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If you ask people whether 
they think stealing is wrong,

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most of them would answer, "Yes."

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And yet, in 2013, organizations
all over the world

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lost an estimated total
of 3.7 trillion dollars to fraud,

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which includes crimes like embezzlement,

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pyramid schemes,

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and false insurance claims.

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This wasn't just the work
of a few bad apples.

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The truth is that many people
are susceptible

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not only to the temptation 
to commit fraud

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but to convincing themselves
that they've done nothing wrong.

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So why does fraud happen?

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While individual motivations 
may differ from case to case,

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the fraud triangle,

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a model developed
by criminologist Donald Cressey,

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shows three conditions 
that make fraud likely:

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pressure, opportunity,
and rationalization.

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Pressure is often what motivates someone
to engage in fraud to begin with.

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It could be a personal debt,

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an addiction,

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an earnings quota,

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a sudden job loss,

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or an illness in the family.

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As for opportunity, many people
in both public and private sectors

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have access to tools that enable them
to commit and conceal fraud:

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corporate credit cards,

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internal company data,

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or control over the budget.

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The combination of pressure

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and being exposed to such opportunities
on a daily basis

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can create a strong temptation.

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But even with these two elements,

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most fraud still requires rationalization.

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Many fraudsters are first time offenders,

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so in order to commit an act
most would regard as wrong,

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they need to justify it to themselves.

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Some feel entitled to the money
because they are underpaid and overworked

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and others believe 
their fraud is victimless,

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perhaps even planning to return
the money once their crisis is resolved.

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Some of the most common types of fraud

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don't even register as such
to the perpetrator.

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Examples include employees
fudging time sheets or expense reports,

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taxpayers failing to report cash earnings,

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or service providers overbilling
insurance companies.

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Though these may seem small,

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and can sometimes
only involve hundreds of dollars,

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they all contribute to the big picture.

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And then there's fraud on a massive scale.

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In 2003, Italian dairy food giant 
Parmalat went bankrupt

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after it was found to have fabricated
a 4 billion dollar bank account

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and falsified financial statements

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to hide the fact that its subsidiaries
had been losing money.

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Because it was family controlled,

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corporate governance 
and regulator supervision were difficult,

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and the company likely hoped 
that the losses could be recouped

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before anyone found out.

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And it's not just corporate greed.

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Governments and non-profits
are also susceptible to fraud.

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During her time as City Comptroller
for Dixon, Illinois,

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Rita Crundwell embezzled 
over 53 million dollars.

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Rita was one of the country's leading 
quarter horse breeders

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and winner of 52 world championships.

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But the cost of maintaining the herd
ran to 200,000 dollars per month.

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Because her position gave her complete
control over city finances,

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she was easily able to divert money

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to an account she used 
for private expenses,

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and the scheme went 
unnoticed for 20 years.

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It is believed that Crundwell
felt entitled to a lavish lifestyle

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based on her position,

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and the notoriety 
her winnings brought to the city.

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It's tempting to think of fraud
as a victimless crime

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because corporations 
and civic institutions aren't people.

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But fraud harms real people
in virtually every case:

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the employees of Parmalat 
who lost their jobs,

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the citizens of Dixon whose taxes
subsidized horse breeding,

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the customers of companies
which raise their prices to offset losses.

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Sometimes the effects are obvious
and devestating,

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like when Bernie Madoff caused thousands
of people to lose their life savings.

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But often they're subtle
and not easy to untangle.

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Yet someone, 
somewhere is left holding the bill.