876: Kelly Richmond Pope | How Fraud Became a Trillion-Dollar Industry

876: Kelly Richmond Pope | How Fraud Became a Trillion-Dollar Industry

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[00:00:28] Coming up next on The Jordan Harbinger Show.

[00:00:31] Kelly Richmond Pope: We can engage in fraud and we don't think we're going to get caught. And if we do get caught, we're not going to jail because we can talk our way out of it. We're just going to pay a fine and move on because that's that optimistic idea that it's not going to be as bad as actually it can be.

[00:00:48] Jordan Harbinger: Welcome to the show. I'm Jordan Harbinger. On The Jordan Harbinger Show, we decode the stories, secrets, and skills of the world's most fascinating people and turn their wisdom into practical advice that you can use to impact your own life and those around you. Our mission is to help you become a better informed, more critical thinker through long-form conversations with a variety of amazing folks from spies to CEOs, athletes, authors, thinkers, and performers, even the occasional undercover jihadi, economic hit man, astronaut, or music mogul.

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[00:01:36] Today, we're talking about fraud. Who commits fraud? Why do they commit fraud? How can businesses and individuals prevent getting taken for a ride? Kelly Richmond Pope and I discussed something called the Fraud Triangle. We'll also learn the warning signs to look out for, especially if we own or work in a business, which most of us do, and explore why fraud seems more common and more severe these days than ever before.

[00:01:58] Here we go with Kelly Richmond Pope.

[00:02:04] So I've always been interested in fraud when I was a kid. I love the idea that systems were hackable and had holes in them that somebody else could take advantage of. And when I was a kid, probably being a little bit of a turd fraudster, junior diet fraudster, was more appealing than catching the fraudsters. But even now, in business, there's opportunities, but wherever there are legitimate opportunities, there's also fraud. So your work was a good fit for my interest/the show, I think.

[00:02:30] Kelly Richmond Pope: That's so funny.

[00:02:31] Jordan Harbinger: How did you get interested in fraud? You're an accounting professor. There's a lot of fraud in accounting. Is that really as simple as it gets?

[00:02:39] Kelly Richmond Pope: Okay. So there's a lot of fraud in the world.

[00:02:41] Jordan Harbinger: Yes.

[00:02:41] Kelly Richmond Pope: And you think about what an accountant does and they are developing the financial statements of all organizations. And those numbers have tremendous stories attached to them, and there can easily be fraud there. That's the technical answer. My interest really is I think I'm just partially just maybe a largely nosy. And I'm fascinated by people's ability to rationalize. Anything they want, whenever they want it. And I go on an audience and I'll say, raise your hand. If you're ethical, everybody raises their hand. And then you start going through these different scenarios and they can rationalize anything they want to take. And so I'm just fascinated by how good people can make bad decisions.

[00:03:24] Jordan Harbinger: It is quite easy to do. Few months ago, I ordered something. My wife got the order. Didn't tell me, wasn't sure what it was from, thought it was maybe from a show sponsor. I was like, where is this thing? I asked her where it was, but I wasn't very specific. She said, "I don't know," because I asked her that a hundred times a day. So I called the company, they sent me another one. And she's like, "Oh, now we have two of these?" And I said, "I asked you where that was."

[00:03:47] So, I basically accidentally conned this company out of a thing that I bought. And it was like a hundred bucks. And I'm like, we got to mail this back. And then I was like, how do I even do this? I have to call the company and be like, "So what happened was I accidentally lied to you guys, and stole this, or tricked you into giving it to me," and it was hard to do.

[00:04:05] I mailed it back. And I figured they're not going to maybe ask me why I did that. And then, of course, like an idiot, I didn't think about this. They refunded me the purchase price. So, now, I'm like, okay, now I have to call them because they just gave me my money back. So I called it. It was one of the most awkward things I've ever had to do. And they just laughed at me and thanked me for doing it.

[00:04:25] But I guess what I'm trying to say is, how the hell do these people do this and not have that same feeling? Because it's very unnerving to have stolen something.

[00:04:34] Kelly Richmond Pope: It's so funny, the dress I'm wearing right now that happened to me. I ordered it, got one. And then, another one came, that happens a lot. And so I sent it back and when I sent it back, I think they refunded me twice.

[00:04:49] Jordan Harbinger: Oh no.

[00:04:50] Kelly Richmond Pope: And I'm like, wait, I actually did buy the dress. I'm trying to call, trying to explain. And often, you get somebody on the other end who doesn't care. They're like, "You're stupid. Keep the money and run."

[00:05:02] Jordan Harbinger: Yes.

[00:05:03] Kelly Richmond Pope: And you're like, "But no, I can't." I'm like, "Yeah, you can. I don't care." So you find yourself really explaining yourself in a weird way. I think when those situations have happened in person, like you might be in a store and maybe you're on the phone and you pick up an item and it's in your hand, you walk out and you get to your car and you realize, "Oh my god, I'm still holding," whatever you're holding. Do you go back into the store and say, "I didn't mean to steal this, but I did"?

[00:05:29] Jordan Harbinger: Depends on how long the line is if I'm being 100 percent honest.

[00:05:33] Kelly Richmond Pope: No, but you know what? It also depends on who you are.

[00:05:36] Jordan Harbinger: That's true, I'm sure.

[00:05:37] Kelly Richmond Pope: For me, as an African-American female, I got a lot of things I'm thinking about. How am I dressed? Do I have on sweats and gym clothes? Do I have on a suit? Like, how am I going to be received? What kind of story is it? I'm thinking about all these things in terms of how my message is going to be received. Am I going to be believed? Who knows? There's all these things, it may be just easy for me to keep it.

[00:05:58] Jordan Harbinger: Yeah, yeah, like I'm not trying to get tased for walking out of here with a banana. It's like an apple.

[00:06:05] Kelly Richmond Pope: Right, or my arm's broken. It's a weird world we live in. But I'm just fascinated by how people can rationalize fraud. And so, it's not so much, in the book, I talk about these three types of fraudsters. You can be an intentional perpetrator, an accidental perpetrator, or a righteous perpetrator. It's not the intentionals that I'm fascinated by, it's the others. I think the mass majority of the population fits in the other category, the accidental and the righteous. That's what fascinates me more because there are born corporate con men and women that know a system and exploit it for personal gain. That's never going to change, but it's the people that don't intend to or the people that do intend to help someone else, that I want to open our eyes and expose that category to more people.

[00:06:52] Jordan Harbinger: That's a good point, right? There's no shortage of people that are going to create fake invoices for their dental practice for Medicare or whatever the hell.

[00:06:59] Kelly Richmond Pope: Absolutely.

[00:07:00] Jordan Harbinger: And that's not as interesting as somebody who's this company's evil and I'm giving to poor people and they have a more complex psychology. I know your dad had a close brush with fraud. Can you take us through that a little bit?

[00:07:11] Kelly Richmond Pope: Sure. I am a second-generation academic. So my father was a professor too. And he then went on in his academic career to become the chancellor of North Carolina Central University. And so there was an employee who received a grant from the government who was charged or indicted with embezzlement and you can't steal from the government.

[00:07:33] Jordan Harbinger: No, don't steal from the government.

[00:07:34] Kelly Richmond Pope: Not even one dollar, not even one dollar. And my father wanted due process. He wanted an investigation to be launched and to see what the findings were. But the court of public opinion said, no, he's got to be fired now. And my dad was like, "No, we have to give him due process. We have to find out what the facts are." And so it was just so much, it was so stressful. He was just like, "You know what? I'm just going to go back being a college professor." And so he resigns. He wasn't involved in the story, but his determination for a process to run its course was not something that anybody wanted to hear. And he wasn't friends with the person or anything, so he didn't have a personal relationship with them. He just felt we have to have a process in place. And so I grew up seeing that and I was like, "Wow, adults can act bad sometimes, like real bad."

[00:08:23] Jordan Harbinger: How much did the guy steal? Was it a large amount of money?

[00:08:26] Kelly Richmond Pope: I can't remember the amount, but I'm going to say, if I had to guess, let's say 25,000, 30,000 maybe. In the grand fraud scheme, that's not a lot, but you don't take from a federal government. You can't steal five dollars.

[00:08:40] Jordan Harbinger: No, nothing intentional and even accidental, for that matter, I guess. If you think about it like taxes, that gets you eventually.

[00:08:46] So you mentioned different types of perpetrators, intentional, I assume that's the largest category of just people who go in expecting to steal something.

[00:08:55] Kelly Richmond Pope: Talk in the book that the accidental perpetrator is the largest category because those are the people that find themselves just following the boss's orders. And that's all of us. We all have to report to somebody. And there can be at any given moment, someone saying, "Hey, Jordan, I just need you to sign right here. Sign this. I'm going to handle the rest. Don't worry about the details. I know you're busy. You have the show to do. Don't worry about it. I'll cover it. I'll handle it." And you just sign off because you trust this person. And then you find up, knock, knock, the FBI is knocking on your door and they're like, "Jordan, did you sign right here?" And you're like, "Yeah, but—" This has now put you into this situation. That can happen to more people than we realize. And so this concept of that everybody is still in for greed, I think is very untrue because some people find themselves in circumstances that they did not receive any personal gain from. And so that's what I wanted to open up the conversation about.

