Tip: click a paragraph to jump to the exact moment in the video. Psychology of Fraud and Corruption (Criminology Intro in CIAPS, Cambridge, UK)

1. 00:02 Okay. So, uh, good morning everyone.
2. 00:11 Today we’re going to discuss a variant, a subspecies of crime known as financial
3. 00:18 crime. Now, financial crime is a white collar
4. 00:24 crime. White collar crime is very distinct from street crime. The psychology is
5. 00:31 completely different. Even the demographics are different. In the countries of the west, white collar
6. 00:38 crime is committed by middle-aged white males who are also very well off.
7. 00:47 Whereas street crime is committed mostly by people who are not white, not well
8. 00:53 off and young. So the demographic profile, the psychological profile are completely
9. 00:59 different. And it raises the question, why would anyone commit a white collar
10. 01:05 crime? Why would anyone commit a financial crime if they are well off? If
11. 01:11 they’re in the middle of their lives, if they have a family, they have a home, they have a settled pattern and
12. 01:17 routines, why would they risk disrupting all this, not to mention spending the
13. 01:23 rest of their lives in a prison if there are no serious psychological
14. 01:29 problems involved? And gradually we are coming to believe in criminology that
15. 01:35 white collar crime not all of it but a lot of it is motivated by severe deep
16. 01:41 set lifelong psychopathologies and that is the topic of today’s
17. 01:48 lecture. There are three types of financial crime. There’s money laundering, there
18. 01:55 is fraud and there is corruption.
19. 02:01 Now as far as we could ascertain money laundering does not involve any mental
20. 02:07 health problems. Money laundering is not the outcome of any compulsions or any
21. 02:13 personality disorders or any other issue in mental health. Money laundering is
22. 02:19 antisocial in the sense that money laundering involves breaking the law and
23. 02:25 it does take a specific type of personality to break the law on a regular basis. Personality which is antisocial or a personality which is high on what the international
24. 02:38 classification of diseases calls dissociity. But this is not full-fledged mental
25. 02:45 illness. It’s more like a personality style. It’s more like a habit. It depends where you’ve grown up. Um who
26. 02:52 you were surrounded with in childhood modeling who which role models you’ve
27. 02:58 emulated as a child and as adult an adolescent. So I will put moneyaundering
28. 03:04 aside. Moneyaundering is also usually a very structured organized activity.
29. 03:10 A little similar to tax evasion or tax havens in in with of corporations.
30. 03:18 Today we’re going to focus mostly on fraud. All types of fraud, individual
31. 03:24 fraud, securities fraud, checking fraud. The dozens, hundreds of types of fraud.
32. 03:31 We’re going to discuss the psychological template behind fraudulent activities and we are going to discuss um uh corruption the psychology of
33. 03:44 corruption which is um a very interesting uh topic
34. 03:51 and much neglected in the literature. We’re going to start with fraud.
35. 03:57 All of you have heard probably of Bernie Maidolf. Bernie Maidoff was the head of
36. 04:03 NASDAQ, which is one of the major stock exchanges in the United States and in the world actually. He was the head of
37. 04:10 the Securities Association. He was a pillar of the community. He was a very prominent figure in the securities
38. 04:17 industry. And the last thing anything would have imagined is that Bernie Maidov would be involved in fraud.
39. 04:25 And yet for decades Bernie Maidoff sustained a Ponzi scheme, the largest in
40. 04:33 human history. Ponzi scheme at its apex reached the value of $50 billion like
41. 04:40 the economy of a middlesized country. And the POS the participants in the
42. 04:46 Ponzi scheme were the elites, top politicians, rock stars, movie
43. 04:53 stars. I mean everyone who is anything business, the largest businessman, biggest businessman, they all participated in his Ponzi scheme until it collapsed. He was exposed. He was
44. 05:04 taken to prison. All his property were confiscated. His wife suffered. His children suffered. It was a horror. The whole family was destroyed. He paid an
45. 05:15 exceedingly heavy price for his actions. And yet to the very day that he died in prison, he never ever expressed remorse, regret, doubted his his actions, asked
46. 05:28 himself whether what he has done was somehow wrong. Bernie made to the last
47. 05:35 day of his life remained unrepentant. And that is a very crucial feature,
48. 05:43 recurrent feature in white collar crime. People who commit white collar crimes
49. 05:49 are unrepentant and they are unrepentant for a variety of reasons which we are going to discuss momentarily. Let’s start with the fact that we have studied white collar criminals
50. 06:06 especially criminals involved in financial fraud, insurance fraud, other types of fraud. We have studied them
51. 06:12 very very deeply and very intimately for many decades. we have a firm grasp on
52. 06:18 their psychology. We can even predict who is likely to commit financial fraud and financial crime.
53. 06:25 And so the first thing we discovered is that all of them shared a sense of impunity,
54. 06:32 a sense of immunity to the consequences of their actions. A counterfactual belief that they can
55. 06:39 always get away with it, that no one is going to catch up to them. There’s a famous movie, Catch Me If You Can.
56. 06:46 This sense of immunity and impunity is of course a form of magical thinking.
57. 06:52 Magical thinking is the belief that your wishes, your dreams, your hopes, your
58. 06:58 fantasies, your thoughts and your beliefs actually affect reality, shape
59. 07:06 reality. that you have the capacity just by wanting something very much, just by believing something a lot, you have the capacity to somehow change the structure of reality and the processes involved in
60. 07:18 it. This is known as magical thinking. And all white collar criminals share
61. 07:24 this magical thinking. They believe that they are somehow untouchable, invulnerable, impermeable, and that they’re always always going to get away
62. 07:35 with it and things are going to turn up for the better. When they don’t, these people are shocked. They’re not only
63. 07:41 shocked, they’re indignant because the very narrative of their universe has been falsified. When they
64. 07:48 are arrested, when they are on trial, when they are sentenced to prison and so
65. 07:54 on so forth, they are in a state of denial and indignation. They are
66. 08:00 furious. They rage. They contest um the process. They claim to have been subjected to injustice and so on so forth. Not necessarily
67. 08:12 because they’re trying to manipulate the courts or the public of public opinion, but because they truly believe it. They
68. 08:19 are truly no longer with us. These people live in a fantasy. We’re going to discuss it a bit later. People who commit financial fraud are
69. 08:31 exactly like street criminals. They have a problem with impulse control. They are impulsive. Impulsivity actually is one of the main
70. 08:42 characteristics of what we call primary psychopathy. The inability to controls one’s one’s
71. 08:49 urges, one’s drives, one’s impulses is a critical feature in what is known
72. 08:55 collectively as cluster B personality disorders. the dramatic erratic personality disorders especially narcissistic borderline and psychopathic personality disorders. These according to studies by Robert Hair by Nathan
73. 09:10 Babiaak by many others these constitute a sizable portion of the prison
74. 09:16 population. these people with personality disorders. And so
75. 09:22 we are likely to find personality disorders among um people who commit
76. 09:29 white collar crime among fraudsters, con artists, swindlers, grifters, scammers.
