The Psychology of Fraud with Toby Groves, Ph.D. – Story Clarification
The Psychology of Fraud featuring the story of Toby Groves is a popular case study for professionals and researchers alike in the areas of ethics and decision-making. The story has also been used in classrooms for students studying auditing, investigation, forensic accounting, and psychology. The story was the subject of an NPR story titled Psychology of Fraud: Why Good People do Bad Things which aired on All Things Considered on May 1, 2012 and in a Planet Money podcast in April, 2012 which was rebroadcast July, 2015. The NPR story challenged traditional assumptions about fraud and ethical decision-making and these versions have also been used at universities and by professional organizations in discussions about the psychology behind ethics and fraud. An accurate and detailed understanding of the facts in the story is important for these audiences.
In the NPR story, the journalists used a timeline of the fraud and focused on a particular date (A 2004 loan application in which income was overstated) which they labeled as the “first lie”. The court records, however, show the guilty plea in the case included tax evasion for tax returns in the years 2001-2003 , which pre-dates the 2004 loan application. An explanation surrounding the timing and why the 2004 date would be used to start the story and be identified as the ‘first lie’ instead of an earlier date such as 2001-2003 tax returns would give readers a better understanding of the story. That is the purpose of this post.
The 2001-2003 tax returns were included as part of the 2004 loan application as proof of income. There is no indication that the 2001-2003 taxes were under scrutiny prior to the 2004 loan application. Additionally, forensic accountant reports (records available to live audiences) further suggest the 2001-2003 taxes would not have been targeted separately from the 2004 loan application. Many examiners conclude 1.) It’s useful to identify the first conscious and deliberate act in the case and 2.) While there is no way to know what is in someone’s mind, it seems likely that issues related to the 2001-2003 tax returns would not have been known prior to the date of 2004 loan application which would make the 2004 loan application a useful starting point for the story.
The 2001-2003 dates of the tax returns could be used to begin the story, but it would be less clear how they fit. The tax returns are more likely to be significant in a discussion related to legal procedure. It is important to note that court records do not necessarily describe the course of events as an observer would have consciously perceived them at the time of those events. Court records have a different purpose than reports and articles produced by researchers, psychologists or reporters. Depending on the purpose, an examination may focus on different facts and reach different conclusions. Even though the conclusions may appear to be different, they are still correct in their given context. Details disclosed in court records are frequently the result of a complex combination of plea negotiations, procedural rules and prosecutorial discretion, not a full disclosure of all the events that led up to those records. Researchers, psychologists and reporters are usually interested in the context that is lacking in black and white court documents.
This post resulted from an article and series of incorrect corrections to the original Psychology of Fraud story made by NPR’s public editor, Elizabeth Jensen. The corrections were wrong, as explained in this article by IMedia Ethics titled NPR De-Indexes Public Editor’s Blogpost, Update and Corrects 2018 Corrections .
Toby Groves, Ph.D.