Feb 28 2020 13 mins
Contact Kelly: https://www.linkedin.com/in/kellypaxton/
Pink Collar Crime site: https://pinkcollarcrime.com/
IMA's Annual Conference & Expo 2020: https://bit.ly/2HXTN42
IMA's website: https://www.imanet.org/
FULL EPISODE TRANSCRIPT
Mitch: (00:00)
Welcome back to Count Me In, IMA's podcast about all things affecting the accounting and finance world. In the past we've included some IMA focus bonus episodes where we spoke to Ima, staff members where I am a volunteers and young professionals. Today's bonus episode is very interesting because we are going to share a conversation held with Kelly Paxton, a certified fraud examiner and pink collar crime expert. She spoke with IMS manager of brand content and storytelling, Margaret Michaels Kelly presented on pink collar crime at IMA's 2019 annual conference and expo in San Diego and she was nice enough to sit with Margaret after her presentation to share some additional insights as we approach our 2020 annual conference. We thought it would be a great opportunity to share some valuable perspectives like Kelly's and make sure you look out for this year's speakers and topics. Let's head over to the conversation now.
Margaret: (00:57)
I'd like to start with your area of expertise. Can you tell us a little bit about how you became interested in pink collar crime and how you learned more about it?
Kelly: (01:15)
So I became interested in pink collar crime when I was working as the fraud analyst at a local Sheriff's department. Prior to that I was, my original career was in finance and I became a customs special agent. So I was used to arresting bad guys you know, money launderers, drug dealers. But then when I go to a local Sheriff's office and I'm doing primarily embezzlement type cases, all my suspects are women. And I came across the term pink collar crime and I just started researching it and it fascinated me because we were arresting women that look like you and me. They were nice woman. I had a detective one day who, she arrested a woman who stole hundreds of thousands of dollars from her child's school where she worked at. And the detective said it was the hardest day of her career. That was this nice woman. She was crying, she was devastated, she had no criminal history, nothing. She made a bad decision and it just spiraled out of control. So I was fascinated because I was, we think of criminals as bad guys. We don't think of them as the people that live in our neighborhoods. And that's what I was seeing in embezzlement cases.
Margaret: (03:54)
This is so interesting. Can you explain to us what is the difference between pink collar and white collar crime?
Kelly: (04:03)
So white collar crime came in in 1939 by Edwin Sutherland. It is a crime committed by a person of high social status in the course of his occupation and it was his occupation. So it took another 50 years for pink collar crime to come out, which is petty amount stolen by lower level workers in the workplace, primarily women because women are in those positions. So what I say a huge part of the difference between pink and white collar crime is it's position, not gender. So white collar crime is generally considered to be fraud, which is Ponzi schemes, financial statement, fraud and corruption. Whereas pink collar crime, I call it garden variety embezzlement. It's the main street crime. It is the dentist who gets ripped off by his trusted office manager. It is the manufacturing company who has an accounts payable, you know, employee who steals. It's relatable. That's, I use a lot of hashtags in my social media and presentations and I call it the relatable crime. I can't tell you how many people come up when they find out what I do and they have their own story of how they are. A family member had been ripped off by someone or a school club that their kid belongs to. So I call it the relatable crumb. We don't relate to Bernie Madoff. It's just we don't, we don't live in his world. We live in the world of mainstream.
Margaret: (05:37)
Are there patterns in the behavior of pink collar criminals? For example, I'm not sure if you consider Elizabeth Holmes a pink collar criminal or not, but there have been reports that her behavior seemed to raise some red flags. In the cases you've worked on. What have you commonly seen?
Kelly: (05:56)
So some of the common characteristics of pink collar criminals are the trusted employee. It is your right hand person, you own a business, it is your trusted employee. I will tell you it's positioned not gender. A man can be a pink collar criminal. It's the position, it's just the women are in more of these types of positions. According to census, you know, reports 90 plus percent of administrative positions are filled by women. And that's where the cash is in a business. It's in accounts payable, it's in accounts receivable, bookkeepers, receptionist's office managers. So, but they are trusted employees, absolutely trusted employees. So, um, Elizabeth Holmes, I don't consider it to be a pink collar criminal. I don't know what she actually financially profited from Theranose. But the thing about the women and pink collar criminals or the men and pink collar criminals is they're indispensable in a business. They really are indispensable. One of the, I call them pink flags instead of red flags, I call them pink flags is never taking a vacation. So if you have an employee who never takes a vacation, it is a huge pink flag. Of course, lifestyle I do, I tell businesses to do a parking lot audit, look outside and does their salary match the car? I mean, I've had a dentist who, when you find out you've been embezzled, it's horrifying. You are just gutted. And so what do people do when they're horrified? They try to bring humor in it. And so here I have this dentist, he realizes he's been ripped off and he said, you know, when I realized she drove a newer model, BMW's than me, that would be a clue. And I'm like, yep, that would be a clue. So there are patterns men steal more than women. So if you get a male pink color criminal or embezzler, he's going to steal more than a woman. Women steal 45 to 50 cents on the dollar compared to men. Embezzlers and that's been my practice. The two biggest cases I've had male embezzlers.
Margaret: (08:14)
Very interesting. Well obviously you don't know someone's behavior before you hire them. Not fully at least. So what are some of the best practices for background checks or industry standards that organizations can follow when looking to hire new employees?
Kelly: (08:31)
So I did background checks for many, many years and the ACFE has their report to the nation that most company, about 50% of companies do background checks. Now a background check is a rear view looking assessment. We went to look now into the future. So that's what I say, a parking lot audit lifestyle audit. Many States you can no longer run credit reports unless you did. There is a, you know, a need that can be documented. So the problem with the background check is a lot of these people may have done it before and just been fired or terminated and not prosecuted and so it won't show up on their record. But then there's a huge amo...