews with white collar felons, whistleblowers and victims of fraud, but it was the white collar felon interviews that people would come like, oh, we want to see we want to see those fraudsters. And it was when people would say things like that, that was sort of get to me, because I will say to myself, it’s not them, it’s us. You know, this is something that we all have the propensity to do, we can all think about some little misstep. Some of us it’s smaller, some of us it’s larger. And if it’s large enough, we’ll read about it. But all of us can really find ourselves rationalizing why it’s okay to make just this little sidestep because it’s something that we want. So when I started thinking about how people are so easy to say, it’s them, not me, I started to think about like, How can I change this conversation a little bit, so that people can see them themselves reflected, and these types of unethical decisions that sometimes people can make. So what I wanted to do with the book, at least is sort of turn fraud upside down. Because especially when we start thinking about the two sort of bookends of the book, which are the fraudsters and the whistleblowers, when we think of the fraudsters, we often think of a certain type of fraudster. I mean, if you’re like me, you watch anything true crime, you listen to True Crime podcast, you just can’t get enough of it, right. And those stories, and those cases, tend to be about intentional perpetrators, people that we tend to not see ourselves anything like, you know, they, they are inside an organization, they know the loopholes in an organization. And they’re able to manipulate an organization for personal gain. And a lot of us don’t identify with that most of us don’t. But there’s two other categories that we might identify with. And that’s where the book I think, sort of opens up your mind. And that is the accidental perpetrator and the righteous perpetrator. And so what I wanted to be able to do is allow people to see themselves, and sometimes these unethical choices that we make, and so stop that language of its them, but make sure that we are more inclusive, we understand it’s us.
Mike Malatesta 07:41
And when you get into the accidental and righteous perpetrators, let’s say I, I always think of and I thought of this when I read your book that I want to see what you whether whether you agree with this or not. But it seems to me in my experience, that anybody at any time with the right persuasion can either be talked into something or talk themselves into something that they wouldn’t have met that that absent that convergence, right time, right person, right message, they would never absolute those. Do you? Is that what you? Yeah,
Kelly Richmond Pope 08:18
absolutely, absolutely. And so, you make such an important point, because I don’t think we think about that enough. I don’t think we put ourselves in those situations. And what we also don’t realize is, we find ourselves in those situations that you just described more often than we really recognize, right? So we’re in a meeting with the boss, where the CFO, CEO, CEO, whoever has a seat in front of their title, we’re there, we need to make the numbers work. We may be trying to IPO we may be trying to purchase a company, when whenever there’s a pressure that we’re trying to manage. And the numbers need to be a certain amount. What can we do to get that number to where we need to be all hands on deck, we got to fix this problem. And one of the things that we do in organizations is we hire problem solvers. You know, you think about any really good working employee, any good executive, they are problem solvers. So sometimes being that problem solver, you almost take it by any means necessary approach to get that problem solved. That might mean cutting corners, that might be relaxing and internal control. And that can lead our organization to significant weakness, weaknesses down the road. So yes, what you just said we all can find ourselves in those circumstances right time, right time, right place, right person, right assignment, and boom, we make that decision. And we sort of put the rules, the regulations, our personal ethics or professional ethics, just to the side for a second, right because we need to get This done right now and then we’ll pick those epics back up. But for now we put them down. And so yes, that’s what you said is the point. I find,
Mike Malatesta 10:08
too, that we have a great ability to compartmentalize levels when it comes to what we will and won’t do that we wouldn’t ordinarily do. For example, if someone were watching us and you, I think it’s in the book, you have a good example of your own experience where you had some, something you ordered got delivered to you twice, right. And you had an ethical dilemma. Right about tell us, why why Utah, you had another word that found interesting,
Kelly Richmond Pope 10:39
I had a purse by a designer that I really like. And they sent me my personal excited. And then the next day, he sent me another purse. I was like, wait a minute, only ordered only paper one. So here, I’m just in this dilemma. Now, you know, you think about thought process, and this comes up? I use this in a lot of workshops. What would you do? And you know, a lot of times audiences, audiences, accountants, lawyers, professional people? Well, it’s not your fault. You didn’t order another person, you should keep it, keep it and sell it. You didn’t ask for it’s not your problem. They say to you, it’s on them to figure it out. And I’m like, Well, wait a minute. The the the consumer, the customer also is a level of internal control, too. So I have to have some personal ethics about myself to say, hey, wait a minute, you all sent me this, I didn’t pay for this. This isn’t mine. Most people like that’s not your fault. And so. So what I did, I ended up sending the purse back. But what it also could have done is I could have kept the purse, I could have sold the purse? And what if I sold it made a little bit of money like wow, that was easy. I wonder if I could do this again. And again and again and again. And then next thing you know, I got a whole shelf of goods I can sell to people. And I’ve started into this huge return frauds game. That’s how we can start. Small.