77. 09:37 Personality disorders are over represented. They are over prevalent among these people.
78. 09:45 White collar crime therefore is a type of mental illness or the manifestation and expression of mental illness. It should not be taken lightly and we
79. 09:56 should not always assume that the white collar criminal is an evil cunning scheming mority. Sometimes it’s a driven person, a person
80. 10:08 who is taken over by impulses that are uncontrollable
81. 10:15 and inexurably driven towards this kind of misbehavior and misconduct. Impulsivity is a critical feature, but it goes hand inhand with what is known
82. 10:26 in psychology as aloplastic defenses. Aloplastic defenses are the tendency to
83. 10:34 blame other people, to blame institutions, the world, reality, politics.
84. 10:43 Everyone is guilty. Everyone is to blame. Everyone is responsible except the culprit, except the criminal. That this type of criminal never assumes
85. 10:54 responsibility for his or her actions. This kind of criminal denies any evil
86. 11:00 intent, any malicious intent, any criminal intent, men. This kind of
87. 11:06 criminal even when caught rent handed or with a hand in the teal would immediately spin some kind of story which is self-exonerating,
88. 11:17 self-justifying. Some kind of story which renders the criminal all good and everyone else and
89. 11:24 everything else all bad. People made him do it. The environment misunderstood
90. 11:31 him. He was or she was discriminated against. This was just an attempt to
91. 11:37 write some wrong. It was all done for the greater good. And a million other narratives. All of them counterfactual.
92. 11:45 All of them unrealistic. All of them fantastic. All of them ungrounded. We are beginning to see that people who commit white collar crimes are convinced not only of their own impunity but of their own innocence. They regard themselves as victims,
93. 12:03 victims of society, of institutions, of other people. They believe that other people envy them, undermine them, challenge challenge them that there is
94. 12:14 some malevolent or malicious conspiracy going on and so on. In short, people who
95. 12:20 commit white collar crime very often display what we call paranoid ideiation.
96. 12:27 And so aloplastic defenses coupled with sense of immunity and impunity. Put the
97. 12:34 two together and what you get is what is known in psychology as recklessness.
98. 12:40 Recklessness is the tendency to act without regard to the very probable and
99. 12:46 plausible consequences, adverse consequences of one’s actions. The
100. 12:52 reckless person acts first and asks questions later. The reckless person is
101. 12:59 all focused on action, action focused rather than deliberate analytical.
102. 13:07 The reckless person has no horizon, no perception of the future, is embedded
103. 13:14 and grounded completely in the impulsive moment. And so recklessness is a key feature,
104. 13:22 key clinical feature of people who commit uh white collar crimes. But
105. 13:28 whereas the street criminal is usually a one-time off criminal, it’s a criminal
106. 13:35 who would snatch a bag, rape a woman, commit a murder. A street criminal would
107. 13:42 do something and then would usually repose or there would be some break or
108. 13:51 hiatus in the activity with white collar criminals.
109. 13:57 There’s a pattern of action that invades and imbuss and permeates
110. 14:03 their entire lives. The totality of the life of the white
111. 14:09 collar criminal is dedicated to white collar crime.
112. 14:15 And so white collar criminality is a lifestyle. It’s not only the
113. 14:22 outcome of mental illness, but it becomes habituated. It becomes a mode of interaction which
114. 14:28 is pretty exclusive. The white collar criminal defrauds people,
115. 14:34 embezzles, abscon with other people, people people’s money, um evades taxes.
116. 14:40 The white collar criminal manipulates securities, publicly traded securities, securities
117. 14:47 fraud. The white collar criminal does things on a regular basis every morning,
118. 14:53 every afternoon and every evening, every day of every month of every year of his
119. 14:59 or her life. It is therefore the life of the white collar criminal. Whereas the street
120. 15:06 criminal can have long periods of time without any criminal activity, the white
121. 15:13 collar criminal is always a criminal.
122. 15:19 The I mentioned that the white collar criminal is a bit detached from reality.
123. 15:26 We call this phenomenon impaired reality testing. A white collar criminal is unable to evaluate and gauge reality appropriately. And that is a major reason why the white collar criminal is
124. 15:38 oblivious, blissfully oblivious to the adverse consequences of his actions.
125. 15:44 He’s not here. is not grounded the white collar criminal. I’m saying he because majority of white collar criminals are actually men. He is not grounded in reality. He lives he inhabits some alternative universe, some virtual
126. 16:00 reality, what we call in psychology a paracosm. There is a fantasy involved. White
127. 16:07 collar crime involves a lot of fantasizing, a lot of um behavior which is almost
128. 16:14 pseudocssychotic. the the white collar criminal um is is embedded in a dreamscape. It’s
129. 16:22 like he’s living in a dream and unable to break out of the dream. It’s like lucid dreaming.
130. 16:29 And this this fantastic elements, this unrealistic terrain, this dreamscape
131. 16:36 which the white collar criminal inhabits allows the white collar criminal to
132. 16:42 self-justify to blame others to believe that what he
133. 16:48 or she is doing as a higher purpose is actually even moral uh to some extent. I
134. 16:55 just want to make people happy. I just want to make others rich. I have a a a magic formula. I have come with an amazing invention. They lie to
135. 17:06 themselves. They’re selfdeceiving. They convince themselves that their own lies are true. And this is known as confabulation. All the elements that I mentioned
136. 17:18 constitutes a pattern, a pattern known in psychology as narcissistic personality organization. We have found in studies that pathological narcissism and antisocial
137. 17:31 features psychopathy are over represented in and among
138. 17:37 uh white collar criminals. And so the white collar criminal confabulates,
139. 17:44 lies to himself and to others, selfdeceives and is embedded in a fantasy.