[00:09:49] Jordan Harbinger: That's interesting. So, okay, intentional is the people that think they can talk their way out of anything and they come up with a scheme to defraud the company.

[00:09:57] Kelly Richmond Pope: Like, you're Bernard Madoff. He's an intentional. Now, I don't know, I know you read the book. I don't know if you watched my documentary.

[00:10:03] Jordan Harbinger: I did not. Dang it, I didn't even know.

[00:10:05] Kelly Richmond Pope: Aah.

[00:10:05] Jordan Harbinger: I'm surprised that I missed that. I'm usually pretty comprehensive with the prep.

[00:10:09] Kelly Richmond Pope: Let me tell you about it, okay? Back in 2017, I directed and produced a documentary called All the Queen's Horses. It lives on Amazon. You can watch it anytime you want to. But it's about a woman who was a city comptroller of Dixon, Illinois, who embezzled $53.7 million over 20 years. She is an intentional perpetrator, somebody that knew the system inside and out. There were no segregation of duties, and she stole a lot of money and bought horses. So she's an intentional perpetrator.

[00:10:38] Jordan Harbinger: I remember reading about that in the book. This is somebody who had a job that was like, not a bad job, but she had a huge ranch and millions of dollars worth of horses and everyone was like, "How does she get all that money?" "Oh, her boyfriend died and left her millions of dollars." People just made up a story.

[00:10:52] Kelly Richmond Pope: Yeah. So you read it in the book.

[00:10:53] Jordan Harbinger: That's right. I read about that in the book. And if memory serves, she was a really good team member. Was she not? She was really on it.

[00:11:00] Kelly Richmond Pope: Yeah. She was a great. Accountant slash bookkeeper. She was good at what she did and everybody trusted her. She was good until she was stealing, but she was so good at what she did.

[00:11:11] Jordan Harbinger: I've read somewhere possibly in your book that one of the reasons companies make people take vacation is because if there's fraud and they go away for two weeks, they can't cover their tracks anymore. Is that true? Or is that speculation?

[00:11:23] Kelly Richmond Pope: Yeah, that's true. That tends to be a red flag that someone that does not take vacation because you need to stay put so you can cover it up. The interesting thing about Rita, though, is she took four months off of vacation every year.

[00:11:37] Jordan Harbinger: Four? How do you keep a job when you take four months off?

[00:11:39] Kelly Richmond Pope: I know, right? This is the thing. She had her system so locked down that when she was away, so although she was out of the office, she could still run and manage things while she was away. So she was like a remote worker before we had remote workers.

[00:11:54] Jordan Harbinger: Yeah. Wow.

[00:11:55] Kelly Richmond Pope: That's what she did. So, yeah, that's the ironic thing about her case is even when she was away, most of the time for all of those years, no one discovered the fraud, a lot of times fraud would be discovered when someone is gone, because if you're making fake invoices or you have a second bank account and you're not there, then someone else could fill in and see what you're doing.

[00:12:17] Jordan Harbinger: That makes sense, right? Oh, you need to cover these things. Why are there double payments going out every month? That's odd. Why, when you were on vacation, did our expenses drop by 60 percent? Yeah.

[00:12:26] Kelly Richmond Pope: Exactly. So that should have shown up, but she was still managing things when she wasn't in the office. She was good. I'm telling you she was good.

[00:12:34] Jordan Harbinger: Yeah, really interesting. And she went to prison for a long time, not long enough.

[00:12:38] Kelly Richmond Pope: No, it's funny because she was sentenced to 19 years and seven months in federal prison. And when she was released early under the Compassion Release Program due to COVID, that's when I really dug in and said, okay, I'm going to write this book because I'm not going to do another movie. But I need to say something about was justice served, does crime pay. And so that's where the inspiration of the book came from. So throughout the entire book, you read that story. And then, at the end, this analysis of, did she serve the appropriate amount of time.

[00:13:11] Jordan Harbinger: Does accidental also cover stuff like what we were talking about, where package gets delivered to my house and I'm like, "I'm going to open this. Oh, wow. I'm going to keep it." Is that in there?

[00:13:19] Kelly Richmond Pope: Yeah, that's an accidental perp. Absolutely. Had I kept the refund for this dress that I clearly purchased, then I would be in an accidental perpetrator category, for sure.

[00:13:30] Jordan Harbinger: Okay.

[00:13:30] Kelly Richmond Pope: Absolutely.

[00:13:30] Jordan Harbinger: It is a nice dress that you stole.

[00:13:32] Kelly Richmond Pope: Thank you so much. It's great on camera, right?

[00:13:35] Jordan Harbinger: That's right. Stolen or not. It looks good.

[00:13:37] Kelly Richmond Pope: Hot or not?

[00:13:38] Jordan Harbinger: That's right. The other category was righteous. Is that correct?

[00:13:43] Kelly Richmond Pope: Righteous. Okay. Yeah. Now, let's talk. You're going to have something to say about this because the righteous perpetrator category, I'm going to say a name and when I say this name, you're going to understand why he is a righteous perpetrator. I hope you understand.

[00:13:56] Jordan Harbinger: All right.

[00:13:56] Kelly Richmond Pope: Edward Snowden.

[00:13:57] Jordan Harbinger: Yes, of course.

[00:13:58] Kelly Richmond Pope: If you notice, when the Snowden name was hot, you had 50 percent of the world that thought he was a whistleblower and 50 percent of the world that thought he was a criminal. Okay. And so he is the perfect example of a righteous perpetrator because Snowden thought by leaking this information, he was doing a public good, even though a law was broken. A law was broken, but so many people thought, thank you so much for sharing this. He's a righteous perpetrator. The stories in the book are about corporate company stars because when you're a star, you have a halo around you and you can do anything you want. And so sometimes you can use your halo status to help someone outside of the company. You didn't receive any personal gain, but you used your power and your privilege within an organization to do that. They fall into this righteous perpetrator category. I love to talk about Snowden because then it clicked. Then people were like, he fits them all.

[00:14:57] Jordan Harbinger: Yeah, that makes sense. I changed camps because at first, I was like, this guy's spying on us. He's got all these secrets are gone. And then, I found out what the secrets were. And I was like, are you kidding me? This is such BS, but also I'm like, God, I hope nobody died as a result of whatever he exposed. And it made the US look bad, but I'm also like, you can't really get mad when you look bad for something you did. It's like somebody getting caught stealing is like, "You ruined my reputation." Did I ruin your reputation?

[00:15:21] Kelly Richmond Pope: Right.

[00:15:22] Jordan Harbinger: Yeah, he's a complicated character, really complicated character.

[00:15:25] Kelly Richmond Pope: Yeah, a person that I also think that might have started out as a righteous perpetrator is Elizabeth Holmes. She might've started out that way.

[00:15:34] Jordan Harbinger: Mm-hmm.

[00:15:35] Kelly Richmond Pope: Transitioned, for sure, intentional. But think about just reading about her case. She wanted to do good. She wanted to create this technology so that people wouldn't have to go and have vials and vials of blood taken when they just need to go to the hospital. Y'all can just use a drop of blood. And so she wanted to do good. She really did. I believe. Now it went sideways real quick. But I think at the beginning, early stages, that's what she wanted to do.

[00:16:00] Jordan Harbinger: I would agree with that. I think, look, I'm no mind reader. She does seem like she's probably awful in many ways for having done what she did, especially with the patients and bullying the employees. She crossed the Rubicon. Yeah.

[00:16:11] Kelly Richmond Pope: Oh, she transitioned, for sure.

[00:16:12] Jordan Harbinger: But you're right. You're onto something. And I think when I was, I followed that case pretty closely as it sounds like you did as well with Bad Blood podcast and everything.

[00:16:19] Kelly Richmond Pope: Oh, yeah.

[00:16:19] Jordan Harbinger: Dropout or whatever, or both, actually, I listen to both.

[00:16:22] Kelly Richmond Pope: Both of them.

[00:16:23] Jordan Harbinger: But you're right, I think in the beginning, that's very Silicon Valley. I live in San Jose, right? It's very Silicon Valley to be like, "Okay, it doesn't work. Do we tell the investors it doesn't work or do we say we're making really good progress even though everything we've tried has totally failed?" "Okay, we have to do that." But then, yeah, you cross the line when you go, "Tell them it works and then send it over to Siemens for a real lab analysis and then give them the readout and don't let anybody see the device because it doesn't work and then tell them it does work and that it's being used in Iraq." Now you're going to prison.

