Research in psychology suggests that when an individual engages in fraud (especially first-time offenders) they often go through a series of emotions, including fear and guilt. Such emotions will often create additional stress in the life of the perpetrator and this additional stress is often seen by colleagues and co-workers. While no particular behavior will indicate fraud, co-workers will immediately notice a change in behavior. Someone that was nice and pleasant will become irritable and confrontational. A co-worker who is loud and boisterous will become shy and reserved (or vice-versa). Even perpetrators will notice their behavioral changes.
For example, a woman who stole over $400,000 said, “I had to be giving off signals. I could not look anyone in the eye.” A man who took over $150,000 from his employer stated, “Sometimes I would be so wound up I would work for 12 or 14 hours a day, often standing up. Other times, I would be so despondent I could not get off the couch for over a week at a time”. It should be noted that just because a colleague engages in unusual behaviors doesn’t necessary indicate that he or she is committing fraud. In fact, changes in behavior can be caused by a number of factors such as changes in sleep patterns, a new child, a divorce or marriage, a parent who is sick, or a number of other factors. The important thing to remember, however, is that both unusual behaviors and extravagant lifestyles should signal to managers that something might be wrong. Before a manager confronts any person about lifestyle changes, unusual behaviors, or any other indications of fraud, both legal and human resources should be identified so that the matter is handled in an ethical and legal manner.