Mike Malatesta 12:07
It’s so funny you say that? Because as you said that, it just reminded me of another person you mentioned in the book who I’ve had on my podcast twice, Bret Johnson, because yeah, great. Great. And Brett Johnson started basically that same way he Yeah, he ripped somebody off on with a beanie baby or some
Kelly Richmond Pope 12:29
Beanie Baby. Yeah. And
Mike Malatesta 12:31
then. And then he’s like, Oh, that was easy. And then yeah, he kept going. And what interested me about the purse thing is like someone would say, Well, yeah, just keep the purse Kelly. And just, but if they found somebody’s wallet on the street, they would return the wallet. Because it’s not right to take somebody’s wallet. But it’s the exact same thing. It’s you came across something that’s not yours, you know who it belongs to? So it’s not like it’s ambiguous at all. And yet, there’s two people would make two different choices on that just
Kelly Richmond Pope 13:00
absolutely. You know, just yesterday, my class, I’m sorry, not yesterday, the day before, we had a guest speaker that came in. His name was Matthew Cox. And Matthew Cox was a real estate fraudster and just rehabilitated now, but my students were fascinated by him. And so what he walked through was the kind of fraud that he did. And he said, You know, it’s sort of easy, like, I would create a synthetic identity. And then this synthetic identity would then apply for credit. And they would then apply for a mortgage, and then they would get the mortgage. And then I would, you know, use their credit card, do all kinds of things, take cash advances, six, pretty easy. And what you find is when you when you have been exposed to an ethical dilemma, and you make the wrong choice, it almost seems like you’re rewires your mind to think about all the other things that you can rationalize why it’s okay. Right. And that’s the danger.
Mike Malatesta 14:08
And let’s get back to like, when you’re interested in this first started, because I’m thinking, at least based on what I know, and I’ve heard about you and read, normally, the type of people, particularly the intentional people, like Brett, for example is, he’ll tell you like my this is my choice. I would tell you for a long time, it wasn’t but it was my choice. It’s intentional. And, you know, you that’s that that mindset of intentional perpetrators, for example, is so different than yours. So what attracted you you had a choice, you could be repugnant, you know, repelled by them, or you could be like, Hmm, I’m really interested in what’s going on there and make a whole you know, not just write a book about and that’s not the whole book, but part of it, but but also, you know, start teaching kids you At the college level, about all of this stuff, instead of basically saying, Don’t do wrong, you know, bring wrong into the classroom and learn from wrong,
Kelly Richmond Pope 15:08
what it really was. eye opening for me was when I was younger, and a neighbor of mine went to federal prison for a mortgage fraud case that he was involved in. And I was in high school. And you know, when adults act badly, and you’re a teenager, it sort of hits you differently. You’re just sort of like, whoa, like you are acting that like you’re the responsible adult, like, how could you do something like that? So I was old enough to witness this. And but this neighbor of mine, was not an intentional perpetrator. He was actually a righteous perpetrator. He was a person that did not benefit personally. He had power and privilege within his organization and wanted to help a friend. That’s a very different motivation than the person that that like why Brett did with Red Dead, right? And so when I, when I reflect back on just my research career, I hear myself saying all perpetrators are not created equal, they’re not the same. And so how can I allow people to see themselves in in a category of perpetrator where they may identify with, and that is the accidental and the righteous perpetrator. So over the years, I have lots of people that come to my class, talk to my students, I go to federal prisons and interview people I write to people they write to me, we have these communications. And so what I’ve learned is how different these these categories are, and it makes us empathize very differently. So we probably we can all say a lot of people may dislike Bernard Madoff, you know, he stole from the rich in that might be the part that we may not care much about, but he still stole from people intentionally. But when you find the person that might steal from their company, because they have a child at home sick with cancer, we empathize a little bit different. We still know they stole, but are they on the same scale with a&r Man No, probably not. So I wanted people to see themselves in this whole process. So that’s to me the need for these categories.
Mike Malatesta 17:25
So why don’t we if you don’t mind, so why don’t we walk through a couple an example of each? Because you have plenty of examples in the book of an intentional and accidental and righteous and give people a sense that I think they get a, you know, sort of macro right now let’s give them a micro on how this really manifests itself in the real world.
Kelly Richmond Pope 17:47
All of the book was really inspired by the intentional perpetrator out of my documentary, which was redefined Well, yeah. And Rita Cromwell was the City Comptroller embezzled $53 million. No one knew data for 20 years and got arrested. So that story sort of flows through the book, but I’m going to tell you a story about another intentional perpetrator, that’s going to get to you in a different way. And it’s the story of Dr. Robert Courtney. Dr. Robert Courtney was a compound pharmacist. And most of us don’t know what a compound pharmacy is, is when we think about a pharmacist, we think about the pharmacists that’s at Walgreens or CVS that we get our medicine and we walk away. But the compound pharmacist is the person that made the medicine that made the solution that gives the chemotherapy drugs to the oncologist and that we don’t even think about that person write what Robert Courtney did was he manipulated cancer patient drugs so that he could spread out the margin so that he could pay his tax bill with the IRS and make a donation to his church. Now, just think about this scheme. And this is an egregious scheme. But I want you to think about this. If you are a 77 year old female stage four breast cancer. When you pass away, if you pass away, assuming you pass away, no one may even question it. Because you’re a stage 477 year old breast cancer patient. Yeah. And that’s just what happens. It’s what happens, right? If you are an 82 year old male prostate cancer patient, and you pass away, it was going to ask a question. So you think about this type of scheme, sadly, was the perfect scheme, because who’s gonna question when the person passes on? Now it’s sick, don’t don’t get me wrong, this is sick. But what happened was, there was a nurse who started to notice my cancer patients aren’t showing the normal chemotherapy reactions. So if we polled 100 people on the street today and asked if somebody was going through chemotherapy What do you expect them to experience? nausea, fatigue, hair loss, weight loss, weight loss. Most people expect that, right? So this nurse started noticing my patients aren’t experiencing this and their, you know, their stage three stage where they should be experienced, there should be some commonality between all of these patients. And so at first he said, Well, you know, she second guesses herself. Everybody responds to chemotherapy differently now, yes, but there’s some similarity to right. I will my father who had cancer, he never went to one treatment that he didn’t get sick. Never. And no one in his cohort never went walked out of chemotherapy, skipping and jumping and ready to go swim laps. Yeah, one day, my dad, no one ever right. So she started to get concerned. And what she did is she took a bag of chemotherapy drugs, and sent it to the FDA. And when they tested it, it came back. This particular bag had no medication in it, it was just like saline solution? None.