[00:16:53] Kelly Richmond Pope: Yeah. Now you're going to prison.

[00:16:54] Jordan Harbinger: Yeah.

[00:16:55] Kelly Richmond Pope: And you think about there was so much wrong with her and it. This whole idea of "fake it till you make it" came from a con man. That whole concept of "fake it till you make it" was from this guy who was going and telling people, just wear a nice suit. People will buy from you as a multilevel marketing guy. People will listen to you if they look good. It doesn't matter if what you're saying makes sense or not.

[00:17:17] Jordan Harbinger: Really? I didn't know that came from a con man. No surprise at all.

[00:17:20] Kelly Richmond Pope: Yeah. There's a whole story about him and where that came from. So the whole idea of "fake it till you make it" was introduced by a man by the name of Glenn W. Turner. If you want people in the multilevel marketing strategy to listen to you, just look the part, people will listen to you. So this concept, "fake it till you make it like," we talk about that, but do you realize that we're building our foundation off of a con man, a known self-proclaimed con man? So again, this idea of it doesn't really have to work as long as we just ensure confidence. It's a crock of mess. I mean, you see the same thing over and over and over. So we just got to stop believing it. But we're talking about Elizabeth Holmes. She definitely crossed over into intentional perpetrator, but what fascinated me so much about her case and that story, she was lying, got that, but the people that believed her, like how in God's name did you get Walgreens to sign up for what you're selling and it's a crock of mess? How do you do that?

[00:18:27] Jordan Harbinger: A lot of social proof with a lot of powerful people on the board, right? You get the former secretary of defense, you get a couple of generals on there, you get some real heavy hitters in business. They get bullshat by your executives, who then pull the wool over the board's eyes. The board goes to bat for you. There's a ton of investors who are banking on it. They probably put their thumb on the scale to say the least. And then, some executive goes, I've dealt with these guys for 20 years. They're not lying to me because it's the SEC def and the general. And I know those guys from the golf club. And so I'm going to sign a trial. And then everybody at the end is like, "Oh my god, I had no idea." Meanwhile, Tyler Shultz, right, the grandson, he was the whistleblower and nobody believed him. And she was going to sue him and that was a mess. That was a whole big mess.

[00:19:12] Kelly Richmond Pope: It's a mess, but it's why people don't want to be whistleblowers. A lot people don't and won't say anything because no one can really handle being bullied as an adult. We just can't deal with it, right? It's the playground when someone just popping something out of your hand because they can. But as an adult, you can't deal with this. You don't even know what to do. You just keep your mouth closed because, why, if you don't have the money for a legal team, you can't emotionally take the hit. You just keep quiet. And that's why people keep quiet because of the corporate bullies out there and everyone knows they're there. You know who the bully is, where you work. You absolutely know who it is.

[00:19:49] Jordan Harbinger: Yeah. My mom was a public school teacher. She had a really nasty principal who would cuss her out. She was terrible. Nobody would help her. Even the union was like, "Oh yeah, we deal with her all the time," but it's almost like they got to pick their battles because it's an administrator and it's just the whole thing. So my mom was like, "Screw you, I'm retiring." And they're like, "But we need good teachers." And she's like, "Maybe don't treat us like crap, food for thought." Teachers all over the place right now are nodding their heads. They're going to have to go to the chiropractor because of the neck injury they're going to get from nodding their heads to this particular thing. Because I get these emails all the time about how mistreated people are in the workplace, especially people like teachers and public servants, and there's so many bullies and they're entrenched.

[00:20:28] I digress a little bit here, but is there way more fraud now than ever before? You mentioned Sam Bankman-Fried. That cryptocurrency scam, the scale of it gets larger, but is there more of it? Is there a higher instance of fraud or is it just the scale?

[00:20:42] Kelly Richmond Pope: I pause because I think that everything feels like more now because people are reporting things more than they ever did before.

[00:20:51] Jordan Harbinger: Sure.

[00:20:51] Kelly Richmond Pope: You think about like police brutality, we see it more because everybody has a camera in their hand all the time.

[00:20:57] Jordan Harbinger: That's true.

[00:20:58] Kelly Richmond Pope: It's probably the same. It's just, we see it more because it's in real time. It's a video posted up. So I think fraud, there could be an uptick, but what I feel is though, you see more people like, you or I, just hypothetically speaking, engaging.

[00:21:14] Jordan Harbinger: We've already admitted to our illegal deeds at the top of the show.

[00:21:17] Kelly Richmond Pope: Our retail fraud.

[00:21:19] Jordan Harbinger: That's right, that's right.

[00:21:20] Kelly Richmond Pope: I think that you're seeing more people that are willing to push the envelope because they think the likelihood of getting caught. There's more fraud movies. There's more fraud podcasts. There's just more true crime in the atmosphere. So I think we believe now that there's more. We just may be hearing about it more—

[00:21:40] Jordan Harbinger: Yeah.

[00:21:40] Kelly Richmond Pope: —than we did before. We didn't talk about the F word the way we do now, but it's always been there. I mean, it's sort of baked into our system, our culture, our economy. It's our foundation, but is it more, I don't know.

[00:21:55] Jordan Harbinger: Yeah. It's a tough one because you had the COVID-19 PPP, whatever fraud. So that was a new opportunity that's now gone. You had cryptocurrency, which wasn't regulated. So that's wild Westie, and the Internet.

[00:22:08] Kelly Richmond Pope: Yeah, cryptocurrency is the oddest thing. One of my best buddy's colleagues, Lamont Black, shout out. He's a professor here at DePaul. He loves cryptocurrency. Every time I see him, I'm just like, good grief. I think it's a fraud. I think it's a big Ponzi scheme. It's like this unregulated Ponzi scheme. And at some point, everyone's going to just understand that because there's no real asset. The value is created by more people joining. It's a Ponzi scheme or multilevel marketing, whichever words you want to use, but that's the biggest fraud to me. I don't have any cryptocurrency though.

[00:22:44] Jordan Harbinger: You're listening to The Jordan Harbinger Show with our guest, Kelly Richmond Pope. We'll be right back.

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[00:24:06] Jordan Harbinger: This episode is also sponsored by BetterHelp. Trying to decide on a career path, whether or not to start a family, maybe you're contemplating moving to a different part of the country, or thinking about ending a relationship. Whatever the juncture in life, therapy can help you map out your future and trust yourself to find the way forward. A lot of people think therapy is for people who've got serious traumatic experiences. It's great for that, of course, but also, quote-unquote, "normies." like, I'm sort of one of those. We all go through stressful times when we're trying to figure out important or big life decisions. Engaging in therapy can be instrumental in mastering effective stress management techniques. Establishing personal limits. Figuring out what path to go toward. It's a great tool for unlocking your highest potential. Want to dip your toes in therapy? Try BetterHelp. All online, answer a short questionnaire. You'll be paired with a licensed therapist. And hey, if you don't click with the therapist, there are over 23,000 certified therapists so you can switch, no additional charge.

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[00:25:08] Jordan Harbinger: By the way, if you haven't heard yet, we are doing a special partnership with GiveDirectly, an amazing charity by the way. They are rated highly on Charity Navigator, and they use their funds efficiently and effectively. And thanks to your incredible generosity, within 72 hours, we successfully raised 20 grand, matched by a generous donor to become 40 grand. Now, we have until September 15th, so we decided to increase the goal and lift another village, this time in Kapkun, Kenya, out of extreme poverty by delivering cash donations with no strings attached. If you haven't heard episode 867 with Rory Stewart, go back and check it out. He explains why this type of charity works, why we should help these people in Kenya, even when people in the US are also struggling. Kapkun residents are suffering through a years-long drought that has left a lot of families food insecure and without any ability to generate income from farming or anything else for that matter. There are electricity poles available in the village, but residents can't afford the wiring necessary to connect it to their houses, which is ridiculous. Like Ngamani, there is limited water access, and they can't afford to install a water access point, so residents are trekking to distant rivers to fetch unhealthy, unsanitary water. According to the village chief, women in the village are hoping to use their transfers to form cooperative businesses and start savings groups. So this is not getting spent on booze and cigarettes. Go to givedirectly.com/jordan to donate. Donations are 100 percent tax deductible in the US. For those listeners not in the US, here's your chance to support the show givedirectly.com/jordan.

[00:26:34] If you're wondering how I managed to book all these fantastic folks for the show, it is because of my network and I know that networking sounds gross and schmoozy. This course, however, is all about improving your relationship, building skills and creating a context in which other people actually want to develop a relationship with you. It's not cringy, it's not gross. It's down to earth, not awkward, not cheesy, just practical exercises that will make you a better connector, a better colleague, a better friend, and a better peer. Just a few minutes a day is all it takes and many of the guests on the show, subscribe and contribute to the course. So come join us, you'll be in smart company. You can find the course at jordanharbinger.com/course.

[00:27:11] Now back to Kelly Richmond Pope.