140. 17:54 And when you put all these elements together with impunity, with impulsivity,
141. 18:01 with entitlement, with a profound sense of envy, with
142. 18:07 competitiveness, with being driven and subject to urges,
143. 18:13 with egoony, some kind of pride in what he or she is doing. When you put all
144. 18:20 these elements together, you end up with a person who is defiant.
145. 18:26 A person who defies social norms, conventions, mores, and ultimately a
146. 18:33 person who defies the law itself. A person who is a law unto himself. A
147. 18:41 person who refuses to succumb to authority and the dictates of authority.
148. 18:48 This kind of person is a contumacious person and consummaciousness and defines a major features of something called reactance which is a
149. 18:59 clinical feature of psychopathy. I’m above the law. I’m above the law because I’m entitled. I’m above the law because I’m superior. I’m above the law because I’m immune to the consequences
150. 19:11 of my actions. I’m there’s impunity there. And I’m above the law because my
151. 19:18 fantasy is should always be a substitute to reality, is stronger than reality, is
152. 19:24 more valid than reality. My fantasy is not a fantasy. It’s a vision. My fantasy
153. 19:30 would make everybody’s life uh better. And these are postfactor justifications. Of
154. 19:37 course, this is a form of reframing. Initially when the white collar criminal
155. 19:43 starts to commit crimes he or she is motivated by benign banal
156. 19:50 um uh attitudes and motivations. So greed there’s a lot of greed. There’s a
157. 19:56 sense of superiority and a need to sustain a lifestyle which is exorbitant. Initially white collar crime starts with normality.
158. 20:07 Initially white white collar crimes is merely an exaggeration of the habits, the wishes, the dreams,
159. 20:15 the fantasies, the hopes and expectations of a normal person. Everyone is greedy. Everyone wants to
160. 20:21 live rich. There’s nothing unique about this. But the white collar criminal takes take it takes it a step further
161. 20:28 because of the sense of entitlement. When I say entitlement, it has two facets.
162. 20:35 One facet is I’m entitled to a good life. I’m entitled to special treatment.
163. 20:41 I’m unique. I’m amazing. I’m unprecedented. And by virtue of being so,
164. 20:48 no one should ever obstruct my ascendance and my supremacy. So that’s
165. 20:55 one facet of entitlement. And the other facet of entitlement, if anyone says no to me, if anyone sets a boundary, if
166. 21:03 anyone hampers my my activities, they are traitors, they are enemies, they are
167. 21:10 malicious, they’re malevolent. It is entitlement that constitutes the pivot from normal
168. 21:21 pedestrian motivations to psychopathology and it’s attendant fantasy. So we have someone who starts to steal money
169. 21:32 because they have a lifestyle they want to sustain or because they’re greedy and then they feel immune.
170. 21:39 They feel they are untouchable. invincible. They become grandiose.
171. 21:45 They have a sense of entitlement. I’m entitled to this money that I’m stealing.
172. 21:51 And then the entitlement drives the individual into a psychopathological
173. 21:58 state into a mental illness which involves as I mentioned all the aforementioned features including not the least a fantasy defense a
174. 22:11 narrative which is completely divorced from reality. It is easy to sustain the fantasy. It is easy to lie to yourself that what you’re
175. 22:23 doing is not what you’re doing. It is easy to convince yourself that society’s judgment on your activities is completely wrong. You be you are misunderstood. You’re discriminated
176. 22:35 against. You’re being victimized. It’s easy to convince yourself of this because whereas street crime involves
177. 22:44 human bodies, human faces, human smells and humans generally. When you are
178. 22:52 committing a street crime, you come across physical objects. You come across human beings. Street crime is a handson
179. 23:00 crime. Even if you burgle an empty apartment, it is an apartment. It is an
180. 23:06 object. When you enter the apartment, you witness the lives of the occupants.
181. 23:12 There’s always a connection. Of course, when you mug someone, when you rape someone, when you murder someone, street
182. 23:19 crime involves people. Whereas, white collar crime does not
183. 23:25 involve people. It involves symbols. White collar crime is a manipulation of
184. 23:34 symbols. symbols on a computer usually not even physical symbols and sometimes cash. But
185. 23:43 even the cash, these are symbols. These are pieces of paper. There’s no human
186. 23:50 there. There’s no human face to the crime. And so it it’s easy to convince yourself as a white collar criminal that you are not hurting people, that people are not involved. You’re manipulating. You’re manipulating numbers on a computer. You’re getting a suitcase full
187. 24:07 of pieces of paper. There are no not people there. And of course, it’s a selfdeception.
188. 24:14 People do get hurt a lot by white collar crime. Actually, more people get hurt by
189. 24:20 white collar crime than street crime. But there is a lack of empathy there.
190. 24:26 Narcissists and psychopaths lack empathy. White collar criminals generally lack empathy. They’re unable
191. 24:33 to put themselves in other people’s shoes. They’re unable to visualize other people, their existence, their needs,
192. 24:40 priorities, dreams, hopes, wishes, their assets. So they have aphantasia,
193. 24:48 empathic aphantasia. They’re unable to perceive other people as real, as external, as separate with a life of their own. This lack of empathy and the
194. 25:00 the fact that white collar crime has to do with simple manipulation
195. 25:06 allow this combination allows the white collar criminal to create narratives of
196. 25:12 unreality to embed himself or herself in a kind of movie, a kind of virtual reality.
197. 25:22 Everything becomes abstract. everything becomes um a kind of video game or board game like Monopoly.
198. 25:33 There’s no the the white collar criminal does not anticipate real life consequences because the white collar crime does not take place in real life.
199. 25:45 It takes place in a fantastic space in some symbolic space in in very detached
200. 25:53 from people. The white collar criminal very very rarely
201. 25:59 have have has to see the consequences of his or her actions. Very rarely does the white collar criminal come across the victim of his
202. 26:10 or her misdeeds and misconduct. It the white collar criminal is divorced from
203. 26:17 his victims is removed from his victims. The white collar criminal is isolated, firewalled from his victims, by using
204. 26:28 computer systems, by using the banking system. The white collar criminal works with systems, not with people. So, it’s easy for the white collar criminal to
205. 26:39 deceive himself. I’m doing no wrong. I’m hurting nobody. It’s very common to hear
206. 26:45 a white collar criminal say, um, oh, there’s no victims here. they’re going to get reimbursed by the insurance company. So, I didn’t do anything wrong. I hurt
207. 26:56 nobody. I may have stolen money from the bank. I may have stolen money from my company embezzled. I may may have even
208. 27:04 stolen money from an old widow, but they’re all going to be compensate compensated by the insurance companies.