Mike Malatesta 21:11
None. He was really protected margin.
Kelly Richmond Pope 21:15
Oh, yeah. Because think about how you can make that stretch. Yeah. And so it just happened that, you know, you may have friends or listeners that work in the pharmaceutical sales rep. So pharma could cynical sales industry. And so those pharmaceutical sales reps tend to have relationships with the doctors offices that they work in. So the nurse was talking to the rep one day and was just like catching a we have been so slammed, we’re so busy, you know, Doctor coordinate, just patient after patient after patient and the sales reps like How How could that be? Because he hasn’t been placed in a lot of orders. And I know he isn’t using another, another drug. What’s up with that? So you put two and two together, and then you do get four eventually. And that’s how it came to light. So he is an intentional perpetrator. And if you think about it, he had a need. He knew the skin, he had no oversight. And he knew the likelihood of getting caught was slim. I mean, it was just slim. So he is a very evil kind of intentional perpetrator. And when and what’s interesting when you start talking about the healthcare field, are are discussed for intentional perpetrators in the healthcare field rise in a different way than we were just talking about financial statements money on sheet, you know, we we look at made off in a completely different way. Now, were there people that probably had health issues as a result of losing their money? Sure, but this was a
Mike Malatesta 22:46
little bit different. Yeah, it’s a human and not a thing. Yeah,
Kelly Richmond Pope 22:49
yeah. So the intentional perpetrator is a person that knows the holes in the system, and uses that system to exploit for personal gain.
Mike Malatesta 22:57
Let me ask one question about him. Sure. So as you were telling the story, right, you when you first started this thing about paying the IRS back, okay, I get that but then making a donation to the church that does that. Sprinkle, like a little sociopathic righteousness into that guy’s head as well. May,
Kelly Richmond Pope 23:17
you know a lot of people think when they’re doing wrong if I do a little bit of writing, it erases it. And I’m Marian Jennings has a book called The seven signs of ethical collapse. And so she talks about, you know, how you can do this type of altruistic kind of move when you’re doing something wrong, and that sort of atone for the sins you’re creating. And so sometimes you see that
Mike Malatesta 23:41
talking yourself into doing good with doing that.
Kelly Richmond Pope 23:43
Yes, absolutely. That’s an intentional perpetrator. I use, I use his story, as an example, because most of us won’t identify with him will be like, Oh, my God, he’s terrible. I would never do that. And so I think that that’s why intentional perpetrators makes for such great TV because they’re, it’s wild. The story is wild, the schemes are wild. And it’s they push the envelope in a way that you’re just like, wow, I would never do that. Now. The Accidental perpetrator, however, in this might be you or me. They’re the team player. You’re the people pleaser. They’re the people that never push back. They believe in the organization. They believe in the executive team. Somebody says, Hey, I need you to just sign this document for me. We’ll talk about it later. Just sign this we can get get through this process and get through the closest deal just find this and you do it. You don’t push back. You never have said no. And that document that you signed, could have just been the document is sealed, you’re sealed your fate and go into federal prison because it could have been something fraudulent. You knew maybe that it didn’t seem okay, but you didn’t know if you power to push back. You’re the sole breadwinner interfere in your family. Your family needs these health benefits. You might have a sick child you might have to stay At home spouse, you need this job, you’re not going to rock the boat, that is the accidental perpetrator. So there’s stories in that chapter of the accountant, the lawyer that found themselves mixed into these types of situations, they didn’t push back. They didn’t say no, that could be any one of us, any one of us.
Mike Malatesta 25:20
It made me think of gray area too. And you were talking about that, because a lot of people rationalize something is not, it’s in a gray area. So it’s not quite black, and it’s not quite white. Everybody’s doing it. So what’s the harm.
Kelly Richmond Pope 25:34
And this is the interesting thing, because if you are a professional, held a professional license, there is no gray area, you know, like, if you’re a CPA, you’re a JD, you’re anything that holds a license, you don’t get a gray area, you get black and white, you don’t get when you find yourself in a gray, the judge is going to put you in black and white, you’re either going to jail, or you’re paying a fine, but there’s no gray area for you. And so those are the stories that in cases that I use in class, when my students hear those, they’re like sitting there like, Oh, my God, like, this could be me, this could happen to me, like, what am I supposed to do if my boss asks for my password to go in and change a transaction under my name? And I’m the newest employee, I’m the lowest on the totem pole. What do I do? Do I tell my boss? No. Right? Do I really do that? And you might really have to nasty accidental. Okay. All right. And so there’s there’s numerous examples in the book about an accountant. And I can think of an accountant who was, depending on the kind of organization you work in. Some people love their accounting group. Some people don’t a lot people don’t like their accounting group. They look at them as a nuisance, but you need someone to keep you grounded. And sometimes the accountants will get a charge from the C suite saying, we just need to get these numbers to work. We have a big transaction make it worked. Yeah. You do it.