[00:27:14] Bitcoin, people will say, it's more complicated. I tend to agree a little, but I also don't really know because I am not an expert and I hold some and I just hope that it doesn't go to zero, but I don't hold other stuff. I've already gotten burned way too many times with some of that stuff. I'm still thankfully up quite a bit. Thanks to things like Bitcoin and Ethereum. But otherwise, yeah, what I need to do is not invest in things that I don't understand fully. And I think that's a good lesson for everybody. I got lucky with that, right? Investing in Tesla, Apple, Bitcoin, and Ethereum, but getting lucky, your luck runs out. I don't want to push it. And yeah, that's interesting. I would have assumed there'd be more just because of the Internet, but you're right. Maybe there's more small-time stuff, but the big-time stuff has always been there.

[00:27:56] Kelly Richmond Pope: So much has changed when you think about where we are now. We're on a 24-hour news cycle every single day. So, what we hear about is just all the time. So, I don't know if it's more because I think our mechanisms for reporting and hearing about news is just more. Like, when I was a kid, the news came on at six o'clock. That was it. There was the afternoon news and there was a six o'clock news. That was it. That was your only source of information. But there weren't blogs, there weren't podcasts, there weren't any of those things, so that's when you ask me, is it more? I don't know because we just get news so much more than we ever did before. It's very overwhelming if you think about it.

[00:28:39] Jordan Harbinger: I agree. I try not to even consume a lot of that stuff, although we were late doing this because, in the beginning, we were talking about that summary. So I don't know if I can really say I don't follow that because we were just like, can we start 20 minutes late? Talk about current events.

[00:28:51] Kelly Richmond Pope: And we could have kept going.

[00:28:53] Jordan Harbinger: I know we could have. I was looking at the clock like, sh*t, I got to eat at some point today.

[00:28:57] Kelly Richmond Pope: I do too.

[00:28:58] Jordan Harbinger: Yeah, I love the Fraud Triangle. Can you take us through that?

[00:29:02] Kelly Richmond Pope: Sure.

[00:29:02] Jordan Harbinger: That is really interesting because, of course, it makes sense, but every fraud has this.

[00:29:06] Kelly Richmond Pope: Yeah. Donald Cressey developed this years back, and there's three components of the Fraud Triangle, and that's rationalization, opportunity, and pressure. And it's a nice way to really understand where all frauds fit. I'm fascinated with the rationalization piece of it because I think we can all rationalize anything we want. No matter how ethical we are, we can all do that. So that's what the Fraud Triangle is. And so I think with any human being, we have those three points that show up all the time. What is your opportunity to do something? What's the pressure that you're facing? How do you rationalize why you should do it? And so we can go through that. And I think it just makes it easier for us to understand how frauds happen is where they sit, when you're doing like a case analysis.

[00:29:52] Jordan Harbinger: Yeah, the idea that you can rationalize anything is scary because it's 100 percent true, and we've seen that throughout history, but especially with fraud, the rationalization doesn't even have to make sense, right? It can just be like, I deserve this and other people don't. And you mentioned that a lot of narcissists are involved in this.

[00:30:08] Kelly Richmond Pope: This is the thing, Jordan, you probably do deserve it. Now, should you take it is another question, but you probably do deserve the raise, the promotion that you were overlooked for. You probably do. But should you take it as another question that we have to think about?

[00:30:22] Jordan Harbinger: Opportunity is that as simple as I am the one that signs the checks and the one that enters them into the database. And how many people really check that? Nobody. Is that all that is, or does the whole have to be particularly wide to drive through it?

[00:30:36] Kelly Richmond Pope: I think the whole is can be small because opportunity is really just about access. So if you think about 98 percent of us have a corporate card or some type of credit card that is tied to our organization. And if you really wanted to, you could book a trip to Hawaii today, if you wanted to, and the likelihood of you getting caught, it may take a couple of months, maybe. Opportunity is really, in my opinion, about access. The access that we have to engage in fraud. And most of us have access. Think about it. Most of us could say, "I'm going to find a vendor for my company to engage with." But this vendor is going to be either my cousin or I'm going to make up the vendor. I'm going to be able to control the whole process. Now, if it's my cousin or even my friend, I can tell them, "Now, once you become a vendor, you're going to give me a kickback. You're going to give me $5,000 for allowing you to, putting you into the process." That's illegal, but you could figure out a way to make it work. Many of us have access to create a scheme that can benefit us personally.

[00:31:38] Jordan Harbinger: But, wait, hold on, so is that illegal or is that only illegal if it's a government organization? Because I feel like don't people do that all the time?

[00:31:46] Kelly Richmond Pope: The kickback part? No. The referral part. Sure.

[00:31:48] Jordan Harbinger: Okay. Yeah. That's what I was hung up on.

[00:31:50] Kelly Richmond Pope: Let me replace illegal with unethical.

[00:31:53] Jordan Harbinger: Yeah. Yeah.

[00:31:53] Kelly Richmond Pope: Okay. Because I'm not a lawyer and I don't want lawyers coming after me. Let me say unethical.

[00:31:58] Jordan Harbinger: Okay.

[00:31:58] Kelly Richmond Pope: And so the kickback part is what makes it unethical because if you are referring a vendor, in most circumstances, you shouldn't have any direct tie to them or any kind of financial gain based on who gets picked. So unethical.

[00:32:13] Jordan Harbinger: Right. My dad, he was an auto worker. And I remember some days he would come back with these gift baskets, the ones that had like jam and sausage in them and stuff. And holidays, we always had a ton of these things when he was doing whatever he was doing at Ford. And then one year there were none and I was like, "Where's all the candy?" And he's like, "Yeah, we're not allowed to do that anymore." And I said, "Oh, that's a bummer." And then, I remember one day he came home with one and he's like, "The supplier gave me this and I'm not supposed to have this." And I said, "I can't take this." And he gave it to me anyway. And my mom's like, just throw it away. But then, what if something happened? So we ended up keeping this thing like in the closet for, I want to say at least a few months. And I was like, "When can we eat the sausage and the candy?" And my mom was like, "We can't." Because what I think what they were afraid of was somebody would find out and he'd be like, "It's in the wrapping." Not, "Oh, I threw it away." And they're like, "Sure you did. It's definitely not something you ate with your family." He wanted to be able to return this shrink-wrapped, rotten-ass gift bag, basket thing.

[00:33:08] Kelly Richmond Pope: He wanted to keep the evidence. He wanted to have the evidence.

[00:33:10] Jordan Harbinger: He wanted to have the evidence.

[00:33:12] Kelly Richmond Pope: I get it.

[00:33:13] Jordan Harbinger: I get it now, but when I was a kid, I was like, "Why are we keeping sausage in the coat closet? This is so weird. Stale ass bread in here."

[00:33:19] Kelly Richmond Pope: Because your dad knew he had a sense, he had a moral compass, an internal moral compass that just guided him. And a lot of us don't have that anymore, or we can rationalize it away, or we can shut it off when we need to. He didn't do that. That's why he couldn't eat that sausage.

[00:33:36] Jordan Harbinger: Yeah, it's tough. It does come into play on this show though, because we'll get a sponsor offer and I'm like, "This product sucks, but it's so much money," and my wife's like, "You can't do it." I'm like, "I know I can't do it." A lot of people figure they go, "Oh, whatever. It's just capitalism. You can advertise whatever you want. Doesn't mean you have to really endorse it." But I just, I don't know. I don't believe that.

[00:33:54] Kelly Richmond Pope: Yeah, you know, you believe what you put out in the world comes back to you.

[00:33:57] Jordan Harbinger: Well.

[00:33:58] Kelly Richmond Pope: Then if you believe that, then that will guide you too. So I get it.

[00:34:02] Jordan Harbinger: It's just funny. That's the lesson I took from the sausage basket after all these years, right? The rotten sausage basket has taught me good.

[00:34:09] Kelly Richmond Pope: But you remembered it, right?

[00:34:10] Jordan Harbinger: Mm-hmm.

[00:34:10] Kelly Richmond Pope: So it must have had a big impact on you. And so like his moral compass impacted is yours. That's what I hope that I do in the classroom. Like I'm leaving these stories. I may not always have my own stories, but I'm using these stories, the lenses of other people to hopefully have an impact on students that are in the classroom. That could be a student, an exec ed student or a freshman, but I hope that it has an impact because it's not if you're ever going to be in these situations, it's when. And so when it is your turn, what are you going to do? Are you going to be a peer on the front page of the Wall Street Journal or not?

[00:34:45] Jordan Harbinger: Yeah.

[00:34:46] Kelly Richmond Pope: Pick your poison.

[00:34:47] Jordan Harbinger: So opportunity, okay, the whole doesn't have to be that big. Rationalization, we can all rationalize pretty much anything. Pressure is an interesting one, right? Because we all see wealthy people who were born into money stealing tons more money. And you're thinking, what pressure do you have other than, it's self-inflicted, right? It's like ego. I need to look great and that's the pressure, not like I need to feed my kids or I'm going to fail in my career. The pressure almost seems superficial and ridiculous.