209. 27:10 So, I’m exempt. I’m innocent. I’m okay. You know, and so
210. 27:19 aloplastic defenses are not only about convincing yourself that other people are to blame, that
211. 27:26 they are responsible for everything that’s happened, that they’re guilty, but aloplastic defenses are also about convincing yourself that whatever it is that you’re doing would never have any
212. 27:37 adverse consequences on other people, not only on yourself, on other people as well. And a very typical sentence by a psychopath is um I stole their money because they were
213. 27:50 stupid. They should have paid attention. They they should have been much more careful.
214. 27:59 Why did they leave their money exposed? Of course, I stole it. But it’s not my fault. It’s their fault for having been so negligent. This is a form of aloplastic defense.
215. 28:13 And so the world of the white collar criminal,
216. 28:19 the mind of the white collar criminal is very surrealistic.
217. 28:25 As I mentioned, it’s kind of a dreamscape where the white collar criminal wanders wanders this dreamscape, navigates this dreamscape, this nightmarish
218. 28:36 alien planet, convincing himself that this is reality.
219. 28:42 And because these these fantastic spaces are deep depopulated, there are no
220. 28:50 people there, it’s easy for the white collar criminal to believe that he’s just playing a game, some kind of a
221. 28:56 game. It’s a video game. And you know, why am I being arrested? What have I done except manipulate a few
222. 29:04 uh figures on a computer screen? I didn’t do anything wrong. I didn’t even use the money. The money is still there.
223. 29:11 So it’s a game. There’s there’s a logic element here. There’s an element of game playing, oneupmanship,
224. 29:19 competition. Competition against whom? Competition against the world. Competition against
225. 29:25 people who are richer. Competition against other white collar criminals. And above all, competition against
226. 29:31 oneself. It’s a desperate attempt to prove to yourself that you are not a loser. that the white collar criminal possesses
227. 29:42 what we call a bed an internalized bed object a group or cluster of voices that inform the white color criminal that is
228. 29:53 inadequate. He’s a loser. ism. And the white collar criminal criminal’s activities are sometimes an attempt to falsify these internal voices to prove
229. 30:05 to himself that he is a genius, that he is brilliant, that he is not a loser but
230. 30:12 a winner, that he is worthy and and so on. So it’s a it’s an internal dialogue.
231. 30:22 the the activities of the white collar criminal are very often soypistic.
232. 30:28 They are not social. They are not relational. It’s a type of crime that is done in the darkness alone out of the sight of other people. Type
233. 30:39 of crime that does not generate any grandio rewards, any narcissistic
234. 30:45 supply, any attention. It seems that the white collar criminal is playing chess with himself,
235. 30:53 trying to outbid himself, outdo himself and win the game against himself.
236. 31:00 And that’s why white collar crimes, most of them, not all of them, are actually
237. 31:06 very lonely affairs. And even when they involve real life flesh and blood
238. 31:12 victims, ultimately the whole strategim, the whole scheme
239. 31:20 is unknown to the victims. It’s known only to the criminal. And so again, the criminal is alone. Even if there is a psychopath who is
240. 31:31 cheating old people out of their life savings
241. 31:37 only he knows it only he is aware of it. The whole thing is unfolding and
242. 31:43 unfurling in his mind and in his mind only. Con artistry conmen.
243. 31:52 The word con is short for confidence. Confidence men, confidence artist. The
244. 31:59 white collar criminal exudes confidence, triggers confidence in people, acquires
245. 32:07 the trust of other people, creates uh engenders, manufactures an alternative reality, a fantastic reality
246. 32:18 within which people can reside. And all this time he holds the key to the keys to the kingdom. He is the sole guardian and custodian of the truth. He
247. 32:30 is the only one who knows what’s going on. And so it’s a very solitary
248. 32:36 kind of crime. Solitary kind of activity. You see in street crime, in street crime as distinct from white collar crime, everything is above board.
249. 32:47 Everything is completely explicit. Everything is immediately decoded. Someone snatches your purse or your
250. 32:55 smartphone, it’s very clear what’s happening. A rape is very clear. A mugging is very clear. A murder is very
251. 33:02 clear. These are absolutely overt text. Whereas white collar crime is an overt a
252. 33:10 covert text. It’s a covert activity. It’s a hidden text. It’s an occult occult text. There always layers of
253. 33:19 meaning there. There’s always a code which requires decoding. That’s why
254. 33:25 white collar crime investigations are by far the most complicated and very
255. 33:31 unsatisfactory because they usually don’t come out with a full um with a full picture. Have a look for example at
256. 33:39 what’s happening with Jeffrey Epstein. To this very day, years later, years after his death, we are still not quite sure what has happened there. And yes, what Jeffrey Epstein’s work um handiwork was basically white collar crime.
257. 33:56 So we are faced with narcissists and psychopaths. These are not mentally
258. 34:02 healthy people. Not all criminals are narcissists and psychopaths. Not all white collar criminals are narcissists
259. 34:09 and psychopaths. Some white collar criminals suffer from mood disorders. Other have others have anxiety
260. 34:16 disorders. Others have substance use disorders but a substantial majority
261. 34:22 suffer from personality disorders and among these the majority are narcissists and psychopaths.
262. 34:28 So these people their personality disorders
263. 34:35 they they’re mentally ill. These are not these are not just normal
264. 34:42 people, healthy people who woke up in the morning and said, “I need to have another $100,000 because I want to buy
265. 34:48 uh Lamborghini or a Ferrari.” That that’s not a typical white collar criminal. A white color criminal is
266. 34:57 driven is is consumed by the white collar crime. The white collar crime becomes
267. 35:03 the life of the white collar criminal. Bernie Maidolf and his sons
268. 35:10 spend 90% of their waking hours running the Ponzi scheme from secret
269. 35:17 computers in the in back rooms. People who who commit white collar
270. 35:23 crimes become defined by the white collar crime. The white collar crime becomes
271. 35:29 the core identity of the white collar criminal. And that’s not the case with a
272. 35:35 street criminal. The street criminal may commit a crime, multiple crimes, have a
273. 35:42 long rap sheet, but you can’t use the crimes to define the personality of the
274. 35:48 street criminal. You can use a white collar crime to define the personality,
275. 35:54 life, and lifestyle and mind of the white collar criminal. Two very distinct
276. 36:01 types of crime. We know that psychopaths are goal
277. 36:07 oriented. They are inexurable. They are ruthless. They’re callous. They have no empathy.