Mike Malatesta 27:08
And you do it and data and they can, it’s plausible deniability for them to because they could say I never said, I never said to do anything specific. I just said, Hey, this is where we got to get to. Right.
Kelly Richmond Pope 27:21
And Mike was classic is I’m not the CPA, they are right. They know the rules. I know. I’m sound guy. I don’t know. They’re the ones that devise this. I just said make it work. I didn’t tell them how because I’m not a CPA, then you go to
Mike Malatesta 27:34
jail. So from an example standpoint, I think there was an attorney in the book. I don’t know if it was Elise or Kyla, one of them. Kayla, yeah,
Kelly Richmond Pope 27:46
okay. My righteous. That’s my righteous chapter. Okay.
Mike Malatesta 27:48
All right, cool. Oh, my God.
Kelly Richmond Pope 27:51
How many here? Are you gonna say ask about her because we can go on to the righteous person who perpetrated chapter down?
Mike Malatesta 27:56
Yeah, well, I was I couldn’t remember whether it was her or there was there was one attorney who hired her husband to make copies. Okay, so she, this was a legitimate need of the firm. They were had some case going on and had lots of copies. And they couldn’t do it themselves. He could and guess had some kind of business that was set up. I can’t remember exactly. But he started to do it. And it was working out fine. And then he stopped delivering the copies. Right. Yeah. And then that created a problem for her because I think they had paid in advance or something. I’m not sure. So you take it.
Kelly Richmond Pope 28:36
No, no, you’re doing great. You’re doing great.
Mike Malatesta 28:38
So they, the firm had paid in advance and then her husband wasn’t delivering on the on the, on the copies. And that’s where that she stuck. Right. And that’s where my recollection ends.
Kelly Richmond Pope 28:53
Right. That’s great. So what happened? As you as you eloquently said, she’s stuck. She stands just think about let’s let’s remove Kayla from the situation and put ourselves we recommend a friend for a job. And we know this friend has a legitimate business and we know this friend has done work for other friends before we recommended a friend for a job and we’re the person that gets to oversee this contract and we know the person but we didn’t let our partners know that we knew the person that they were a friend a good friend. Okay. So what happens when referrals right? So your friends contract gets picked up, your firm hires your friend, and your friends doing the work, everything’s moving smoothly. Until one day your friend stops doing the work. And you go to your friend, you’re like, Hey, friend, I need you to get this done. Because you have my mind. My name is on the line. I vouched for you, right? And you’ve got to get this done. And like we talked about earlier, we hire people that can fix problems, so I’m not gonna let fraud happen. Been on my watch with my friend. I’m going to be able to get my friend in gear that was Caylus needed. Okay, my husband’s going to do this. I’m not going to let my husband tank my farm. And my in my goodness. Yeah. Right now the reason why Kayla’s are right just perpetrator is because Kayla was a star in her firm. She didn’t need the money. She was an equity partner in a top law firm in New York City on Wall Street. She was rich, she didn’t need the money. She was really just trying to help her husband.
Mike Malatesta 30:35
And she wasn’t damaging the firm either. It was a legitimate need. It was to generate
Kelly Richmond Pope 30:39
knee. Yeah, it was legitimate need, but the problem was for husband stop doing the work. When he stopped doing the work, and started to submit invoices for work not done. That was a problem. But I will say this, and this, I can’t remember if this is in the book or not. There was a policy that the firm had that her department came up with saying, Listen, we don’t want to go back to our accounting group at the at the end of the fiscal year or calendar year and say, we didn’t spend all of our money. So hey, anybody have any outstanding invoices, please submit them. So we can bring down this balance. Because the last thing we want to do is go back to the accounting group and say we have a $50,000 surplus. Because next year, when we go back and put our budgeted, they’re going to reduce it by exactly. So this sort of process of submitting invoices before the work had been done was sort of the culture. Okay. So that being said, as her husband was submitting these invoices before work had been done, that was the culture. Okay, all right. Now, the culture was that that work would eventually be done or husband didn’t do the work. So Kayla started to find herself, okay, I’m gonna approve these invoices with the expectation that he’s going to do this work. He never did it. That led to a multimillion dollar fraud scheme. I’m not gonna spoil the whole story. More a little. But yeah, but one of the things that I’ve noticed in my when I have talked about these cases, live. What I do is I talk about an intentional perpetrator case, I talk about an accidental perpetrator case, and I’ll talk about the right just broke through the case. And a lot of times, I’ll show video interviews with Egypt, intentional perpetrator, that’s terrible, that person should rot in jail. They’re awful. Okay. Accidental perpetrator, oh, my God, that happened, Oh, I feel so bad for this person, like, Man, my heart goes out to them. That’s a tough spot.
Mike Malatesta 32:46
I can put myself in their shoes. Right?
Kelly Richmond Pope 32:49
Right. Just perpetrator? Yeah, that person really messed up that person, there’s a there’s a level of empathy that is shown to the other two categories that is not shown to the intentional perpetrators. So you know, if there was some way that I could do like rings, scans of people, as they’re going through these processes, I’d love to be able to write that study, because just showing the emotional changes that people have, as they are experiencing different cases and showing that these categories actually work. The reason another reason why I think that they’re important, is it. If you utilize them in a training workshop, it may give you insight on the types of internal controls, you need the type of employee support, you may need to offer, perhaps firms that have some type of employee support program where there’s a fun that you can access, if you are in a time of need. Maybe those types of resources could reduce someone from feeling like I need to take if I’m in need, who knows just an idea, right. But I think the categories matter.