[00:35:14] Kelly Richmond Pope: I think the pressure from, if I was a billionaire, I would understand the pressure of another billionaire.

[00:35:20] Jordan Harbinger: Mm-hmm.

[00:35:20] Kelly Richmond Pope: And me being completely not a billionaire—

[00:35:23] Jordan Harbinger: Right.

[00:35:23] Kelly Richmond Pope: —I think their pressure is probably silly, but it's real to them. I think pressure, everyone has it, and it's very personal, but we all have it. All of us have it. My 13-year-old has pressure. I think it's stupid, but she has it. I think it's real to the person, but we all have it. And so that's the variable. I think that's constant among everybody is you have some kind of pressure.

[00:35:47] Jordan Harbinger: Do you agree that a lot of it's self-inflicted? Like ego, you have to look the part, that kind of stuff, or is it lifestyle creep where you're like, crap, I bought a yacht because my business was doing well and I want to lose it.

[00:35:58] Kelly Richmond Pope: I think now the way we live, a lot of it is self-induced pressure and lifestyle pressure because you don't hear a lot of stories like this. Employee X had a 14-year-old kid that had leukemia and was dying and the health policy didn't cover the treatment. So the employee X embezzled $500,000 to pay for the treatment of their kid. You don't hear those stories anymore.

[00:36:25] Jordan Harbinger: And if you did, the jury would be like, not guilty—

[00:36:27] Kelly Richmond Pope: Exactly.

[00:36:28] Jordan Harbinger: Maybe, or at least like guilty, but it would be so hard to convict somebody in that situation.

[00:36:33] Kelly Richmond Pope: All we hear now are, "You got a PPP loan and you bought a car, you bought a Maserati."

[00:36:38] Jordan Harbinger: Or a Lamborghini.

[00:36:39] Kelly Richmond Pope: Yeah.

[00:36:40] Jordan Harbinger: What a moron, what a freaking idiot. This guy took a PPP loan. He had like a two-person company said he had 400 employees. Man, dumb, dumb, dumb.

[00:36:49] Kelly Richmond Pope: But you know what though it shows you the level of internal control weaknesses that clearly existed for him to even think he could do that. What was the process? What was the application or what was the review process or the lack thereof that a person that has two employees could say they have 400? How?

[00:37:08] Jordan Harbinger: When we filed ours, we were very careful. Not that we were tempted to defraud the US government. We say also the top of the show where you never steal from the government, but it was like, they're going to eventually catch these people, even if it takes 15 or 20 years, statute of limitations be damned because they're going to say we were behind and we're going to change the law, and you also defrauded the government. It was not worth it to even think about doing anything. But my wife was like, gosh, we submitted this. We got paid almost immediately. How do they know they didn't audit our taxes from this year to find out if our income level matched what I put in there? Nothing.

[00:37:42] Kelly Richmond Pope: No, they didn't know all of that was relaxed to get money out to the business owners faster to help in this desire to help put money in pockets that all of that was relaxed.

[00:37:53] Jordan Harbinger: Yeah, these people are so parasitic. I love that they are being made examples of now because you do want to live in a society where you can help people at scale in some way. And you do want a society where innovators are free to get financial capital from investors. But what you don't want is for Elizabeth Holmes or Lambo guy to abuse the system to the point where massive amounts of money are lost, especially if the public ends up having to foot the bill.

[00:38:21] Kelly Richmond Pope: Absolutely. Social media helps us see life in a different way. So this idea of, "I need to look the part," if we didn't have a platform to look the part on, you wouldn't care as much, we wouldn't know about the Lambo guy, we wouldn't know he's driving around and this or that, we wouldn't know, and maybe he wouldn't even feel the need to show that, who knows, so I think we just see opulence in a way that we never saw it 50, 60 years ago, it's an odd time.

[00:38:50] Jordan Harbinger: That's a good point. How much of this has to do with narcissism? You do in the book mention that perpetrators are often grandiose or vulnerable narcissists. Is that the majority of cases?

[00:39:00] Kelly Richmond Pope: So this is the thing I'm going to say this, and I don't want you to get offended, but I think most people are narcissists.

[00:39:06] Jordan Harbinger: In some sense, yes, but not in the clinical sense.

[00:39:09] Kelly Richmond Pope: So the grandiose narcissists are the category that I talk about, the intentional perpetrators. The vulnerable narcissists are more of the accidental, probably righteous perpetrators too. They're the milder ones. But I think if you are remotely successful at doing anything, you know, you maybe have five percent of narcissism, just a little bit, nothing to make you dangerous, but just enough to make you competitive. I think we see that a lot. Narcissism exists on a spectrum, so we have to have a little bit just to be able to do what we're doing. Who writes a book? Who holds a podcast? There's a little bit.

[00:39:43] Jordan Harbinger: Bunch of narcissists—

[00:39:44] Kelly Richmond Pope: Yeah.

[00:39:44] Jordan Harbinger: —self-absorbed pricks.

[00:39:47] Kelly Richmond Pope: You got to be able to own it, Jordan. You got to be able to own it.

[00:39:49] Jordan Harbinger: I'm here for it.

[00:39:50] Kelly Richmond Pope: I mean, yeah. But we're not dangerous with it. We're not dangerous with it, but we got to admit it. I think there's tons of corporate narcissists, tons of them. Is there a CEO that's mild? That's not a narcissist.

[00:40:04] Jordan Harbinger: It's pretty rare.

[00:40:05] Kelly Richmond Pope: Yeah.

[00:40:05] Jordan Harbinger: I've met a few guys who are really. Amazing in that they are either employees above the market rate and they employ tons of refugees and they pay for the housing and they sponsor the visas. And I'm like, this—

[00:40:17] Kelly Richmond Pope: They could still be all that and be a narcissist.

[00:40:19] Jordan Harbinger: That's true. And then they maybe just don't present as such because they know it's unbecoming. That's a good point. I hadn't thought about that.

[00:40:26] Kelly Richmond Pope: They could still, because all of those things are good, I mean, narcissism is more about the worship of you. So they could still do all of those things and be a narcissist, for sure.

[00:40:35] Jordan Harbinger: That's right. Like they're just signaling to the other camp. I didn't even think about that. That's a really good point. You mentioned the book, most corporate fraud comes from a combination of someone inside the company and somebody outside the company. Is that most corporate fraud? Did I read that? Or is it just some? Because it seems like some of the embezzlers are a solo act.

[00:40:53] Kelly Richmond Pope: Yeah, I hope the word was some.

[00:40:56] Jordan Harbinger: Yeah, it could just be me taking notes on a walk.

[00:40:58] Kelly Richmond Pope: So we're just going to say it was some, okay, for the purpose of our conversation. But I think that the larger scale financial statement frauds can be a combination of someone in the inside, someone on the outside. It depends on scale. Someone like Rita Crundwell, she's an outlier because you would think that it would take more than one person to take $53.7 million over 20 years. That's a massive heist for just one person. You look at Rita. Before Rita, the largest municipal fraud happened in Washington, DC, and it was a woman by the name of Harriette Walters. There was 11 people in that case that helped steal $48 million over around 18 years. So, you see a variability.

[00:41:43] So, I think it really just depends. When I was doing these interviews and going around talking to people, a lot of the people that I interviewed were sole perpetrators. But there've been a few conspiracies, but a lot of the people that I've interviewed are sole perpetrators. Not to say that they dominate, but it just tends to be the ones that I've talked to.

[00:42:02] Jordan Harbinger: Of course. People overestimate their abilities and underestimate the odds they'll get caught. You mentioned this is optimism bias. Is that the same thing as wishful thinking?

[00:42:11] Kelly Richmond Pope: Absolutely. We all think we're smarter than we are. We all think we're faster than we are. We all think our kids are smarter than they actually are.

[00:42:19] Jordan Harbinger: Yeah, I'm guilty of that.

[00:42:20] Kelly Richmond Pope: I'm sure your kids are amazing.

[00:42:21] Jordan Harbinger: They certainly are.

[00:42:22] Kelly Richmond Pope: I know they are but we all think that.

[00:42:25] Jordan Harbinger: Yeah, you're right. Whenever I say, wow, he's so smart. I'm like, yeah, but I'm his dad. So is he? I don't know. And then I'm like, I always fall down on, yeah, he is definitely. I'm not, I'm not just hallucinating.

[00:42:34] Kelly Richmond Pope: Of course he is. He or she should be in the gifted and talented school class in every grade. We all think that. And so I think that plays into this idea of we can engage in fraud and we don't think we're going to get caught. And if we do get caught, we're not going to jail because we can talk our way out of it. We're just going to pay a fine and move on because that's that optimistic idea that it's not going to be as bad as actually it can be. So yes, for sure.

