Assignment needed By April 30, 2020

Running head: LESSONS LEARNED FROM THE DENA BRENNER CASE 1

Lessons Learned from the Dena Brenner Case

Texas A&M University-Commerce

Accounting 530

LESSONS LEARNED FROM THE DENA BRENNER CASE 2

Abstract

This paper discusses the Dena Brenner case in relation to fraud committed by organizational

psychopaths, with the aim of exploring what management can do to prevent large-scale

embezzlement and theft by those with an inability to feel remorse or empathy. This paper

suggests, that although Dena Brenner is not a diagnosed organizational psychopath, there are

many similarities between her case and the indicators of psychopathic tendencies. Considering

that organizational psychopaths may be responsible for a large proportion of white-collar crime,

this paper looks to suggest factors that can assist the corporation in protecting itself from falling

victim to organization psychopaths. Additionally, this paper suggests that this field is ripe with

research opportunities.

Keywords: Dena Brenner, Organizational Psychopaths

LESSONS LEARNED FROM THE DENA BRENNER CASE 3

Dena Brenner’s Ethical Dilemma and Lessons Learned

Background

We all know someone like Dena Brenner. This person is attractive, says the right things

at the right time, dresses beautifully, has a seemingly perfect family and a successful career.

Dena Brenner was all the above and more. After completing her associate degree, the 31-year-

old mother found a job in the payroll department of Sure Growth Seed Company; a family-

owned business destined for growth. As such, Sure Growth was acquired a few years later by

International Agricultural Seed (IAS). Dena’s charisma earned her the position of corporate

payroll manager and she was transferred to the corporate offices where she worked with top

management. She quickly endeared herself to the executive suite occupants, especially the CEO

who played an integral part in Dena’s career advancement, a patron as such.

However, as much as top management liked and trusted her, co-workers and peers

viewed her with mistrust seeing her as, “arrogant, cold and condescending.” (Tonsick, 2015, p.

16). Her co-workers especially disliked the way she treated her husband and children; which,

often involved anger in relation to her husband, while she seemingly viewed her children as

possessions. Additionally, many wondered how she managed to live so well on her salary;

however, she explained her lavish lifestyle by citing wise investments and inheritances.

Klaus Dieter was the one executive at IAS that did not fall prey to Denna’s charms. No

matter how hard she tried, Klaus performed his role as treasurer of IAS with extreme attention to

detail while viewing internal monetary transactions with a questioning mind. Meanwhile, Dena

Brenner had the CEO move the payroll department to fall under the Human Resource Director

(rather than the Treasurer, Klaus). In hindsight of events to come it is worthwhile to point out

that the only thing that made sense about moving the payroll function away from the oversight of

LESSONS LEARNED FROM THE DENA BRENNER CASE 4

the treasurer to oversight of H.R., is that the relationship between the H.R. director and Dena was

one of trust and support. She then had a complex payroll system installed and replaced all the

payroll department’s long-time employees with a new hand-picked staff. According to Dena, the

new system was too complex for the previous payroll department employees to comprehend.

The week that everything unraveled for Dena Brenner, was the week that she ran

$700,000 through payroll, under a prior employee’s name, to her own personal bank account.

Klaus astutely noticed that the difference in payroll was significant in relations to prior amounts

and questioned Dena. She told him she would fix it, and that she did. Klaus questioned the

transaction and Dena held that it was a “bank error.” Thankfully for IAS, Klaus continued to dig

and found that the money was wired from Denna’s personal account. Klaus immediately

engaged a forensic accounting firm to perform a full investigation.

Once confronted Dena fessed up to the crime and eventually (as investigators uncovered

additional evidence) admitted to other transgressions. The investigators also discovered beside

“ghost” payroll transactions, Dena would overpay payroll taxes, apply for refunds, and then

deposit the refunds to her personal account. At the beginning of the investigation Dena returned

as much of the money as she had available; however, did not continue to cooperate when

additional thefts were uncovered, most likely because she had run out of money to repay the

company for the thefts. IAS did pursue criminal charges and Dena Brenner was charged with

theft, money laundering, and tax evasion; and eventually, she was found guilty and sentenced to

15 years in state prison. Moreover, she lost her family when her husband divorced her and took

custody of their three children.

