For criminals, money can provide the perfect breeding-ground

What makes some people steal from strangers and others give?

As you read this, a number of Kiwis are being groomed for "investments" that will cause their life savings to vanish. Sadly, money creates the perfect breeding-ground for crime.

Waikato University management school's Stuart Locke says there are good and bad operators in every industry, not just financial services. There are many people out to squeeze others for cash, no matter what the consequences. Understanding what's going on in the criminal's mind can help prevent individuals from becoming victims.

So why does the scammer call to try to get access to your computer in order to plunder your bank account, or the upstanding churchgoer set up a Ponzi scheme and sell it as an investment?

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There isn't a one-size-fits-all answer to this question.

As Locke points out, there are pathological rip-off exponents "who would subscribe to 'never give a sucker an even break'", those who are driven by short-term needs and those who can't resist a low-hanging plum waiting to be picked.

The same words come up over and over again when discussing financial crime. They include empathy (the absence of), deprivation, narcissism, sociopathic, morality, deprived and dehumanise.

In short, someone looking to steal from you rather than give to you has a dodgy moral compass. He or she could be a narcissist or sociopath who lacks true empathy for others.

If morality is based on empathy and oxytocin gives us more empathy then there is a physiological connection tying together the other strands.

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And the criminal who fits this mould probably dehumanises or even blames their victims.

On the dehumanising front, the overseas scammer may see us as "rich foreigners" and a source of money, not human beings, which makes us legitimate prey. Plenty of poor people, however, are scrupulously honest. A classic illustration of this happened to me 18 months ago in the formerly infamous Rocinha favela in Rio de Janiero. I watched as a poor slum dweller from the largest urban slum in Brazil ran after a tourist to return the handbag she'd accidentally left behind at a roadside stall.

In their book Freakonomics, Stephen Dubner and Steven Levitt wrote about Paul Feldman, an economist who dropped out and became a bagel seller relying on an honesty system for payment. Feldman found that customers who knew him were less likely to steal the bagels, but as the business grew and the personal connections lessened, more bagels were stolen. About one in seven customers didn't pay.

Wherever you are in the world, the majority of people have moral values. These values evolved to solve the co-operation problems necessary for survival. If these values went out the window and we all stole from each other society would collapse.

A North American research project titled "Financial Deprivation Selectively Shifts Moral Standards and Compromises Moral Decisions", by Adam Alter and others, found that otherwise honest people could become dishonest when placed in a situation of financial distress.

Often a feeling of deprivation leads to financial offending. The "deprived" person may be living in a one-room shack in Nigeria and attempting to defraud you and me over the internet.

Equally, relatively wealthy people can feel deprived as well as those who have nothing.

It's likely ASB fraudster Stephen Versalko, who stole $18 million from customers, felt he deserved to live the high life. Versalko may have seen people around him with better cars, nicer houses and who took more overseas trips and felt deprived.

In their warped minds, criminals think they're doing nothing wrong. It's not unusual for fraudsters to justify and rationalise their crimes, says Tamar Frankel, author of The Ponzi Scheme Puzzle. They lack the ability to feel sympathy for their victims. Many blame their victims.

This is where narcissism and sociopathy come in.

Whereas one person may feel deprived but not steal, another who also has a lack of empathy for others will justify ripping their victims off. That's exactly what one of the most famous Ponzi scheme operators of recent times, Bernie Madoff, did, says Diana Henriques, the author of The Wizard of Lies. Madoff, who had the gift of the gab, managed to distance himself from guilt or responsibility, Henriques says.

Frankel notes that one convicted fraudster justified his actions by saying he had given his customers appropriate warnings and said:

I really don't care, you know. They gonna spend it somewhere. I want to be the one to get it. F*** my victims.

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Interestingly, Robert Aitken of the University of Otago points out that financial fraudsters are on a continuum, which at one end has perfectly legitimate advertising and marketing practices. Those advertisers and marketers can be selective with the truth and may not have empathy or may dehumanise the customers or see them as a fair cop. They may not find it amoral to leave out salient details when selling a product.

Scammers are just more extreme, says Aitken. Likewise, advertising can make us feel deprived if we don't have the same car or sofa or other item that our neighbours have.

The person who steals from a stranger may also be affected physiologically as well as psychologically. Neuroeconomist Paul Zak found that the more oxytocin we have in our systems, the more likely we are to feel empathy towards others. Oxytocin evolved in mammals to ensure the care of offspring.

If morality is based on empathy and oxytocin gives us more empathy then there is a physiological connection tying together the other strands.

We all also have a price.

In the oft-quoted work Why Good People Sometimes Do Bad Things, Muel Kaptein commented that everyone has a price at which they will throw their principles overboard. He quotes an example of lawyer and subsequent US President Abraham Lincoln, who admitted that he had a price when it came to representing people whom he knew to be guilty.

In a foreign call centre that price is probably only a few dollars an hour. For Versalko it was in the tens if not hundreds of thousands of dollars. Lincoln threw the man out before this line was crossed. Others cannot resist the temptation.

I will, no doubt, have my head bitten off by some readers. But we can't assume that everyone who wants to invest our money or offers us a great deal has our best interests at heart. It's wise to stay vigilant and get second and third opinions before investing large sums in anything.