278. 36:15 No access to positive emotions. They don’t bond. They don’t attach. They reject authority. They’re consumacious.
279. 36:22 They’re defined and they’re reckless. That’s a typical profile of a primary psychopath. factor one psychopath which are the psychopaths that are over represented in the prison population and by the way among chief executive
280. 36:38 officers of Fortune 500 companies tells you something about the corporate
281. 36:44 world and how white crime can actually be legitimized and become corporate
282. 36:50 greed. Anyhow, that’s the profile of a psychopath. And the goal orientation of
283. 36:56 the psychopath renders the psychopathic white criminal different to the narcissistic white criminal. Whereas a narcissistic white
284. 37:07 criminal, the white criminal who is a narcissist is mainly concerned with maintaining a
285. 37:13 fantasy, a narrative. The white collar criminal who is a
286. 37:20 psychopath is mainly concerned with obtaining some goal. Money, sex, power, access,
287. 37:29 connections, you name it. There’s some goal. And the psychopath pursues the goal by
288. 37:36 any and all means necessary. The psychopath deliberately and premeditatively lies, uses lies,
289. 37:48 gaslights, falsifies the reality perception of other people, uh manipulates, is very
290. 37:55 machavelian and so on. So whereas both types of white collar criminal are
291. 38:01 psychologically compromised, the psychopath is a lot more healthy so
292. 38:07 to speak, a lot more mentally healthy than the narcissist. The narcissist is almost psychotic, almost insane. The psychopathic white collar criminal is
293. 38:18 almost insane. Has completely lost touch with reality. Lives in a fantasy, in a
294. 38:24 narrative. it it like a character in a movie or in a video game. Whereas the psychopath is much more grounded in reality. Still mentally ill. Mentally
295. 38:35 ill because he cannot control his impulses. Mentally ill because he’s reckless and doesn’t care about the consequences of his actions. He’s self-defeating and self-destructive. There are many elements of mental
296. 38:45 illness or mental impairment or mental compromise in the psychopath. But when
297. 38:51 it comes to reality and the perception of reality, the psychopath is vastly superior to the narcissist because the
298. 38:58 psychopath always remains remains grounded in reality. Can tell the
299. 39:04 difference between reality and fantasy leverages fantasy and the lies of the fantasy to manipulate people. Manipulates people with outcomes that are beneficial to himself. So he is the psychopath is self-efficacious.
300. 39:21 And so the psychopath is a far more dangerous white collar criminal than the
301. 39:27 narcissist and far less likely to be captured ultimately to be discovered.
302. 39:33 When we talk about con artists, when you talk about swiddlers and scammers, we
303. 39:39 usually we are usually talking about psychopaths, not about narcissists.
304. 39:45 Someone like Bernie Maidoff is a narcissist because Bernie Maidoff created this fantasy in his mind that is
305. 39:52 going to make many people rich and happy and that was his main motivation not the money. His main motivation was to be
306. 39:59 admired by people to be respected by them to be loved by them. He was looking for love. So that’s a narcissist. But
307. 40:07 when but when we talk about other types of white collar criminals, white collar criminals who couldn’t care less about
308. 40:13 people, white collar criminals who without a shred of empathy or remorse or regret or compassion or affection or anything. White collar criminals who are like some type of machinery, robots,
309. 40:26 alien intelligence. This type of white collar criminals who take your m your last dime even as you are dying who
310. 40:34 abscond with with the last savings of a of a of a widow or a widower who white collar criminals who who blackmail without any any hint of uh of repentance
311. 40:45 and so these kind of white collar crims are much more dangerous and they are typically psychopaths but both
312. 40:52 psychopaths and narcissists as white collar criminals
313. 40:58 They lead a parallel life. They lead a double life. On the surface, they’re
314. 41:05 normal. They’re healthy. They’re functional. The pillars of the community. They contribute. They’re
315. 41:11 charitable. They are what we call pro-social. They’re communal.
316. 41:17 And so it’s very difficult to spot a white collar criminal just by observing
317. 41:26 the the person just by you know casual observation and so you need to test you need to subject the person to psychological testing structured interviews and observation but
318. 41:38 structured observation only then you would be able to predict white collar criminality. But if you
319. 41:45 just happen to be a neighbor or even a friend or a wife of a white collar
320. 41:51 criminal or a husband of a white collar criminal, you would never know what’s taking place. White collar criminals
321. 41:59 maintain what Hervey Cleley called the mask of sanity. They present to the
322. 42:06 world a mask, a persona, a facade of I’m just an average guy or I am what I seem to be or whatever you think about
323. 42:19 me, you’re right. In other words, they conform. White collar criminals conform
324. 42:25 to stereotypes, to expectations, to role model, to roles, to to models. They they
325. 42:32 model some types of behavior. White collar criminals are indistinguishable from you and me.
326. 42:39 And you never know what’s going on be under the surface behind the scenes.
327. 42:45 There’s always a parallel life, a double life. And the maintenance of this parallel life or double life is very very energy consuming and energy
328. 42:56 depleting. takes a lot of time and effort and mental resources to maintain one life,
329. 43:04 let alone two complete separate lives. Gradually the white collar crime or
330. 43:10 criminal activity tends to consume the other life. Gradually the other life
331. 43:17 dwindles, deteriorates, degenerates. Gradually the other life, the normal
332. 43:24 life, the healthy life, the communal life, the pro-ocial life, the life of of um of family and friendships and gradually this life disappears and all
333. 43:36 that’s left is the white crime life. But that’s a very gradual process which
334. 43:43 takes years and even decades in the case for example of Bernie Maidoff. And as the individual tries to maintain both lives simultaneously, as the individual juggles these balls in the air and tries to somehow sustain the
335. 43:59 precarious balance between the two types of life, the secret hidden occult
336. 44:06 private life and the public facing life. This requires as I said a lot of mental
337. 44:13 resources and then various mechanisms psychological mechanisms are activated
338. 44:20 and sometimes they take over. The most dominant of which is known as
339. 44:26 dissociation. This kind of individual becomes gradually highly dissociative,
340. 44:33 develops memory gaps, lost time, becomes amnesiac, forgetful
341. 44:40 and sometimes experiences depersonalization and derealization. Feels that reality is not real and that is he or she is not in reality. And all
342. 44:52 these together these are known as dissociative symptoms. Dissociation is the only way to maintain a double life. When you’re in one life, you need to
343. 45:05 dissociate the other. You need to forget the other. You need to cut it off, slice it off, delete it, bury it, repress it,
344. 45:12 ignore it, deny it. When you are in one life, the other life is dead to you.