There are multiple ethical dilemmas involved in this case. The most obvious dilemma for

Dena Brenner was whether she should use her position to mastermind the theft of money from

LESSONS LEARNED FROM THE DENA BRENNER CASE 5

her employer. Once the theft was discovered she faced the ethical dilemma of fessing up to all

the schemes she had employed to steal. Additionally, she was faced with the ethical dilemma of

repaying her employer the money she had illicitly gained. There is another ethical dilemma that

is a little more hidden, and that is the ethical dilemma Klaus faced when he decided not to accept

Dena’s explanations and to dig further. Lastly, there is the IAS’s ethical dilemma that is often

faced by entities that have gone through these situations; which is the decision to prosecute or

sweep wrong-doings under the rug. In this case, everyone involved (except Dena) chose the

ethical route. Klaus made a correct ethical choice when he continued to dig, rather than accept a

co-worker’s explanation and justifications. (This might have been a difficult time for him, as

Dena was a favorite of the CEO and had rational explanations for the thefts). The entity also

took the ethical route, by prosecuting and setting an example of zero-tolerance. The one player

that continued to fail ethically, is Dena Brenner. Because this situation is all too common, it is

vital to dissect the factors at play from an organizational and individual level. In reading about

this case, one is left musing, “why would someone, who seemingly has it all, put everything on

the line and risk losing everything?” Perhaps, through a general understanding in relation to the

literature on fraud theory, there are insights that can assist future firms in identifying red flags

and implementing controls to prevent this common theft from affecting their own entity. The

aim of this paper is to examine this case from an individual level (Dena’s personality) as well as

an organizational level in an attempt to answer the question, what can one do differently at an

organizational level to prevent employees from taking the unethical route towards monetary

rewards?

LESSONS LEARNED FROM THE DENA BRENNER CASE 6

Individual Factors Affecting Ethical Choices

Personality Type

Six pillars of character. According to the Josephson Institute of Ethics, there are six

core traits that guide ethical decision making, listed as follows: trustworthiness, respect,

responsibility, fairness, caring, and citizenship. (Mintz & Morris, 2017, pp.16). The first pillar

embodies honesty, integrity, loyalty, and reliability. We know that Dena was not an honest

person, mainly because she embezzled large sums of money from her employer. Furthermore,

she continued to lie to investigators throughout the investigation. However, these traits can be

difficult to assess prior to a theft. A red flag that Dena lacked some of the basic pillars of

character was apparent in her treatment of her husband and her co-workers that she didn’t see as

superiors. She showed her lack of fairness and caring when she replaced all the long-time

employees of the payroll department. These factors should have presented red flags to the

executives that were so enamored with her. Rather than blindly trusting, I would instead

continually appraise department heads and trusted employees for character lapses. The

replacement of an entire department should have raised a significant red flag with management.

Yet, the company continued to give her “the keys to the kingdom,” rather than assess the

departmental problems she claimed were inherent. Moreover, I truly cannot imagine signing off

on the replacement of an entire department because of a technology update. The very act

demonstrates that Dena possibly did not have empathy; nor did she recognize that her decision

affected others. In other words, she did not recognize herself as a moral agent. (Jones, 1991).

Teleology vs. deontology. Teleological ethics focuses on the end results of an action and

further, rationalizes that an action is ethical if it achieves the desired result. Deontological ethics

is characterized by “duty” and focuses on the rights of all involved as well as the intentions of a

LESSONS LEARNED FROM THE DENA BRENNER CASE 7

behavior, rather than the end-result. Dena’s blatant disregard for how her theft would affect her

employer, coworkers, and family clearly demonstrates teleological ethics. Specifically, Dena

was an egoist, demonstrated by a need to support her lavish lifestyle, which possibly led to her

unethical decision to steal.