Mike Malatesta 33:55
And I think for the at least from the accidental standpoint, you tell me from a CPA standpoint and a control standpoint that’s in accompany at least those are the those are kinds that those are things that probably can be prevented if you’ve got the right controls in place, right?
Kelly Richmond Pope 34:13
Absolutely. And that is, Mike, you’re taking money, you’re taking the words out of my mouth. What I did is, and I’ll send this to you now I don’t know in your show notes if you want to use this but I created a game called The for me once fraud experience, and you can log in and you can play to two paths. You can either report fraud or you can commit fraud. And if you report fraud, it tells you what type of whistleblower you would be if you were ever to be one. If you commit fraud, you do that path and it tells you what type of perpetrator you would be whether it’s going to be intentional or accidental or righteous. So you go through scenarios and up pops an answer and there might be no if you were ever to be appropriate and you will be a Brightspark tree. What I’ve seen so far from the data selected, the data I’ve surveyed I have about I should have about 6000 responses at this point is most people are trending on the accidental perpetrator and the righteous perpetrator categories, which is good, because you can prevent that everybody is gonna be a potential perpetrators, we have a big problem. But what we’re seeing is, most people are showing that they are either, if they’re going to commit fraud, it’s either because they feel like they can’t push back, or they’re trying to help someone, both of those we can manage through training through internal controls, which I think there’s hope that we can change it.
Mike Malatesta 35:36
Okay. So thank you for for walking us through that. I’d like to spend a little bit of time on Rita only because, as you mentioned, she’s sort of a theme throughout the book Plus, she’s the, the, the star of your documentary, all the Queen’s horses and I, so I don’t want to, you know, give away anything. I’m just curious how she’s like, as I read the book, it seemed to me like she impacted you. It’s almost like she got in your head, the way that she did things and on and then and then, of course, the way that she was sentenced and, and then, you know, let out and stuff later, but she’s like a special case for you. So there’s like some personnel there?
Kelly Richmond Pope 36:24
Well, you know, it’s interesting that you pose your question the way you did, because it’s not so much that Rita impacted me. Okay. It’s the environment that impacted me. Because what was interesting to me, after I saw the headlines that City Comptroller embezzled millions and millions of dollars, my first question was, what’s the environment that allows a person to think they can get away with that? Because I sort of believe we all will push the envelope, but it’s the rules around us that makes us say, No, I’m not going to speed or No, I’m not going to use my corporate card and go shopping today. Like it’s the rules and the policies that make us that stop us, right. And so I was curious as to what, where is Dixon? And what in the world is going on in Dixon that a person thinks that they can steal that amount of money for that length of time, so it was more about the environment that I was intrigued by Rita to me was just the product of the environment. So you know, and so you think about it, Rita is an intentional perpetrator. The residents of Dixon are innocent bystanders. And so that’s the middle part of the book, the town of village is the town of Dixon is an organizational target, that’s another chapter. And then the person that discovered the fraud is a whistleblower. She’s actually an accidental whistleblower. So it’s the entire case that really fuels the book. So read is at the beginning, but every player in this sort of broad saga that happened to Dixon is, is a source of inspiration for me, but it was the environment that, you know, when you when you hear these stories, once you get beyond the perpetrator, you start asking yourself two things. How was it discovered? And how did it happen? You know, how did it happen? I mean, if you think about it, the better movies that have been made about Bernard Madoff are about the environment. Not really about his lifestyle. He lived a lavish lifestyle. He had a great penthouse. He had assets, he went to the best country clubs. That’s not what’s interesting. What’s interesting is all the people that believed him, how did he get away with it? And who was the whistleblower that kept trying to alert everybody? That’s where the story is? Yeah. So
Mike Malatesta 38:42
like everything was, so everyone could see that something wasn’t quite right. But everybody was impressed by the visual, right. And I think that’s the same with with redoes. Like, everyone, so can you go on how can this possibly be? But then, wow, she’s really crushing.
Kelly Richmond Pope 38:57
Oh, yeah. And so let let’s sort of let’s sort of pull back the layers of that environment. And that’s where my interest came from. Because, you know, Rita is remotely interested. She lived a lavish lifestyle, she bought horses, and she spent a lot of money. That’s the story. But their true story is, Will Dixon, when you all went to city council meetings, what was the environment of those meetings? What did she say? What did you all approve? What did the records look like that allow her to steal all this money? Because one of the first things we talk about in an accounting class is something called the accounting equation. Assets equals liabilities plus stockholders equity. All these financial statements have to balance. So if you take $53 million out, right, you are putting something in. So let’s talk about what did you put in? How did you pull the wool over everybody’s eyes to me? That was the story. And that was the story that the news was missing.
Mike Malatesta 39:57
And then interestingly, Kathy Swanson is the The Accidental whistleblower in this Yes, and and what was so interesting about it is how quickly if you just asked a simple question like, let me see the bank statement that you are able to, essentially endless 20 Year $53 million fraud, like, you know, in an instant, and it doesn’t make you wonder from a government statement or a leadership standpoint, because it could be a company, right? When you are completely asleep at the wheel, and you are trusting somebody, whatever they tell you, when it’s so easy for you to ask them to just, you know, trust them, but just give me the, you know, give me the bank statement, or give me the reconciliation or the general ledger or whatever, so that our cash flow statement, you know, where stuff going, that at least, I may not know how to be an account, but at least I know, the questions I’m supposed to be asking. I mean, the mayor was beloved in Dixon, Illinois during this this time, but I don’t know what he was doing. But he was not doing anything to be fiscally responsible for his constituents.