345. 45:19 So the only way to accomplish this is dissociation. And dissociation is by far
346. 45:26 the most destructive most destructive psychological defense that we know of.
347. 45:32 It is so destructive that it gives rise to mental illness in a variety of contexts. For example, one of the diagnostic criteria of borderline
348. 45:43 personality disorder in the diagnostic and statistical manual is dissociation. Dissociation is also very common in psychotic disorders like schizophrenia.
349. 45:54 So dissociation is bad for you and dissociation becomes a key defense and a
350. 46:00 key clinical feature in white collar crime where the individual must sustain at all times every single minute a double life and
351. 46:11 not allow one life to intrude upon the other. not allow any interface, any
352. 46:18 contact, any connection between the two lives because of the risk involved, but
353. 46:24 also because psychologically the individual needs to feel that the white collar crime life is somehow justified, somehow exonerated, somehow
354. 46:36 rendered exempt by the normal healthy life. I may be stealing money, but I’m
355. 46:42 contributing and donating to charity. I may be absconding I may be embezzling
356. 46:48 the my bank but at the same time I’m a good father and a good husband. It’s a kind of creating a balance of
357. 46:56 liabilities and assets. A financial statement or a personal statement
358. 47:02 basically I’m a good person maintaining the fiction of a good person. The self-concept of benevolence and and
359. 47:10 charitableness and pro-social being pro-ocial.
360. 47:18 And so one major element in in white collar criminals is grandiosity.
361. 47:26 Gradually as I continue to get away with what whatever it is they’re doing.
362. 47:33 Some of them even convince themselves that they’re protected by God. God himself is protecting them. It’s a fact. They’ve been stealing money for years and decades. They’ve never been caught.
363. 47:46 There have been many many uh brushes with the law with audits with and
364. 47:52 nothing ever happened. Luck, fortune is smiling on them and they feel even more
365. 47:59 entitled because it is the universe that is blessing their activities and so they
366. 48:06 they give in to grandiosity. Grandiosity is a cognitive distortion. Randiosity is
367. 48:13 a misperception or a reinterpretation or a reframing of reality, input from reality, data from reality, stimuli from
368. 48:21 reality in a way that would sustain and butress and support an inflated
369. 48:28 fantastic self concept, self-perception and self-image. The grandiose person
370. 48:35 believes himself to be endowed with some special gifts to be blessed, to be
371. 48:41 unique, to be superior, and to a large extent to be godlike.
372. 48:47 And so when he gets away with it, when he never gets caught, when he’s successful, amasses all kinds of money
373. 48:55 and assets and so on, gradually the white collar criminal begins to develop a sense of I’m above it. I’m above society. I’m above the law. And I’m above the laws of nature. I’m above being caught. I will never get caught
374. 49:12 because there’s something about me that is magical. It’s a form of magical thinking. Again, magical thinking is a
375. 49:19 primitive um kind of defense. Magical thinking is
376. 49:26 very typical at age two years old. two years old are magical thinkers
377. 49:32 and when it survives into adulthood, it’s a prime signal of mental illness or a psychopathology of some kind. And it is common in all white collar criminals
378. 49:45 because they don’t believe they’re doing anything wrong or because they’ve convinced themselves that they’re
379. 49:51 incalable, they’re innocent, they’re even good, whatever it is, you know, it’s for the greater good. Somehow they
380. 49:58 have no remorse. They don’t have empathy. Of course, I mentioned it, but they have no remorse. And they
381. 50:04 instrumentalize other people. They use other people to accomplish the goals of
382. 50:11 the white crime. To accomplish the white crime, they use other people. They manipulate other people. They deceive
383. 50:17 other people. They um motivate other people. They induct other people into
384. 50:24 the fant fantastic story into the movie thereby thereby causing them to
385. 50:30 collaborate and collude in the white crime. White criminals
386. 50:36 use other people not only as victims but they use other people as accompllices.
387. 50:44 The crime itself is solitary. The crime itself is solypistic. the people who are
388. 50:50 collaborating in the crime, who are colluding in the crime, very often don’t realize it’s a crime. Now, of course,
389. 50:58 there are exceptions where the accompllices fully realize what they’re doing, but then we have two narcissists
390. 51:04 or two psychopaths working together. But in the majority, vast majority of cases,
391. 51:10 the people who worked handinhand with a white collar criminal, with a financial criminal were not aware what they’re doing, what they were doing. A prime example are the sons of Bernie
392. 51:22 Maidoff. The sons of Bernie Maidoff facilitated
393. 51:28 his crime, the biggest in history. $50 billion Ponzi scheme, pyramid scheme,
394. 51:36 $50 billion for 30 years, three decades. His sons fully participated in the
395. 51:43 scheme. They maintained the scheme on their computers. And yet to the very last second they had no idea what they
396. 51:51 were doing. They were not aware that they’re collaborating the crime and so
397. 51:57 they never went to prison. Only Bernard made of did and that’s a prime example of what I’m saying. So there is
398. 52:03 instrumentalization and machavelian leveraging of other
399. 52:09 people as grandiosity increases and the white collar criminal believes himself to be godsend or god maybe
400. 52:20 the white collar criminal becomes even more narcissistic. White collar crime tends to exacerbate narcissism and the
401. 52:27 cognitive distortions that are incumbent upon narcissism such as grandiosity and
402. 52:33 entitlement. And so the white collar criminal is that then finds himself in a
403. 52:40 kind of bind. On the one hand, the white collar criminal becomes very proud of
404. 52:46 his exploits. He thinks that not only is he special,
405. 52:52 but the things he the things he’s doing are special. His actions are special. He thinks he deserves attention and
406. 52:59 recognition. He is proud of what he’s doing. And so gradually this kind of white collar criminal begins to behave in ways which are very
407. 53:11 dangerous to himself or to herself. And that’s how that’s when they get caught.
