Most of us grew up being told the same things by our parents—especially our mothers:
Don’t lie. Don’t cheat. Don’t steal.
At least, that was true in my generation.
So when people hear about white‑collar crime, they often assume the perpetrators must be fundamentally different from the rest of us. Greedy. Sociopathic. Wired wrong. That assumption is comforting—and dangerously wrong.
After decades of investigating financial crimes, I can tell you this: most white‑collar criminals do not see themselves as criminals at all. They believe, in their heart of hearts, that they are good people who were placed in impossible situations.
And the mechanism that allows them to cross that line is something called rationalization.
How Good People Talk Themselves Into Committing Fraud
People don’t usually wake up one morning and decide to lie, cheat, or steal.
They talk themselves into it.
They tell stories that make the act feel justified, even noble:
- The company pushed me into this.
- I did it to protect my boss—and other people’s jobs.
- The company cheats on its taxes anyway. I’m taking crumbs compared to them.
Once a person convinces themselves that what they did “wasn’t really wrong,” they sleep just fine at night.
That’s how rationalization works.
We often focus on famous fraudsters—Bernie Madoff, Enron executives, and high‑profile market manipulators. But they are not representative of the vast majority of cases.
Let me tell you about a far more typical one.
Meet Harry
True story… his name was different, but we’ll call him Harry.
Harry was forty‑five years old. An accounting manager at a manufacturing company in the Midwest. A rust‑belt firm struggling to compete in a global economy.
Then one day, Harry’s job was moved overseas.
Just like that, he was out of work.
Harry didn’t panic. He had a wife, two kids, and a mortgage. He stayed positive. This was a new opportunity, he told himself. He’d land on his feet.
What Harry didn’t anticipate was how long that fall would be.
It took nearly two years to find another job. By the time he did, his savings were gone. The new position paid less, offered inferior health coverage, and came without a defined pension plan.
Still, Harry remained optimistic. Same role. Same responsibilities. Accounting manager.
Then six months into the job, the phone rang.
The Moment that Makes a White Collar Criminal
Harry’s wife was frantic.
Their young daughter had been riding her bike when she hit a crack in the sidewalk, flew over the handlebars, and landed face‑first on the pavement. Her injuries were severe.
Harry rushed to the hospital. His daughter was sedated. He cornered the doctor and asked the only question that mattered:
Is my little girl going to be okay?
The doctor reassured him. With proper care—several operations, and plastic surgery—she would recover.
Relief washed over Harry.
Then reality followed.
“That sounds expensive,” Harry said.
The doctor gave him a reassuring look and told him not to worry. Insurance would take care of it.
Harry nodded. Of course it would.
Except it didn’t.
Because his daughter was eight years old—not seven—the insurance company deemed the procedures cosmetic rather than reconstructive. Elective. Not covered.
Harry needed $50,000.
The Fraud Triangle Comes Together
Fraud needs three things to occur: need, opportunity, and rationalization (see my complete article on the “Fraud Triangle“). Sitting at his desk, Harry took stock of his situation.
He had a need: money for his daughter’s surgeries.
He had an opportunity: as accounting manager, he oversaw accounts payable. He didn’t have direct authority over cash—but he knew the system. He knew the back door.
One element remained.
Rationalization.
How do you justify stealing from your employer?
For most people, that’s a hard sell.
For Harry, it took just a few minutes.
It was his little girl!
Harry set up bogus vendors. Submitted fake invoices. Cashed the checks. In short order, he had the $50,000.
His daughter received the care she needed.
That was it.
He would do it just once.
Employee Fraud is Always Easier the Second Time
Six months passed. Harry wasn’t caught.
He returned to work relieved, grateful, and convinced the crisis was behind him.
Then the phone rang again.
His father‑in‑law had died. His mother‑in‑law had Alzheimer’s and needed to move in with them. And his wife was unexpectedly pregnant with their third child.
Harry took inventory again.
He had a need: a bigger house.
He had an opportunity: the same job. The same access.
All that remained was rationalization—and this time, it came easier.
It wasn’t his fault that his job had been shipped overseas. It wasn’t his fault that the healthcare system was broken. It wasn’t his fault his father‑in‑law died, or his mother‑in‑law became ill.
Borrowing some money to deal with emergencies felt reasonable.
And so he did it again.
And again.
For three years, Harry stayed under the radar. He was careful. He was smart. He didn’t take too much at once.
But then the company CFO saw some concerning red flags and hired me to investigate.
When the Story Collapses
Within two weeks, my team had uncovered the scheme.