Cognitive process. Kohlberg’s Cognitive Moral Development (CMD) theorizes there

are three stages of moral development affecting decision making of individuals. Level 1 or the

Preconventional level has two stages, the first being obedience to rules and avoidance of

punishment. Even thought Dena did try to avoid punishment, she did not obey the rules. The

next stage is satisfying one’s own needs which is explained as, “Rules and Authority are

important only if acting in accordance with them satisfies one’s own needs (egoism).” (Mintz &

Morris, 2017). Dena Brenner was possibly operating at the preconventional level 2 when she

embezzled the money from IAS. It is worthwhile to note a link between educational level and

preconventional level thinking. Dena Brenner had a two-year degree and shows demonstrated

signs of Level one (pre-conventional) stage two decision making. Thomas found (in his study of

accounting students) that senior accounting students used post-conventional reasoning more than

first year accounting students. (Thomas, 2012). Dena did not hold a four-year degree and

further, her actions were clearly motivated by self-interest, which is consistent with Thomas’s

research. This link suggests that managers who promote employees (that do not hold bachelor or

higher educational degrees) to a level of power (where there is a risk that controls can be

overwritten or bypassed), should consider requiring extra education or training focusing on

ethical decision making. However, considering her lack of empathy and deep self-interest, it is

possible that there are other psychological elements at play which will be discussed further in

following sections.

LESSONS LEARNED FROM THE DENA BRENNER CASE 8

The fraud triangle. The seminal work in relation to The Fraud Triangle theory was

completed by Donald Cressey, although he never referred to his work as The Fraud Triangle.

Cressey states that through interviews of those convicted of crimes he found that people violate

positions of trust when they have a non-sharable problem, know that they can solve the problem

if they violate the financial trust, and they can rationalize their behavior. (Albrecht, 2014). This

is often summarized as pressure, opportunity, and rationalization.

We know that Dena was living beyond her means, which goes to show that she was under

perceived pressure. We are unable to know her rationalizations in this case but can assume she

was somehow able to rationalize the theft. From the case background, it is obvious that she went

to great lengths to orchestrate an opportunity to commit the fraud. While the Fraud Triangle is

useful in understanding fraud in a general sense (the “why”), it is limited in its ability to assess

the possibility of fraud prior to occurrence. I would venture that most employees experience

opportunity and pressure at some point, yet do not commit fraud. In an effort to explain

additional factors that affect the likelihood of fraud it is worthwhile to explore the idea of

organizational psychopathic tendencies in relation to this case.

Organizational psychopath. Dena Brenner was viewed by her superiors as flirtatious

and charming, a problem fixer and a hard worker; yet, was viewed with distrust by her peers.

Additionally, she bullied her husband, treated her children like possessions, dismissed an entire

department without sympathy, orchestrated organizational changes to her benefit and stole large

sums of money without apparent remorse. These factors indicate a deep lack of empathy and an

ability to manipulate others in pursuit of self-interest. Her lack of empathy combined with the

manipulation and lack of guilt (or regret) speak to a strong possibility that Dena Brenner was/is

an organizational psychopath, or at the very least displayed the patterns of psychopathy. One

LESSONS LEARNED FROM THE DENA BRENNER CASE 9

final clue can be gleaned from the information provided in relation to the possibility that Dena

has the markings of a psychopath. Apparently, she loved riding horses more than anything else.

According to Dr. Babiak and Dr. Hare, a psychopath’s, “need for stimulation is reflected in a

penchant for high-risk, thrill-seeking behaviors.” (Babiak & Hare, 2007. P.47). Boddy states,

“As organizational psychopaths have little or no conscience they are not driven by any idea of

social fairness or social responsibility.” (Boddy, 2006). Boddy also suggests that just as criminal

psychopaths are responsible for much of the crime committed in society; it is possible

organizational psychopaths are also responsible for a disproportionate amount of accounting

fraud, unnecessary firings, embezzlement and other corporate misbehavior.

