Visionaries or False Prophets

• Author: Frank S. Perri
• DOI: 10.1177/1043986213496008
• Published date: 01 August 2013
• Date: 01 August 2013
• Subject Matter: Articles

Journal of Contemporary Criminal Justice

29(3) 331 –350

© 2013 SAGE Publications

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DOI: 10.1177/1043986213496008

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Article

Visionaries or False Prophets

Frank S. Perri1

Abstract

Theory and research on the psychology of white-collar offenders has historically been

underdeveloped, and our understanding of the prototypical high-socioeconomic-

status offenders, such as today’s chief executive officers and chief financial officers, first

identified by Edwin Sutherland, has not benefited from the application of psychological

trait theory. In this article, the author examines the negative synergy that develops

when criminal thinking traits combine with the psychological traits of narcissism

and psychopathy to create risk factors for white-collar offending. Psychological trait

theory may be especially applicable to those who hold some of the highest positions

in corporate organizations, who influence corporate culture, and who, at times, are

considered visionaries in their respective industries.

Keywords

white-collar crime, psychological traits, psychopathy, narcissism, criminal thinking

Edwin Sutherland is regarded as the scholar that brought the term white-collar crime

into common usage, describing financial crimes committed by those in the upper socio-

economic echelons of society (Sutherland, 1949). Although Sutherland’s observations

are not inaccurate, research illustrates that white-collar crime is a broad category,

including high-level corporate misconduct, occupational fraud schemes by ordinary

citizens, as well as predatory offenders who operate individually without belonging to

any organization. Nevertheless, even though Sutherland’s prototypical high-status

offenders, such as chief executive officers (CEOs) and chief financial officers (CFOs),

represent only a fraction of the actual number of fraud offenders, their isolation for

study is warranted given the financial and emotional destruction they are capable of

inflicting on individuals, organizations, and society in general, due to their positions of

authority.

1Legal Department, County of Winnebago, State of Illinois, IL, USA

Corresponding Author:

Frank S. Perri, PO Box 5411, Rockford, IL 61125 USA.

Email: frankperri@hotmail.com

496008CCJ29310.1177/1043986213496008Journal of Contemporary Criminal JusticePerri

research-article2013

332 Journal of Contemporary Criminal Justice 29(3)

Consider, for example, that between 1998 and 2007, the U.S. Securities and

Exchange Commission named the CEO and/or the CFO for some level of involvement

in 89% of its fraud cases, up from 83% of the cases between 1987 and 1997 (COSO,

2010). Within 2 years of completion of the commission’s investigation, about 20% of

the CEOs/CFOs had been indicted, and over 60% of those indicted were convicted

(COSO, 2010). A recent report by accounting and financial services firm KPMG found

in a 2011 global survey that CEOs were involved in 26% of organizational fraud cases,

up 11% from a similar 2007 survey (Helm & Mietzite, 2011). In the wake of corporate

scandals in 2001 and 2002, the Department of Justice created the Corporate Fraud

Task Force. In its 2007 report, the department indicated that since the task force’s

inception, it has obtained convictions or guilty pleas from at least 214 former CEOs

and presidents, 53 CFOs, and 129 vice presidents.

Ironically, many of the executives who topped the charts in terms of unethical and

criminal practices had earlier been exalted in popular magazines and national newspa-

pers as corporate visionaries. According to Paul Kopperl, chairman of ImClone’s audit

committee, “I regarded [convicted CEO] Sam Waksal as a visionary who started the

company” (Bloomberg News, 2002). The New York Times initially praised convicted

WorldCom CEO Bernard Ebbers as “a long-distance visionary; he was blunt, folksy, the

entrepreneurial stepchild of the telecommunications revolution” (Lohr, 1997). Convicted

WorldCom CFO Scott Sullivan was named 1998 CFO of the Year by CFO Magazine

(Yang & Grow, 2005). Fortune magazine described Enron’s Kenneth Lay as a “revolu-

tionary” (Tourish & Vatcha, 2005, p. 462), who offered “visionary leadership . . . unafraid

to redefine the status quo by being bold and innovative” (Georgiou, 2010). Setting aside

the fraudulent revenue recognition of $3 billion resulting in a personal gain of $52 mil-

lion from insider stock trading, convicted CEO Joseph Nacchio of Qwest was “consid-

ered a visionary for his dogged pursuit of Internet opportunities” (CRN, 2000).

Convicted CEO of CA Inc. Sanjay Kumar, considered a visionary in the software

industry (Lyer, 1999), also had the honor of contributing a chapter on his leadership

insights in the book Leadership Secrets of the World’s Most Successful CEOs

(Yaverbaum, 2004) before being sentenced to prison for orchestrating a $2.2 billion

scheme involving fraudulent revenue recognition, securities fraud, and obstruction of

justice. CEO Jeffrey Skilling, considered another one of Enron’s visionaries (Zellner,

2002), was hailed as “the No. 1 CEO in the entire country” (Knapp, 2009, p. 7), and

CFO Andrew Fastow, one of the architects of the company’s fraud, was named CFO

of the Year in 1999 by CFO Magazine (Goldstein, 2011). Tyco’s convicted CEO

Dennis Kozlowski was named a top-25 executive in the country by Business Week for

his daring nonstop acquisition strategy (Lipman-Blumen, 2005). He was called corpo-

rate America’s most aggressive CEO (Sweeney, 2002, p. 22) and talked about “as a

second Jack Welch” (Kellerman, 2004, p. 45). Bernard Madoff, while perpetrating the

largest Ponzi scheme ever—estimated in the billions of dollars—was referred to as “a

true global investment visionary” (Jackson, 2012).

Recently, scholars in the accounting and financial field who write about white-

collar crime have begun to incorporate psychological scholarship into their disciplines,

attempting to create a more holistic picture of white-collar crime and its offenders. Not