When it came time to perform the admission-seeking interview, I prepared as I always had, knowing the value of a confession—no trial. Just a sentencing hearing.
Utilizing the good rapport I had established with Harry to lull him into a false sense of security. Telling him that I needed a final exit interview. That I had found nothing of significance. “Could we meet for 30 minutes before I leave for my flight back to Chicago?” I asked him.
Harry was right where all my targets were–lowered defenses. Relieved that the investigation would soon be over. Just one last interview. Exactly where I wanted his state of mind.
The interview began—It didn’t take long.
Like most white‑collar offenders, Harry was drowning in guilt. Once he realized I knew what he had done, he collapsed into tears, trying desperately to justify indefensible choices.
The case didn’t go to trial. With a confession in hand, it went straight to sentencing.
Harry served three years of a five‑year sentence.
His wife left him.
He lost his job. His career. His professional license. His reputation.
And in the end, his self‑respect.
The Real Lesson
Harry is not a monster.
He is the most common kind of white‑collar criminal I’ve encountered.
No intent to harm. Deep remorse. And a tragic ability to rationalize the very acts that destroyed his life.
If you want to know what a white-collar criminal looks like, don’t imagine villains.
Look to your right.
Look to your left.
They look just like us.
Tom Golden
In future posts, I will cover areas just touched upon here:
- Admission-seeking interview techniques
- Winning people skills—getting people to do what you want
- The best internal control mechanisms to keep honest employees honest
Frequently Asked Questions
How do ordinary people rationalize committing fraud?
Ordinary people rationalize fraud by telling themselves stories that make the act feel justified. Common rationalizations include “the company pushed me into this,” “I’m just taking what I’m owed,” “I’ll pay it back,” or “the company cheats on its taxes anyway – I’m taking crumbs compared to them.” According to forensic accounting investigator Tom Golden, CFE, most white-collar criminals do not see themselves as criminals at all. They genuinely believe they are good people who were placed in impossible situations. Rationalization is the psychological mechanism that allows them to cross a line they would never have imagined crossing – and still sleep at night.
What is rationalization in the context of white-collar crime?
In the context of white-collar crime, rationalization is the internal process by which a person convinces themselves that their fraudulent behavior is justified, acceptable, or not truly wrong. It is the third element of the fraud triangle – alongside pressure and opportunity – and it is what allows people who consider themselves honest to commit dishonest acts. Rationalization typically involves reframing the act as a response to unfairness, a temporary measure, or a victimless action. Once in place, it allows the fraud to continue and often escalate over time.
Are white-collar criminals different from ordinary people?
Not in the ways most people assume. After decades investigating financial crimes, Tom Golden found that most white-collar criminals are not greedy sociopaths or people wired differently from the rest of us. They are ordinary people – accounting managers, trusted employees, long-serving executives – who faced financial pressure, found themselves with opportunity, and rationalized their way across a line they never imagined crossing. The assumption that fraudsters must be fundamentally different from us is comforting but dangerously wrong, because it causes organizations to overlook the real risk sitting inside their own teams.
What triggers rationalization in fraud cases?
Rationalization is most commonly triggered by financial pressure combined with a perceived sense of injustice. A person who loses their job, faces a medical crisis, accumulates debt, or feels undervalued by their employer is more vulnerable to rationalizing dishonest behavior. The key insight from Tom Golden’s investigations is that people rarely decide to commit fraud outright – they talk themselves into it gradually, reframing each step as a reasonable response to an unfair situation. By the time the fraud is significant, the rationalization is so deeply embedded that many perpetrators genuinely cannot recognize what they have done as wrong.
What is the psychology behind financial fraud?
The psychology behind financial fraud centers on three converging factors: financial or personal pressure that creates motivation, an opportunity created by weak controls or unchecked access, and rationalization that makes the act feel acceptable. Tom Golden’s 30+ years of fraud investigations reveal that the psychological journey into fraud is rarely sudden. It usually begins with a genuine crisis, proceeds through a series of small rationalizations, and escalates because each step that goes undetected reinforces the belief that the behavior will continue to go undetected. Understanding this psychology is essential for both detecting fraud and designing organizations that make it harder to sustain.
How can organizations reduce rationalization as a fraud risk?
Organizations can reduce rationalization as a fraud risk by building a culture of ethical accountability and removing the conditions that feed it. This includes fair compensation and treatment so employees do not feel owed something, transparent communication about organizational values and consequences for misconduct, visible oversight and controls that signal fraud will be detected, and whistleblower programs that give employees an outlet for concerns. When people know their behavior is observed and that misconduct carries real consequences, the rationalizations that enable fraud become harder to sustain.
