7 Deadly Sins According to a Forensic Accountant

Forensic accounting has chosen me for over 40 years. I attained my CPA simply for academic achievement. My goal was to become a business owner. Little did I know I would become one, that of a CPA, working with people who needed counsel at their darkest times. Through representing low-key folks to well-known public figures, I’ve seen a broad spectrum of people become entangled in white-collar crimes.

Human beings often succumb to what history has coined “the seven deadly sins.” These vices can be damaging to the human element, exposing the worst in people. How does one get there? What is it about the rise in status and monetary success that drives people to an endless pursuit of it, risking their reputation and freedom? For the record, I don't believe people set out directly to commit white-collar crimes. Typically, what I see are individuals who make mistakes for a variety of reasons: lack of legal awareness, overconsumption, and a host of other reasons. Either way, my career has given me a front-row seat to the movie of life, with characters who have illustrated how the seven deadly sins can infiltrate their lives.

Pride: This can be the ultimate downfall for an individual, their families, and their companies. Case after case I have seen how pride can delay a result and cloud a picture – distorting reality beyond epic proportions. Pride has a way of driving a person to do things they would otherwise never consider. It can make one believe they are like a Teflon Man – invincible and able to withstand anything. Unfortunately, pride and money have an inverse relationship. Sometimes it is better to settle a dispute early by payment than continue to litigate to prove a point. Representation, whether criminal or civil, is expensive. Sometimes it is better to say guilty and pay the price to move forward. Criminal investigations and proceedings are long-winded, stressful, and normally do not end well.
Greed: Intense and selfish, greed is the driver of most fatal outcomes. We live in a society that believes more is better. From expanding a company’s sales to hyper-spending to keep up with the “Joneses”, greed is the impetus for these bad decisions. Bad decisions can take many forms. For example, expansion of a business without a plan or underreporting taxable income to avoid taxes to free up capital.
Lust: Often the deep desire for something we want can blind us. It can put us in a trance and saddle us with a shortsighted perspective that can be damaging to our long game. I represented a client who was married with children. He developed a relationship with his secretary only to marry her. As karma would have it, the new bride's father was a tax protestor, who convinced him to stop filing his taxes. Naturally, he was summoned by the IRS and then proceeded to prepare incorrect tax filings. Of course, he ended up in court, served time, and was placed on house arrest. Well, his new wife decided to leave him and flee to Oregon, where he in turn followed to bring her home. He was picked up and arrested for breaking his conditions of house arrest. I share this story to illustrate how playing the short game can have toxic long-game results. Simply put, don't allow lust to have a seat at the table.
Wrath: I liken this cardinal vice to the “war of the roses.” Engaging in a vengeful pursuit will always prove to be far worse for the one leading the charge. I had a case where a client had cheated on his taxes. His wife was in the know and decided to divorce him. She left him for many reasons. Eventually, she threatened to turn him in to the IRS when the divorce was not going well for her. After five years, 20 million dollars in legal fees, and bankruptcy, the case was finally settled. Wrath was had but both parties would have been better off if they had worked together.
Gluttony: Synonymous with today's culture, we tend to overindulge in everything. Overspending has extreme consequences. We hear the term “life balance” but what I think of is a balance sheet. Each month, income and expenses could vary, but if they are managed effectively, a balanced outcome can be achieved. Instead of living in a mindset set of gluttony, I ask clients to live within their means. It is more comforting to be secure.
Envy: To be green with envy can quickly turn financials into the red. Resenting someone for their qualities, achievements, and possessions can propel one to the “one up syndrome”. This often leads to financial devastation, reputation desecration, and an ugly fall from grace. I have seen cases where individuals who seemed to have it all were simply not satisfied. They channeled greed and would stop at nothing to attain what they had set their mind to, and their relentless pursuit resulted in devastating circumstances. In these cases, I was often reminded of the importance of focusing on your own lane versus being concerned about what someone else is doing. It only splits your energy, drains your resources, and clouds your perspective from seeing the twists and turns of life that can and will derail you.
Sloth: Analysis paralysis is a real thing. I have seen time and time again where procrastinators become non-filers. Not because they have anything to hide, but because they haven’t prioritized getting their taxes completed or they got buried in the weeds of managing the nuances of their returns. This becomes a terrible spiral and individuals will spend all of their money trying to catch up or they will get so far behind that catching up seems unreachable. Sloth has a rich way of compounding problems as well. Things like applying for student loans, buying a house, and getting an auto loan all require tax returns. So, delaying the necessity of completing tax returns only slows down working towards other goals as well. Simply put, as I share with those I have worked with who procrastinate, do today what your future self will thank you for.

Forty years of navigating crazy as a forensic accountant has shown me that it is not if the seven deadly sins will become a problem for individuals, it is when. The question becomes, when the capital vices begin to emerge who will you call to help mitigate your risk and help you get back on track? Who will you trust when you can no longer see the forest through the trees?

Having the right people in your sphere of influence can help get you back, and keep you back, on track. Life is long and change is the only constant but growth requires leveling up. That can mean making strategic changes in the way you do business and who you choose to do it with. To succeed at the game of life is to know that happiness is not being free of problems, but rather in having the peace of mind in knowing how you can handle them.

Connect with Gary Howard, CPA, Howard, Kittle & Company CPAs : https://howardkittlecpas.com/.