[00:43:00] Jordan Harbinger: I don't know how these people aren't terrified. Honestly, I know that lying stresses out the brain. I think you mentioned that in the book. It was Dan Ariely ran a study on that and we eventually adapt. I know that I am not cut out for this stuff because when I'm reading the book, I'm playing Xbox and reading the book, walking outside, reading the book. I was so stressed for the people you were talking about. I had to pause. I'd be like, I need to listen to some music for a minute. I'd be doing another lap around the block because I'm so stressed on behalf of these people you're writing about because they're like, "Oh, I'm just doing this and this and this." And it's like, dum, dum, dum. FBI is at the door. And I'm thinking, how did you not swallow your spleen at that point?

[00:43:37] Kelly Richmond Pope: So think about, so if you feel that way reading it, think about over the years how I felt interviewing them. Because what happens to me is I get emotionally attached to the people. I'm sitting here like, "Oh my god, what about your kids? What are you going to do?" And by the time, I'm just like wiped out because I'm like, "Oh goodness." So from just reflecting on the interviews, the stress that we're describing post-fraud is not the stress that they're feeling when they're in it. Because they don't think it's as bad as it actually is.

[00:44:08] The FBI knocked on the door, I think you're talking about Andy Johnson's case, and that he was an accidental perpetrator. Andy did not think he really did anything criminal. He knew it was, didn't follow generally accepted accounting principles, and maybe could be asked a question or two, but go to jail? That's never on his mind. No one thinks that. Because we're not talking about career criminals. We're talking about white-collar job holders, went to college, may have a graduate degree. No one ever thinks they're going to jail. That's not what they're thinking. So that stress that we're reading post-fraud, I don't think they have that stress when they're going through it.

[00:44:48] Now, the intentional perpetrator story of Diane Katani, she's a story that's in chapter one or two. I can't remember which chapter, intentional perpetrator. I think it's chapter one? She talks about the stress of keeping the lie made her sick, physically sick. So I think some people, intentional perpetrators may feel it, but an accidental perp, think about it. They're just following the boss's orders. They're not receiving any personal gain. They're just doing as told. So why would they feel stressed because they think they're doing the right thing?

[00:45:20] Jordan, if you sent me an email and said, "Kelly, I just need you to sign up on this document." One, I probably didn't read the full thing, especially if it's 15 pages. I probably didn't read it. Probably just went to the signature line and signed it. Why? Because I've already established a trust with you. I've looked you up. I know the show. I think you're a good dude. So I trust you. For all I know, it's some fraudulent loan application that I just signed, and now I'm in trouble. My point is I don't think about the stress because I've already established a level of trust with you. And I think that happens a lot with the accidental perpetrator.

[00:45:51] The righteous perpetrator, they're so far up in their company, who's going to touch them? If you're Elon Musk doesn't follow his own policy, who's going to say something?

[00:46:01] Jordan Harbinger: Mm-hmm.

[00:46:01] Kelly Richmond Pope: One, so he probably doesn't think he needs to even follow what the SEC says he's Elon Musk. So you sometimes get so large, that you feel that you're above a law. You don't feel the stress of what we're feeling as we're reading it post-fraud.

[00:46:19] Jordan Harbinger: This is The Jordan Harbinger Show with our guest Kelly Richmond Pope. We'll be right back.

[00:46:23] This episode is sponsored in part by Starbucks. Life moves fast. Starbucks Ready to Drink Coffee delivers an uplifting boost that helps you tune in to the moments that matter wherever you might be. As a dad of two under four, my life is a tornado of activity — preschool, there's a poopy diaper, swim class, gymnastics, another poopy diaper, music class. My hands are perpetually full. Either work, the kids, or something the kids have squeezed out. And in the curveballs that parenthood throws your way, there's never a quiet moment to just chill. But for all the chaotic beauty of dad life, it's the little conveniences that make all the difference. And one of those is my trusty, often chilled Frappuccino from Starbucks. It's not just the caffeine kick, though, believe me, that's a lifesaver in its own right. It's that small treasured moment of indulgence, a sip of something I love amidst the sea of toddler demands and diaper hands and work responsibilities. With the bottled Frappuccino coffee drink, I have my favorite Starbucks coffee ready and waiting whenever I manage to steal a moment. Whether it's a breather between meetings, a quick recharge before I kick off an interview, it's often my go-to pick-me-up that fits right into my on-the-go lifestyle, on-the-go from my bedroom to my office, usually sans pants, but y'all feel me. With every delicious sip, it's a little reminder that even in the heart of chaos, there's always time for a coffee break.

[00:47:30] Jen Harbinger: Starbucks Coffee, ready for right now. Shop the full lineup online or in-store, wherever you buy groceries.

[00:47:35] Jordan Harbinger: This episode is sponsored in part by Airbnb. Pre-kids, we'd fly almost every week for podcast interviews and conferences. We'd stay in Airbnbs most of the time because we love the locations and personalized stay. One of our favorite spots in LA, it was in this really sweet older couple's home, and since their kids have left the nest, They converted the granny flat in the backyard into an Airbnb. And it became our go-to accommodation whenever we were in town doing interviews. And as regulars, we always appreciated the thoughtful touches they included. So, they'd throw down a basket of snacks that Jen would eagerly dive into. They gave us a bottle of wine, a personal note, and they even started tuning in to The Jordan Harbinger Show — hey, folks. And this actually inspired us to pay the hospitality forward and convert our spare room into an Airbnb. So maybe you've stayed in an Airbnb before and you thought to yourself, "Okay, maybe I could do this. Maybe my place could be an Airbnb." It could be as simple as starting with a spare room or your entire place while you're away. You could be sitting on an Airbnb and not even know it. Perhaps you got a fantastic vacation plan for the balmy days of summer. As you're out there soaking up the sun and making memories, your house doesn't need to sit idle. Turn it into an Airbnb, let it be a vacation home for somebody else. And picture this, your little one's not so little anymore. They're headed off to college this fall. The echo in their now empty room might be a bit much to bear. So why not Airbnb it? While they're away, make some extra cash, and who knows, you might just meet some fascinating people along the way. So whether you could use a little extra money to cover some bills or for something a little more fun, your home might be worth more than you think. Find out how much at airbnb.com/host.

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[00:50:44] Now for the rest of my conversation with Kelly Richmond Pope.

[00:50:49] That makes sense. Because I just thought, if I'm a criminal, do I just get desensitized to all this? I don't want that. In lying, what it does to the brain, the woman who said it made her feel sick, I can identify with that. Imagine every day you're just waiting to get caught. Every check you sign that has double invoice, will kick back whatever, you're just like, "Man, this could be the one that they find, then they're going to find all the other ones and I'm going to go to jail or I'm going to get worse, going to get fired, ruin your reputation." Even if they're not thinking about prison, it's still on the back of their head.

[00:51:24] Kelly Richmond Pope: One of the things I think we have to remember is lying is hard to do. Think about all the things you have to manage to lie. Now from the accounting perspective, I'll put my professor hat on, when you take an accounting class, there's something that you learn probably the first or second day called the accounting equation — assets equals liabilities plus stockholders equity. Okay, so that means all of our financial statements talk to each other and they have to balance. If you lie on one thing, you got to tell a whole lot of other lies to make that lie stand. Do you know how stressful that is to think about what's the debit, what's the credit that I need to make in this transaction? And then how do I create all the subsequent transactions to make it work and make it true? That's a lot of stress. Lying is hard. So you probably don't want to do it that much.

[00:52:14] Jordan Harbinger: No, yikes. Some of the fraud is run-of-the-mill, like the accounting embezzlement stuff. The other stuff that you write about is horrific. The pharmacist diluting drugs. Let's talk about that. That was truly awful.

[00:52:24] Kelly Richmond Pope: Yeah. All right. So he's an intentional perpetrator. You're talking about the story of Dr. Robert Courtney. Dr. Robert Courtney was a compound pharmacist in Kansas City. And what he did was he diluted cancer patient drugs in order to increase his profit margin. And it's noted that he wanted to do that because he wanted to make a donation to his church and he had a large tax bill from IRS. Now think about this. You have stage four cancer patients. Let's say they're late 60s, early 70s, stage four, pancreatic cancer, breast cancer. The likelihood is that they probably will pass away. And when they do pass, no one's going to question why they died. They were the perfect target for him to say, "I'm going to dilute their medication because no one's going to question when they pass away anyway." And that's what happened. So I think there was about 98,000 prescriptions that he diluted.

[00:53:24] And so I talk about his story in chapter one because he's an intentional perpetrator. But then, I go back and follow up with that story and talk about it in the innocent bystander chapter, because we talked to some victims of his. Think about there were stage three and four cancer patients who actually passed away without receiving any treatment, so the type of pain that they must have been in. So we talked to the victims of some of those cases. The way this case was brought to light was the nurse that works for the oncologist started to notice that some of the cancer patients weren't experiencing the traditional chemotherapy signs. We all know that everyone can respond differently to chemo—

[00:54:12] Jordan Harbinger: Mm-hmm.