Kelly Richmond Pope 41:08
And you know, Mike, you find this because for whatever reason, I don’t get it. People don’t like accounting, they don’t think they need it. I don’t know why that is. But every person, every person should be able to read a financial statement, everybody, because whether you work in a corporation or not, your tax dollars are rolled up into a statement of financial position every so every accounting affects everyone. So you should have enough knowledge to ask a question that something like this. If our neighboring next door town Sterling doesn’t have budget cuts, why do we were the same population size as they are? If their financial statement, their balance sheet looks like this? Or if their income statement shows this point of net operating income? Why doesn’t ours? Right? Explain that to me? You don’t need to be a CPA to ask that. But you just have to have some just some basic knowledge. And nobody was asking those questions. That’s what was interesting to me.
Mike Malatesta 42:15
Yeah. And almost everybody who gets ripped off like that. Kelly says something like this in the aftermath. I am really not a numbers person, or Yes, you are. I just never paid attention to the to the numbers. You know, I’m focused on whatever and you can’t be focused on whatever, you know, nothing on the numbers. Right.
Kelly Richmond Pope 42:33
Yeah. And you know, Mike, there’s a, I try to talk to myself every day, when I especially when I make a mistake or something wrong is going on. And I tried to ask myself, what was my personal accountability in this? Yeah. And when you say things like, I’m not a numbers person, make sure you say it in the privacy of your own home. Because whoever you say that around publicly, you’re a target. Right? You are a target, because the numbers person knows that you’re not paying attention. Yeah,
Mike Malatesta 43:03
good to know. Can I handle your cash?
Kelly Richmond Pope 43:08
Right. Exactly. Exactly.
Mike Malatesta 43:12
So let’s, um, let’s let’s switch over to whistleblowers, because those, you spent a lot of time with whistleblowers and and not just the various types, but what their life is like how people think about whistleblowers in general. And you kind of connect this thing that happened to you, when you I don’t know if you were a teenager yet, but you were talking about your brother doing something and you came to your parents and you wanted to tell on your brother and your mom said something like mind your own business. And as I was reading through the whistleblower section, I thought to myself, or maybe you even flat out said it. This is why it’s this is one of the reasons why it’s so difficult to be a whistleblower, because everyone has been told, mind your own business. Keep your mouth shut in your mind your own business. Yeah.
Kelly Richmond Pope 43:58
Right. And you know, and so we have an embedded culture of keep your mouth shut. This doesn’t involve you. And so it’s hard to tell a person come forward. And one of the things that just like with the perpetrator category, we have different types. We have different types of whistleblowers too. And so I wanted to offer something so like a new way of thinking, because we have to stop grouping everybody together and think that they all embody the same characteristics. So with the whistleblower is just three categories accidental, knowable, and vigilante. Now I’m going to start with the vigilante first because the vigilante category of whistleblowers is who we are actually describing when we say things like snitch rat, tattletale trader, you know, backstabber there. Those are the vigilante whistleblowers, and I believe that they are a rare breed. They are a rare breed of person that they don’t mind their own business. But they’re also they’re that employee that reads the Code of Conduct from top to bottom. And they know every rule, every policy and when one person gets out of place they know it. And tell me you don’t want a person like that on your team? Of course you do. Of course you do. You might not know, you might know, what’s your whole team like that. But you need one person that that reads the code of conduct that reads the compliance report that knows the standards, and holds everybody accountable to them. That’s a good person, right? That’s a good person. You know, the next time you get on an airplane, you hope that there is a vigilante whistleblower on that Safety and Inspection Team looking at everything, you hope that that person is there because they know it covered a cover, they’re gonna let you know if somebody’s out of place, okay? Vigilante whistleblowers tend to be somebody that is far more senior in their career. They are willing to fight, you know, they can take the hit, they’re ready for the war. You know, they they almost say, Bring it on. I dare you. Because I know my stuff. I know my policies, and I know you’ve broken and I’m gonna tell that’s the vigilante. And so the terms you know, snitch and red tab, so that’s reserved for them. And they’re okay with it. They’re okay with because
Mike Malatesta 46:27
righteousness about them. Yeah. Right.
Kelly Richmond Pope 46:30
Now, the other two categories we might identify more with, because we only get involved if we really have to. Now the accidental whistleblower is Kathy Swanson out of my documentary. Yeah. Kathy Swanson did not target her box. Kathy’s wants him doing her job like she always did every day. Notice some discrepancies, took those discrepancies to her boss, she stumbled upon it by accident. That’s Kathy Swanson. Kathy never really identified as a whistleblower, because she was just doing her job, right. So why is that called a whistle blower? I’m just doing my job. And I noticed something odd and I take it to somebody, why am I now in this category of whistleblower. Now, the the noble whistleblower, it’s a little bit different because the noble whistleblower, similar to the vigilante, what’s different between the noble and the vigilante is the noble is a part of a team, the noble knows the process and knows that other people aren’t paying attention to what they’re supposed to be doing, and speaks out. The vigilante may not have anything to do with the team. So that’s the distinction between the two. And so going back to that safety inspection team, the noble, the noble whistleblower notices, hey, we’re supposed to do a safety check on these engines for these cars. And I’m noticing that these engines blow up, and they reach a certain temperature, and everybody on this team notices it too. And if we issue in the report, what we saw, we’re going to have to issue a huge recall. And it’s going to cost the company millions. And there could be layoffs. If we do this, you notice that other people don’t say anything, and that can be risking lives of others, you’re not going to do it, you’re going to step out and say something and when you do people attack you, because you’ve stepped outside of the group, but you’ve done the right thing. That’s the noble whistleblower. So there are stories in the book that embody each of those categories. And in the game will tell you which one you most likely would be if you ever want to be a whistleblower.