408. 53:17 They get caught because of attention seeking. They get caught because of overconfidence. They get caught because of grandiosity. They get caught because they think they’re above it all and will never get caught. At that point, they get caught. They get caught because they do
409. 53:34 subliminally and unconsciously seek attention. They attract attention.
410. 53:40 They broadcast what they’re doing and they expect applause and they expect adul adulation and admiration
411. 53:48 and so the attention seeking takes them down. They take inordinate risks. They
412. 53:56 become addicted to thrills and excitement. They aroused but by whatever
413. 54:02 it is they’re doing. And this is usually the final stage, the endgame in the
414. 54:08 white collar crime and it brings their downfall. So this is fraud. You remember I opened
415. 54:17 this lecture by telling you that financial crime has three types. There are three types of financial crime.
416. 54:23 Money laundering which does not involve psychopathology. Fraud, which involves a lot of psychopathology, a lot of mental illness. And the last one is corruption. Corruption is endemic everywhere.
417. 54:37 Of course, the West would have you believe that corruption is an African feature or an Asian feature or a Latin
418. 54:44 American feature. Corruption is everywhere. In every single country in the world,
419. 54:50 corruption is an organizing principle. Corruption allows people to facilitate
420. 54:56 processes, to facilitate business. Corruption is like playing a video at
421. 55:04 speed at a at a heightened speed, two speed, three speed, four speed. Corruption lubricates and speeds
422. 55:11 processes. That’s why corruption is inevitable and fighting corruption is pretty doomed. But we are not here for a
423. 55:18 political um political lecture. We are here to discuss the psychology or the psychopathology of corruption. And I’ll tell you a personal story. In the 1980s,
424. 55:31 I transitioned from Nigeria where I was adviser to the ministry of interior. I
425. 55:38 transitioned from Nigeria to Sierra Leone. And Sierra Leone at that time there was a coup and there’s a guy
426. 55:44 called Momo. Momo was a general and he became the president of Sierra Leone.
427. 55:50 And I went there and um wanted to see whether I can do some business. In my previous reincarnation, I was a businessman, not a small one. And I went to Sierra and I met with President Momo. And President Momo took a liking to me
428. 56:07 or something. I was a kid. I was in my early 20s. And he invited me to his home, to his compound. It wasn’t a home.
429. 56:14 It was a compound. And so one night I went to his compound
430. 56:20 escorted by dozens of soldiers. He was always surrounded by soldiers and the presidency building looked like a
431. 56:26 barracks of some battalion or something. It was always surrounded by soldiers. So they took me to his compound.
432. 56:33 The compound was full of women and children. Dozens of children at least at
433. 56:39 least four women that I could count. And it was like and in the very end there was a shed. The shed was on a kind of artificial island
434. 56:50 and Momo was waiting in the shed. And I entered the shed and President Momo was
435. 56:57 surrounded by at the very least 600 video cassette recorders piled up in
436. 57:06 towers. There were towers of video cassette recorders. All of them untouched.
437. 57:12 They were unboxed. They were not in boxes, but they were untouched clearly because you couldn’t touch them. They were piled up in towers.
438. 57:20 The irony was that in that period of time, there were constant power outages.
439. 57:27 There was no electricity literally like 90% of the time. So, there was no way to
440. 57:33 use any of these video cassette recorders. He was just collecting them. He was hoarding video cassette recorders. Much later in life when I transitioned
441. 57:45 from business to phys to psychology. I’m also a physicist. Transition to
442. 57:51 psychology. I asked myself what was happening in Momo’s mind? What
443. 57:57 was happening in his mind? Why was he collecting video cassette recordings? Now, we should distinguish between two types of corruption.
444. 58:08 There is operational functional corruption. That’s a kind of corruption that allows the corrupt politician to
445. 58:17 maintain networks of patronage and clientele. Allows the corrupt politician to sustain
446. 58:24 his power. allows the corrupt kind of corruption that allows the corrupt politician to become rich up to a point
447. 58:32 to send his children to western universities and so on so forth to obtain healthcare in Switzerland. So this kind of corruption is totally
448. 58:43 understandable, totally human and while deplorable on policy grounds, it’s
449. 58:51 totally understandable and healthy and normal. There’s no psychopathology involved. If you are stealing money from
450. 58:58 the state in order to pay off your minions and supporters,
451. 59:04 that’s understandable, isn’t it? If you are stealing money from the state to ensure the future of your family and to
452. 59:11 become rich, it’s understandable. We we may consider this to be obnoxious and objectionable, but it’s understandable. It’s human. It’s normal. It’s healthy.
453. 59:22 There’s nothing there that is indicative of any mental illness. But how do you explain a Mob, a Malos,
454. 59:33 a Saddam Hussein? How do you explain these politicians? They were hoarding. They were they were
455. 59:41 raking in billions of dollars which they would have never used and never did use. All
456. 59:49 this money was outside in western banks. It it was evident they did not need this
457. 59:56 money. They made no use of this money. It was clear that they were collecting
458. 60:02 money the way other people are collecting I don’t know stamps or books or whatever. It was hoarding. They were
459. 60:09 hoarding money. It was not about the money.
460. 60:15 It was about the process of collecting money, securing the money, stealing the
461. 60:22 money was not about the money. The money was like monopoly money. It was
462. 60:28 inaccessible in many cases. And so, and then I asked myself,
463. 60:34 this type of corruption, which is extreme, is really sick. These are sick people.
464. 60:42 They’re stealing money compulsively. It’s a compulsion. They can’t help it.
465. 60:48 Hoarding. Hoarding is a compulsive disorder. They are old. They’re old
466. 60:54 people who collect newspapers and so their apartments are full of
467. 61:00 newspapers to the ceiling and there’s no way to move around these newspapers. They have like hundreds of thousands of copies of newspapers. as Saddam Hussein or Amabuto or you know Ferdin Marcos
468. 61:18 they were hoarding but they were not hoarding newspapers they were hoarding money and hoarding is a compulsive
469. 61:24 disorder it’s a it’s a pathology it requires treatment but why were they hoarding money I mean many of them were hoarding other things
470. 61:36 Marco’s wife was hoarding shoes there are dictators and on who are hoarding cars. They like to hoard cars. Um so there are many types of hoarding
471. 61:47 but the most common white collar crime in terms of corruption is stealing money from the state. So why do they do that? I mean I understand if you steal a
472. 61:58 million dollars. I understand if you steal $10 million. I even understand if you were to steal $100 million. Okay.