[00:54:12] Kelly Richmond Pope: —but there are some tell-tale signs that most people have.

[00:54:16] Jordan Harbinger: Your hair falls out. Yeah.

[00:54:17] Kelly Richmond Pope: You got it. See, look at you. Are you a doctor?

[00:54:19] Jordan Harbinger: No.

[00:54:20] Kelly Richmond Pope: Okay.

[00:54:21] Jordan Harbinger: I think everybody knows that one, the hair falls out.

[00:54:23] Kelly Richmond Pope: Hair, nausea, maybe fatigue, maybe a little weight loss. So she started to notice that these things weren't happening and she was very concerned. Talked to the doctor. Doctor said, everybody responds differently. One day that nurse said, "I just don't feel good about this." So she took a bag of medication, sent it to the FDA for testing and found out that there was actually in that particular bag, no medication in that bag that was treating patients.

[00:54:52] When you think about it, now I'm going to put my fraud hat on for a second, it was almost a perfect fraud because when a person passes, no one's going to question it. That nurse, she just had something that just in her gut told her, "Ugh, this doesn't feel right. I got to follow up." But even when she followed up the first time, the doctor was like, "Eh, it's fine. Everyone responds differently," but everyone doesn't respond differently on some key metrics when it comes to cancer and chemotherapy. He was evil, just evil, so intentional perpetrator.

[00:55:28] Now, Dr. Robert Courtney, he's a compound pharmacist, not the ones that are in the drugstore that when you go to get your medication, they're back there putting the pills in, none of that. He's a compound pharmacist. He's the one that's making the drugs. So think about how concerning it is because when we take a pill from the pharmacist, we assume that it is what it says it is. How are we going to decide or determine if it's not? So there's this trust. There's a blind trust in some things that we just have no control over. And so that's the Robert Courtney story, just awful person.

[00:56:02] Jordan Harbinger: Really gross.

[00:56:03] Kelly Richmond Pope: Yeah.

[00:56:04] Jordan Harbinger: This guy dilutes, I think it was over a hundred thousand prescriptions, murders potentially hundreds of people, I would imagine, because he wanted to donate to his church. The irony is ridiculous. It's so insane.

[00:56:17] Kelly Richmond Pope: I would imagine. I've never talked to Robert Courtney, but I would imagine that his rationalization was these people are going to die anyway. What difference does it make? Now that's horrible. I don't agree with that at all, but I'm sure that's what he thought. And so he looked at them and said, "This is a perfect opportunity for me to make a little bit of money off the backs of these sick people because they're going to die anyway." And that's awful. But that's the world that we live in, which is not good. It's not good.

[00:56:46] Jordan Harbinger: Really gross. You mentioned in the book that most of the fraud, at least as far as the embezzlement stuff, could be avoided with simple accounting controls. And I let my wife do this. She might be robbing me blind, but it's her money too, so whatever. But I worked at a movie theater in the nineties and every single manager pretty much would eventually get fired for stealing and it was like nine out of 10 managers that I was there with got fired for stealing. Is that bad hiring or is it when there's too much opportunity and not enough oversight, you push towards that kind of thing generally?

[00:57:20] Kelly Richmond Pope: I think it's too much opportunity and not enough oversight because I think the environment can change any good person into a person that can steal. That's a takeaway that I've always shared is that any of us can be an offender, a white-collar criminal, any one of us, any one of us. In the wrong environment, it can happen. That's this idea that it's all of us. It's not just them. It's not just the profile. I want the profile, if you will, to be open because it could be any of us.

[00:57:49] Jordan Harbinger: Tell me about Robin Hood syndrome. We touched on this at the top of the show. You give an example of this woman, Keila, who let her turd husband submit false invoices, but what's really going on here?

[00:57:59] Kelly Richmond Pope: Let me tell you that Keila story. I've talked to Keila a lot. There's a couple of stories in those chapters. Keila is one of my righteous perpetrator categories, and it's funny because I did Keila's interview before I had a name of the chapter, but I knew the characteristics of what a person like a Keila does.

[00:58:18] And so keila was a star in her law firm and went to Columbia University for law school, top program, and she was killing it. She was top equity partner, some of the top firms on Wall Street. She had the top client. In the firm. So everyone really bowed down to her. When there was an opportunity for them to hire a vendor for some litigation support work, she went to her husband and said, "Hey, hubby, if you had a copy business, we could hire your firm to do some of the work. We could outsource it to you. You could be one of the vendors on record." Now, this is how businesses run, right? And you refer something. I know you, Jordan, I may say, "Hey Jordan, there's a big company looking for a podcast show to partner with, I'm going to refer you." We're not married, but still I know you, so I'm going to refer you.

[00:59:11] So she referred her husband, it was an open bid. There were two other vendors. Her husband was selected. Now, she knew it wasn't because she didn't tell her partners about the relationship between she and her husband. So she didn't tell them you all actually just hired my husband. She knew that wasn't right, but she wanted to help her husband. He was underemployed where she was really overemployed because she was super successful. So the husband's firm started doing the work. Everything was running smoothly until it wasn't. He started submitting invoices and wasn't completing the work.

[00:59:43] Now, let me stop here because Keila's department had decided that they were going to implement a policy where they could pre-approve invoices before the work had been done, and they were doing that so that they could manage the budget. So say for instance, they told accounting, we're going to spend $500,000. And they had only spent $300,000. How can we pre-approve more invoices so we can get closer to that 500,000? So we don't have to go back to accounting and say that we actually didn't use all of our budget. Budget games, you get it? So that's where this whole idea of pre-approving some of his invoices came into play. Those invoices were pre-approved and he stopped doing the work.

[01:00:26] And so, then, Keila was in a tough place because she's like, "Okay, I am a smart person. I'm not going to let my husband defraud my company. Of course not. I'm going to go home. I'm going to talk to my husband." "Hey, dude, I need you to do this work. How's it coming?" "Honey, it's coming fine. Stop asking me about it." The typical husband-wife kind of chatter. She thought she could control this in a way that she actually couldn't. He stopped doing the work, but she still was approving the invoices.

[01:00:53] Jordan Harbinger: Ooh, yikes. Yeah.

[01:00:56] Kelly Richmond Pope: Fast forward, her husband got arrested for selling something to an undercover cop.

[01:01:01] Jordan Harbinger: Oh, charmer.

[01:01:02] Kelly Richmond Pope: When he got arrested, law enforcement started looking into his background. They realized that he had another family and another kid, another wife. That's why he wasn't getting the double everything. That's a lot of work. That's why he wasn't getting the work done. To make a longer story short, he was sentenced to over 10 years. She was sentenced to over five years. She had some reductions. Yeah, lost her whole life over him, lost her whole life. And I put her in this righteous category because one of the things I hope that came through is Keila was successful. She did not need the money. She had plenty of money. Her husband did not.

[01:01:40] Depending on what kind of relationship you have, sometimes it's hard for women to be far more successful than a male, than their mate. And so she was trying to help him, just trying to help him pull up. I need you to try to help yourself. And so by helping him get this company established and it was doing well, help their marriage. And so it ruined her life, though. She's a righteous perpetrator.

[01:02:03] Jordan Harbinger: Yikes. Oh, it's so awful to hear things like that. And you see a lot of these similar perpetrators in churches. You mentioned that churches are especially vulnerable to fraud because many people are volunteers. And of course, well, you got to volunteer, right? You're not going to background check them because you need a volunteer. You might check their work, but are you really going to hold them accountable to a high standard? You're volunteers trying to get by, maybe they're being checked by another volunteer who's reporting to, I don't know, one person is great. Thanks for doing all that. You guys are nice. There's no controls in a lot of cases.

[01:02:35] Kelly Richmond Pope: No, that can be very dangerous for organizations that have a volunteer in a fiscal management role because you don't do all the things you just said. You don't know who's overseeing your money. You don't know what their background is. They just volunteered and you're like, "Great. They seem nice." You have a lot of volunteers that are in roles that they have no business being in because they don't have the training to do it, but they have the heart and if you love their heart, you'll let them do it and that's not what you should do.

[01:02:57] Jordan Harbinger: Yeah, it's really scary to see how easily some of these people slipped into fraud. Keila, you go, okay, she helped out her husband and then there's this line where she's approving the invoices even though the work wasn't done and you just wonder what that conversation with herself was like.

[01:03:12] Kelly Richmond Pope: Absolutely. I mean, and it was extremely stressful.

[01:03:15] Jordan Harbinger: You feel bad for five years is such a long time. Now, of course, even when you get out, you don't just go, "All right, I'm ready to take my partner trackback over at McKinsey or whatever." Like you're done now.

[01:03:26] Kelly Richmond Pope: You're done. You're toast.