Mike Malatesta 48:50
Okay. The noble i The example that comes to mind is the engineer from Morton fire call, think he’s a Nobel, right. He’s,
Kelly Richmond Pope 48:58
he’s a Nobel. He’s a Nobel. And you think about it, you remember the space shuttle Challenger? Right, you know, that could have been prevented, easily? Yes. Easily. If they had listened to the science, and the reports and the temperatures and all that that the whistleblower had to offer, if they had just listened to him that could have been prevented. It easily could have been prevented. And so when he stepped out and started talking about Roger Biggio lay was his name when he started talking about what happened, and how no one listened. People attacked him. Why did they attack him? Because jobs were lost when that contract was lost in that town. So now it’s his fault. It’s his fault. It really isn’t. And it wasn’t, but he got blamed for
Mike Malatesta 49:51
Yeah, well, I’ll talk about selfish. I mean, this people died as a result of this decision. And I know there’s been a lot written about that particular do a thing but it wasn’t like he had this revelation or this knowledge that no one else had. They’re all the same thing, right?
Kelly Richmond Pope 50:08
They’re all looking at the same report. They all know the same thing. And no one says any.
Mike Malatesta 50:13
Yeah, it was almost like the rest of them were like the accidental perps because the boss said, Hey, this, this mission is gotta go. And they they made it go.
Kelly Richmond Pope 50:23
And you know why I wrote about that story? Because it gives you You’re right. A lot of people have written about this a lot. But why I wrote about that is because I had a personal connection. When I did the I was the commencement speaker at North Carolina a&t State University back in 2019. Well, on the space shuttle Challenger, was an astronaut, the second African American astronaut in space, Dr. Ronald McNair, and, of course, he died along with the other astronauts. But when I did that commencement speech, and I posted the video, I think it was to LinkedIn, a man reached out to me by the name of Carl McNair. And so this man reaches out to me and says, You did a really great job. You know, I’m so glad I’m so proud to call you an alum. And I noticed the name. So I write him back. And I said, you know, thank you so much, Mr. McNair, by any chance, are you the brother are related to Dr. Ronald McNair? And he writes back and he says, that was my baby brother. And I was like, oh, it’s, you know, it’s his brother. And I’m like, can we please have a conversation? Can we please talk? So we talked, and we had a call, and he said, You know, when I when I listened to your speech, and I was really excited, and I said, you know, when I was writing my speech, I thought about including the story about the Challenger, I had several iterations of speech. And he said, wow, you know, it’s interesting that you say that, because I’ve read about I also watched your TED Talk. And had they only listen to the whistleblower, my baby brother will probably still be alive today. Yeah, you know, and so that’s why I wrote about that, because that was just such a, like, a full circle. Moment. I remember watching when the liftoff when it happened. And I remember watching when it blew up, and did not understand what I was looking at. So I was so young, and I was like, wow, there’s some blue smoke that came out. That’s, I wonder if they intended, that’s what I was thinking, because you never would have thought something like that would happen. So yeah, that’s why I wrote about that.
Mike Malatesta 52:32
Okay. Well, that’s that’s powerful, personal touch to that story. So thank you for, for sharing that. And that was really neat of his brother to reach out to you.
Kelly Richmond Pope 52:41
And it was it was, you know, sometimes you just you never know who you’re going to meet and touch. And so that’s one of the things that I wanted to do with the book was make sure it had a storytelling approach and character driven type of way to share these stories, as opposed to being more of a these are the fraud schemes. And these are the red flags. These are I didn’t want to be like a recipe book. Yeah, I didn’t want to take I didn’t want to take that
Mike Malatesta 53:12
approach. Yeah, it’s not a manual. You didn’t you did a great job of it being a story based book, but getting enough into these things so that you can walk away with the understanding like oh, okay, that’s what happened. That’s what this person was showing themselves to be or, you know, are grouping them into the intentional, accidental righteous, you did a fabulous job. And it’s the best thing the notes section that you I mean, you you can tell you’re a professor, because you definitely, you note your sources, you note everything in that book, having written my own book with hardly any of that stuff. I thought, oh, my gosh, so much work to do it that way. I have
Kelly Richmond Pope 53:47
to thank my editor Kevin efforts and give him a shout out for that for making sure they were all there.
Mike Malatesta 53:54
One more thing on the whistleblower because you have some Mark Whitacre comes to mind and you call him a crossover whistleblower, I believe an example of a crossover whistleblower and as I understood it, Mark Whitaker, I forget the name of the movie, but there was a movie that Matt Damon starred as an insider, the insider Okay, so as I remember it, he works for ADM, which is one of the largest agricultural product producers in United States, a privately held company. And they were doing some things inside of that company. And he was a part of it. But at some point, he was a he’s a really weird case, because he was deep into something benefiting from it, then he got found out but not from inside the company from outside the company. But then I think he even went back to it before he decided that he was going to become a whistleblower. And I may have my facts a little bit wrong there. But the whole crossover thing, Kelly is really interesting if you could just describe what that actually is and what’s going on with those that kind of person.
