Jonathan Marks is a leading fraud expert. He’s helped companies across multiple markets uncover fraud. Jonathan has innovated compliance by creating the Fraud Pentagon. His innovation builds upon work that was done years ago, the fraud triangle. Jonathan takes it to new levels that are in line with today’s sophisticated, technology-saturated world. Today, he and Tom talk about how you can use the Fraud Pentagon in the field.

  • Jonathan dispels a common myth about the fraud triangle, why it was created, and what types of companies it targeted. He explains why this is no longer enough in today’s world. One of the biggest reasons is that fraud is happening in huge corporations like Enron.
  • The Fraud Pentagon includes the following points: pressure, opportunity, rationalization, arrogance, competence. Jonathan explains his two new additions, arrogance and competence, and why they apply on new levels based on a deeper understanding of fraudsters, their mental states, and their technological know-how.
  • Four of the five points on the pentagon are human factors which lead to stereotyping, or at least the adherents to the fraud triangle believed. And their fear of stereotyping led them to overlook some of the most telling characteristics of fraudsters. Jonathan looks at the Fraud Pentagon as profiling and explains how profiling – not stereotyping – is necessary.
  • The Fraud Pentagon is great in theory, but how is it in action? Jonathan points at a huge difference between the triangle and pentagon. The triangle looks at WHY fraud occurs. The pentagon reveals how he, as a fraud practitioner, uses the framework to advise companies on their policies, procedures, and more, by looking at the gatekeepers. Books and records don’t commit fraud. People do.
  • The Fraud Pentagon is much further reaching than a single risk situation. Jonathan and Tom discuss where else it can be used to find corruption and malfeasance. It doesn’t just apply to fraud practitioners; it can also apply to boards and committees.

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