Applying the Fraud Triangle to the Fat Leonard Scandal: A Role-Based Analysis of Coercion and Fraud in Defense Procurement

Abstract

Defense procurement, a fundamental part of national defense, is subject to various forms of misconduct that may damage the country’s economic and national security. The U.S. Navy’s Fat Leonard scandal, with widespread bribery and corruption, was a scandal detected through investigations conducted by the U.S. Navy, the media, and the judicial system. A traditional approach to understanding and analyzing such a case often entails applying the theory of the Fraud Triangle, which is comprised of pressure, opportunity, and rationalization. Given the specificities of the defense workforce, including the integration of various functional areas, such as operations, procurement, and investigations, the fraud model is utilized for a more in-depth understanding of the actors’ roles, allowing for differences in functional backgrounds of those involved in the fraudulent activities. For example, the fraud triangle component of pressure would be applied differently to a member of the logistics workforce as opposed to a member of the procurement workforce. As members reacted differently under various pressures, the severity of their actions made them vulnerable to further demands within the scheme. As they became more complicit, their vulnerabilities simultaneously increased, and the benefit they provided was limited only to their access.