Kelly Richmond Pope 54:53
Yeah, you know what, what I wanted to do was really make sure I had a place for people that were in the perpetrator category that were involved in a fraud, but then became some form of a whistleblower. And so what I wanted to do is not taint the whistleblower category with anybody that had fraud dealings. So that’s why they, I put them in this crossover, because I wanted to make sure that people understood that there are, there’s value in perpetrators that cross over into a whistleblower category because they are at an extreme value to law enforcement, because they have information inside information that can help the legal team that can help the FBI they can help the US Attorney’s, and so they can become a vital source. So I wanted to put them someplace. So that’s why I caught them or crossover.
Mike Malatesta 55:52
Okay. And Brett reminds me of Brett Johnson, again reminds me sort of a crossover, you get caught. And then the FBI or Maverick. Yeah, they, they, they say okay, well, you start working for us to help us move up the ladder of this or throughout the broad, and then we’ll help you with your sentence or your whatever, whatever we end up charging you with. So it’s okay. Thank you for that. One thing I want to leave. I just thought this is funny. So I hope you don’t mind me leaving it at that. But these are Kelly’s red flags. So I thought this is super funny. So so these are these are these are things that Kelly considers red flags one you don’t like dogs.
Kelly Richmond Pope 56:32
Like dogs, right? Cat even cat eating
Mike Malatesta 56:34
cat people like dogs. Yeah. You refer to yourself in the third person. Crazy. It’s happening more and more, isn’t it? It’s high.
Kelly Richmond Pope 56:42
It’s odd by it’s really odd. Like what are you doing? distancing yourself from yourself? Like, why are you doing it?
Mike Malatesta 56:48
What about one name? How do you feel about that?
Kelly Richmond Pope 56:51
I mean, are you a celebrity? Like, what are you thinking?
Mike Malatesta 56:57
Alright, don’t say please. And thank you, which that’s, that’s definitely a red flag for me.
Kelly Richmond Pope 57:02
You’re too arrogant to work with. Right? Yeah, you know, nobody wants to be on your team.
Mike Malatesta 57:07
Don’t have a streaming account. I thought that was funny. And this one is the funniest you have. You have an email account. That’s a Hotmail account. My friend Todd has a Hotmail account. When you notice it every time it comes across. It’s like what is it? What is the mail?
Kelly Richmond Pope 57:26
A Hotmail and AOL. Yeah, and then sent off sounds like fraud. But people are gonna think no one’s gonna click on and open your message if they see AOL. Right. How long have you had that account?
Mike Malatesta 57:41
Well, and people like AOL, is that still even a thing? I don’t even know what that is.
Kelly Richmond Pope 57:45
They don’t even open it. Right. Or Netscape? I mean, you can’t have one. Yeah. But like all those kinds of things, bad signs.
Mike Malatesta 57:53
Well, Kelly Richmond Pope, it’s been such an honor and a pleasure to have you on the show. Your book for me once is a phenomenal book. I recommend it to everyone, you should go get it on Amazon right now. Like, probably hundreds of 1000s of others already have. And if you want to talk to me about it, feel free to reach out to me as well. Kelly, before we go, I just wanted to ask you if there’s anything that I haven’t asked you or something you want to leave us with that I forgot to mention our stages yours.
Kelly Richmond Pope 58:25
Yeah, like any of us can get fooled. You know, and many of us probably get fooled more than once. But hopefully the book will give you some insight to think about how you can protect yourself, how you can protect your organization, and never to help you think about schemes that that you can use. That’s not the point. Somebody don’t.
Mike Malatesta 58:50
There’s a lot of examples, but don’t that’s not what you want to take away from this.
Kelly Richmond Pope 58:54
Yeah. So but I appreciate the invitation and just the really fun conversation today.
Mike Malatesta 59:01
Great, awesome. And if you don’t like numbers, keep it to yourself. You could choose to keep it to yourself. Yeah, have
Kelly Richmond Pope 59:07
a target on your back.
Mike Malatesta 59:10
So everyone, thanks for listening. I just want to leave you with this until next episode, please, every day every day, maximize the greatness that’s inside of you and make your future your property. Something that you are very proud to own everybody. Thanks for listening to the show. And before you go, I just have three requests for you one if you like what I’m doing please consider subscribing or following the podcast on whatever podcast platform you prefer. If you’re really into it, leave me a review write something nice about me Give me five stars or whatever you feel is most appropriate. Number two, I’ve got a book called owner shift. How getting selfish got me unstuck. It’s an Amazon bestseller and I’d love for you to read it or listen to it on Audible or wherever else Barnes and Noble Amazon you can get it everywhere if you’re looking for inspiration that will help you unlock your greatness. This and potential order or download it today so that you can have your very own copy. And if you get it please let me know what you think. Number three, my newsletter I do a newsletter every Thursday and I talk about things that are interesting to me and or I give more information about the podcast and podcast guests that I’ve had and the experiences that I’ve had with them. You can sign up for the podcast today at my website, which is my name Mike malatesta.com. You do that right now put in your email address and you’ll get the very next issue. The newsletter is short, thoughtful and designed to inspire, activate and maximize the greatness in you