473. 62:06 But why do you steal four four five billion dollars like Mob? What’s in it
474. 62:13 for you? What are you going to do with this money? You’re 70 years old. What whenever are you going to use it? And
475. 62:20 why is all of it outside of Zah Zah in Switzerland? So something there’s
476. 62:26 something sick here. There’s some mental problem. And when I went deeper into the issue of the psychopathology of this type of corruption, I will call it compulsive
477. 62:37 corruption. When I went deep into it, it became clear that it is what what is
478. 62:43 known as kleptomania. Kleptomania is when you steal things and
479. 62:50 you don’t need these things. You steal all kinds of objects that you don’t need and you steal them because you’re mentally ill. because there’s a thrill to stealing them. You don’t use them after that and very often you throw them away but you steal them. The act of
480. 63:06 stealing from a department store or the act of stealing is arousing. And this is
481. 63:13 how kleptomania is defined in the diagnostic and statistical manual. The
482. 63:19 pleasure, gratification or relief when committing a theft. the individual may
483. 63:26 hoard or discard the stolen object. That sounds a lot like these compulsively
484. 63:33 corrupt politicians. And so it’s clear that we are talking about some type of compulsive
485. 63:40 kryptonmania. Compulsive kleptomania involves excitement and thrill.
486. 63:47 The more you accumulate money, the more excited you are. It arouses you looking at these towers of VCRs, towers of of
487. 63:56 money, towers of cars. This arousal impact that you aroused by it. It it is
488. 64:03 exciting. It is thrilling and at the same time it’s anxolytic.
489. 64:10 It allows you to let off steam and it reduces anxiety. These people are
490. 64:17 highly anxious. They are anxious for good reasons. Many of them were subject to assassination
491. 64:24 attempts and so on. And one way to reduce anxiety is compuls compulsion. Hoarding. And so hoarding is anxolating. It is self soothing. It’s a little like eating
492. 64:37 disorder when you overeat or undereat. Hoarding is is about reducing anxiety.
493. 64:45 It’s self-medicating with a hoarded object. And so there is excitement and thrill.
494. 64:52 There is um hoarding uh that is self soothing and exolytic. There is
495. 64:59 compulsion. It also serves to enhance one’s confidence and sense of self-esteem. I’m a multi-billionaire. So as a multi-billionaire, I’m all powerful. I’m untouchable. And it it is um on a much deeper level
496. 65:18 um a way to regulate one’s sense of selfworth.
497. 65:24 These people are exposed to a lot of criticism including internal criticism in their own minds.
498. 65:32 Why? Because they’re misbehaving. Because they’re not okay. Because they’re breaking the law. because their
499. 65:40 behavior is not normative. Because the societies frown upon them, they know it.
500. 65:46 These dictators, these tyrants, these corrupt politicians, they know what they’re doing is wrong. And they
501. 65:52 internalize these voices. And in order to regulate their sense of selfworth and to silence these harshly critical
502. 66:00 voices, they steal the hoarded money, the assets in Switzerland,
503. 66:08 the the buildings in London. All these are toys, kind of toys
504. 66:14 intended to somehow inform the corrupt individual. You see,
505. 66:21 you have all these things, you deserve them. You have all these things means you’re superior. You have all these
506. 66:27 things means you’re clever. You have all these things means your sense of selfworth should be pretty high. You
507. 66:34 should adulate and admire yourself for having attained and accomplished all these things.
508. 66:40 On a much deeper level, and I’m kidding you not, studies in psychology have
509. 66:46 demonstrated that money is a love substitute.
510. 66:52 When we get a gift, when we make money, we feel that we are being loved. The universe loves us. God loves us. We get someone gives us money,
511. 67:04 they love us. Money is perceived as the vehicle and the conduit of love. Money is a love
512. 67:11 substitute. When you steal money and you hoard it,
513. 67:17 this is an act of self love. It’s like you are saying to yourself, I deserve
514. 67:23 this money because I’m lovable. I deserve this money because I’m special. I deserve this money. I have to prove to
515. 67:31 myself that I am loved and take to take this money is to show to myself that I’m loved. It’s a love substitute.
516. 67:43 The early Protestants, especially the Puritans in the 17th century, they believed that
517. 67:52 if you’re rich, that is proof that God loves you. I’m serious. You can find it in in the religious texts that being rich is the
518. 68:05 proof positive that you’ve been chosen and touched by God. that you are that God God’s bless blessings and God’s
519. 68:12 bliss are bestowed upon you. So in their worldview the richer you got
520. 68:20 the closer to God you were the richer you got the more saintly you were. They
521. 68:26 equated money with the love of God. They equated money with righteousness.
522. 68:33 And this frame of mind, this mindset still pervades and permeates capitalism.
523. 68:40 And we all live in a capitalistic world. And the corrupt politician who cannot
524. 68:46 stop stealing money, who has to continue to steal money even though he has already $3 billion secreted somewhere.
525. 68:55 This corrupt politician is actually engaging in a Protestant Puritan game regardless of his or her religion. the Protestant Puritan game of the more money I have, the more assets I have, the more blessed I am by God and by
526. 69:12 society, and the more proof it is of my uniqueness and superiority.
527. 69:20 Thank you for listening.
528. 69:26 If you have any questions, I’m available. And if not, it is a Saturday weekend and I wish all of you a
529. 69:33 compulsionfree weekend.
530. 69:39 Any questions? So
531. 69:45 I guess not. So thank you for listening. Thank you for being here and see you next time.
532. 69:52 Thank you very much, Prof. I appreciate you. Uh Prof. We appreciate you, sir. Thank
533. 69:58 you. Thank you for having me. We appreciate you, sir. But if I can uh really understand very
534. 70:08 Thank you. Thank you for having me and I hope to see you again soon. Have a nice weekend there.
535. 70:14 Well, this is right. Thank you. But not in Syria alone.
536. 70:22 I’m sorry. Did I misunderstand? Do you have any question? No, I No. And I said, “Well,” they said, “You see me next time.” I said, “Well, not in Syria alone or one of those funny countries you paid to.” Thank you. Thank
537. 70:33 you. Thank you. Have Have a nice day there.