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Anatomy Of A Fraud

Most fraud victims clam up. In this check-tampering case, the victim-a small-business owner-decided to speak out. The resulting cautionary tale offers a rare, detailed look into the mechanics and psychology of fraud. And its aftermath.

By Scott Berinato

October 01, 2004 — CSO — This is not like most fraud stories, and yet it starts like most fraud stories do: With former colleagues describing the alleged grifter, Rahiem Jackson, as "well-dressed" and "good looking" and "charming." They also never fail to mention Jackson's contagious smile and his intelligence.

Almost by the force of his personality alone, Jackson allegedly used a simple yet clever scheme to steal hundreds of thousands of dollars from several companies that employed him, using the proceeds to pay for everything from medical bills to a luxury SUV. More impressive still, Jackson avoided prosecution for more than a year after the state of Maryland issued two indictments on charges of continuing theft. And while he was avoiding prosecution, he was defrauding two other marks a couple of ZIP codes away.

The particular methods Jackson used are basic, Grifting 101, and worth studying. But even when its methods are rudimentary, fraud remains a deeply complex and violative crime; it takes a psychological toll on victims. For this reason, most victims decline to talk about what happened. Many won't prosecute. Instead, they absorb the blow and move on. Though it costs American businesses an estimated $660 billion a year, fraud remains an eerily silent iniquity.

In this case, however, fraud stirred in one of its victims, a small-business owner named Wendy Rosen, a kind of entrepreneurial rage. Rosen chose to speak out, a rare decision fraud experts would normally hail as necessary and noble. After all, the best way to fight this crime is to raise awareness of how common fraud is. But the fact that Rosen went public was partially eclipsed by how she went public—with an aggressiveness that some argue created a quixotic rather than noble crusade. And indeed, Rosen's choices have turned this story about ordinary fraud into an extraordinary, unfinished cautionary tale. While the accused avoided prosecution after allegedly stealing $127,384, his victims started fighting each other, largely over $8,850. Now, Wendy Rosen stands accused of racketeering, defamation and extortion.

This is what fraud does. It infiltrates the victim's world.

Placement

Rahiem Jackson had just turned 30 when he interviewed for temporary accounting work at the Baltimore offices of Spherion, a professional placement firm, in February 2003. His application listed the Salvation Army as his most recent employer. He claimed he had worked there as an accounting coordinator for six months until the job ended because it was seasonal work.

Two weeks later, Wendy Rosen's company, The Rosen Group (TRG), requested a temporary bookkeeper from Spherion. The Rosen Group provides magazines, trade shows and and other guildlike services for the $14 billion arts and crafts industry. The company is profitable and employs about 30 people. Wendy Rosen also writes books, produces documentaries, and lectures the small businesses that she serves on how to start, grow and thrive.

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