[01:03:28] Jordan Harbinger: Terrible.

[01:03:28] Kelly Richmond Pope: Stick a pin in it. Yep.

[01:03:29] Jordan Harbinger: We'll wrap with food fraud because it's particularly scary and I'm about to go to lunch here, but food fraud is really something.

[01:03:35] I've got a friend who manufactures supplements, their mushroom, he sells mushrooms basically. And he won't deal with China or he will deal only with certain vendors in China because he's found things like sawdust in there or just not the same mushrooms that he bought or not mushrooms at all, which is gross. How much food fraud really is there?

[01:03:55] Kelly Richmond Pope: I think there's more than we feel comfortable admitting and I'm not a nutritionist, but I think a lot of the food allergies that we have is linked back to food fraud because things are not what they say they are. They don't have the ingredients that they say they have. And I think that it has lots to do with our sickness. Now, I'm not a doctor, but that's what I suspect. And so I think that there's more than we realize. And something that we can call organic is not organic. Something that we think it's olive oil from Italy, it's not. So we can get away with a lot because there's very little controls around it. And when there's lack of controls, like in crypto, when there's lack of controls, you can say or do anything. And food is a vulnerable area.

[01:04:39] Jordan Harbinger: I look this up and it varies wildly, of course. Some estimates say one percent or up to one percent of the food industry, which is up to one percent is false, fraudulent, whatever in some way. Imagine the amount of food that that is, one percent.

[01:04:53] Kelly Richmond Pope: Tons.

[01:04:54] Jordan Harbinger: Millions of tons for all I know of food are not what they say they are. Mushrooms from China. Supplements you buy that have—

[01:05:01] Kelly Richmond Pope: Milk.

[01:05:01] Jordan Harbinger: Nothing in a milk, yeah, or not milk as the case may be depending on what you think you're drinking. And olive oil, you mentioned olive oil. I looked this up and this is fascinating to me because I'm a frigging dork, but fake olive oil goes all the way back to Roman times. Apparently, they found shipwrecks that have jars of sealed olive oil and inside there's like ashes or dirt and it's just fake or it's not olive oil or it's mixed. And I don't know how they find this but they can even read, they're like, "Oh, this jar definitely did not have real olive oil in it," and the crime goes all the way up today there's a staggering amount of fake olive oil. And it might just be like, you got low-end olive oil when you thought you were getting extra virgin olive oil, but a lot of times, especially the stuff we get in the United States, it's not from Italy. It's got a bunch of other stuff put in it and it's got a label smacked on it. There's whole organized crime groups that just specialize in olive oil, which seems like a dumb way to go to prison, but I guess there's money in it.

[01:06:00] Kelly Richmond Pope: Yeah. Especially when you start talking about money laundering. Because when you think about the food industry, when you think about warehouses, there's a lot of equipment that has to be purchased in order for them to run. And it's a perfect landscape for money laundering because there's so much money that has to be invested in it. It's a great way to clean money.

[01:06:21] Jordan Harbinger: That is fascinating.

[01:06:22] Kelly Richmond Pope: When I start hearing like mafia and things like that associated with it, I just back away. I'm like, okay, duly noted, moving on.

[01:06:29] Jordan Harbinger: Yeah. Yeah. The olive oil thing is definitely at least originally was a mafia thing. Organized crime. And it makes sense, right? An agricultural product typically from Italy that's been used for a long time. That's going to touch some dirty hands, for sure.

[01:06:43] In closing here, do you have any idea what percentage of fraud goes unreported?

[01:06:49] Kelly Richmond Pope: No, man, I wish I knew that question. So many people ask me that.

[01:06:52] Jordan Harbinger: Oh, really?

[01:06:53] Kelly Richmond Pope: Yeah. I don't know. Cause I don't know how to extrapolate the answer because if you think about fraud is a five trillion industry now. Let's say 10x goes unreported. Who knows? I do not know. I need to figure out. There has to be a way to write an algorithm to figure out the unknown variables of what goes unreported. I need to figure that out because I do not know. I know it's a huge number. And it's very scary.

[01:07:22] Jordan Harbinger: It is scary. I appreciate this. I know we went a little bit off book and I appreciate you humoring me on that. I think it's a fascinating topic. The book has a lot about fraud stories, ways that accountants catch fraud or can monitor fraud, the types of mindset of a fraudster. So thank you very much for doing the show. I appreciate it.

[01:07:39] Kelly Richmond Pope: Thanks so much for having me. This was tons and tons of fun. I'm so glad we did this.

[01:07:45] Jordan Harbinger: I've got some thoughts on this episode, of course, but before I get into that, here's a sample of my interview with Maria Konnikova, who went from being someone who had no interest whatsoever in poker to raking in big bucks as an international poker champion. Here's a quick look inside.

[01:08:00] Maria Konnikova: Poker is actually the perfect game for human decision making because it's a game of incomplete information. No one cares where the hell you went to school. No one cares what you look like. No one cares what you did or didn't do. If you can afford the buy in, great.

[01:08:16] So there are people sitting at the table, some of whom have Ivy League educations, others of whom dropped out of high school and had to wrestle with homelessness and built up their bankroll from $10 and took that $10 and are now millionaires.

[01:08:30] We make decisions and incorporate things that really shouldn't matter all the time, like the weather. We don't realize that we're depressed because it's raining outside and instead we're like, "Oh, life sucks. Everything sucks." But it's so cool that if you draw someone's attention to the reason why they're feeling this way, they're totally capable of discounting it and saying, "Oh, okay, yeah, I'm depressed right now, but it's because of the weather."

[01:08:53] Can you figure out not just your own triggers, but the other person's triggers? Some people, when they lose a lot, they're going to become really cautious because they don't want to lose even more. Some people, when they lose a lot, are going to become extra reckless because they want to gain it back very, very quickly. Same event, totally different reactions. Can I try to figure out what the psychological dynamic for this person is? How do they react to loss? Some people, when they win a lot, they're going to become extra cautious because now they don't want to lose it. They're like, "Oh, I have all these chips. I want to guard them." Other people, when they win a lot, they're like, "Yeah, let's push my advantage. Let's go. If you can start to figure out and pull apart things like that, all of a sudden, you have a really good psychological picture of the person and you can take advantage of it.

[01:09:37] It's really intriguing, man. I thought, let me read more about this poker thing and decided, hey, you know what? This is my book. Why don't I learn poker? Why don't I actually see how far I can go? And I ended up becoming good and winning a major international title and getting a sponsorship from PokerStars and joining Team Pro and somehow found myself as a professional poker player.

[01:10:00] Jordan Harbinger: For more, including how people make decisions and what poker can tell us about reading human motivation, how to spot real physical tells at the poker table and in real life, and how we can control and prevent emotional thinking, aka going on tilt, check out episode 371 of The Jordan Harbinger Show with Maria Konnikova.

[01:10:20] One thing of note here, small businesses tend to be victims because they have fewer internal controls. However, the losses tend to be quite similar. Losses over $100000, same as larger businesses, but unfortunately, and of course, bigger businesses can much more easily absorb that kind of loss versus a small business where sometimes this is actually catastrophic.

[01:10:40] The book has a lot of fraud examples, discusses some internal controls and different types of fraud, especially for small businesses to be aware of as well. So if you do run a business, this is probably very useful. If you're in accounting in a small business, this is probably very useful. If you are a fraudster, this book is probably very useful, but it'll also show you how you're definitely going to get caught. So knock it off and turn over a new leaf already.

[01:11:04] All things Kelly Richmond Pope will be in the show notes at jordanharbinger.com. Just ask the AI chatbot on the website as well if you need something. Transcripts are in the show notes. Advertisers, deals, discounts, and ways to support this show all at jordanharbinger.com/deals. Please consider supporting those who support the show

[01:11:22] We've also got our newsletter, and every week the team and I dig into an older episode of the show We dissect the lessons and takeaways from it. So if you're a fan of the show, you want a recap of some gems from past episodes, or you just want to know what to listen to next, the newsletter is a great place to do just that. Jordanharbinger.com/news is where you can find it. Don't forget about Six-Minute Networking as well, also on the website at jordanharbinger.com/course. I'm at @JordanHarbinger on both Twitter and Instagram or just hit me on LinkedIn.

[01:11:48] And this show is created in association with PodcastOne. My team is Jen Harbinger, Jase Sanderson, Robert Fogarty, Millie Ocampo, Ian Baird, and Gabriel Mizrahi. Remember, we rise by lifting others. The fee for this show is you share it with friends when you find something useful or interesting. The greatest compliment you can give us is to share the show with those you care about. If you know somebody who runs a small business, is dealing with fraud, possibly needs to tighten up their internal controls, or might benefit from a conversation like this, definitely share the episode, with people interested in psychology, for example. In the meantime, I hope you apply what you hear on the show, so you can live what you learn, and we'll see you next time.

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