Often, in reading well-known fraud cases, one is left with a vague feeling of

unsettlement. Somehow, this fraud was rationalized in the mind of the perpetrator, and yet how

could such a heinous act get reduced in the mind of the fraudster to something that is

permissible? According to Hare and Babiak, “Psychopaths have a great sense of superiority and

entitlement and think nothing of helping themselves to property that belongs to others. Their

grandiose sense of self-importance leads them to believe that other people exist just to take care

of them.” (Babiak & Hare, 2007. P.48) The scary thing is that the organizational psychopath is

very difficult to see, they are hidden among us. Sherree Decovny cites Robert Hare’s research

indicating that about 1% of the general population present the defining characteristics of

psychopathy; however, the financial services industry is estimated to consist of a 10% prevalence

rate of psychopaths. (Decovny, 2012). Specifically related to executives, Hare and his

colleagues found an incidence of 3.5% of those examined contained psychopathic tendencies.

(Soltes, 2016, p. 61) In light of such a frightening statistic, combined with the large sums of

money that are at stake, we must consider how the organization can protect itself. In other

LESSONS LEARNED FROM THE DENA BRENNER CASE 10

words, what could have IAS done differently to protect itself from someone exhibiting the same

pattern of characteristics as Dena Brenner?

Organizational Armor

Factors from the Organizational Perspective

The remainder of this paper will discuss the case in relation to the idea of an employee as

an organizational psychopath. There is no evidence that Dena Brenner is (or was) diagnosed as

an organizational psychopath. However, her case bears a striking resemblance to factors present

when organizations are victimized by individuals that have been diagnosed as psychopaths.

Therefore, the following will focus on how the organization can protect itself from the parasitic

employee who exhibits the markers present in a psychopathic personality. This is important, as

this personality type is characterized by a lack of guilt or remorse, making them a greater risk for

fraud violations within the corporate world, especially relating to embezzlement.

Conflicting Front. The organizational psychopath is adept at using their charm and

manipulations skills to endear themselves to a “patron.” A patron is usually a very influential

executive within the organization. This person mentors the psychopath and, often unknowingly,

shields and protects the psychopath. Meanwhile, there are plenty of co-workers that have little to

offer the psychopath. These people are in a unique position to observe the psychopath at work.

We see this clearly in the Dena Brenner Case. The CEO protected Dena, and yet there were

many within the organization that viewed her in an unflattering light. Often these people initially

like their psychopathic co-worker, but then over time see through the façade. How is a

corporation to reconcile the differences and truly know if they are at risk of someone like Dena

Brenner perpetrating a crime against them? Dr. Hare and Dr. Babiak discuss the idea of

organizational police within an organization. Specifically, these people are often human

LESSONS LEARNED FROM THE DENA BRENNER CASE 11

resources, security, auditing and quality control. (Hare & Babiak, 2007, p. 134). In the Brenner

case, we see human resources being a “patron” of Dena’s; however, Klaus, the treasurer was her

downfall. Just as Babiak discusses, the “policing figure” in this case Klaus, was extremely astute

in his distrust and professional skepticism. The first red flag that he came across, he did not let

Dena explain away, rather he kept digging. Furthermore, he immediately brought in professional

forensic accountants to investigate. This action was the saving grace and allowed the

organization to recover much of the theft and successfully prosecute. Dr. Hare & Dr. Babiak

state that in many organizations the “police” are unable to effect improvement, due to a lack of

top management support. (Hare & Babiak, 2007, p 135). This highlights the importance of top

management’s involvement in the team atmosphere, in that they must constantly be assessing

and listening to others’ perceptions of the team. If there is a significant difference between how

a person is viewed from their subordinates vs. the executive’s suites view of the same person,

perhaps some reconciliation measures are due prior to that person’s promotion into a leadership

and control position. Opponents to such a position might argue that it is normal for individuals

to be liked by some and disliked by others; however, Hare and Babiak proclaim that “normal

political battling rarely surfaces in so clear and intense a form as it does with a psychopath… it

was as if employees were describing two entirely different people.” (Hare & Babiak, 2007, p

137).

A Strong Defense. The first step in protecting the organization is the interview process

for new candidates. It is vital that the interviewer has a plan. Be aware of inconsistencies. One

of the tenancies of psychopaths is that they can not express a full range of emotions. Yet, anger

or indignation is often a common emotion felt by the psychopath. The key is to ensure that the

emotions being displayed by the interviewee are appropriate for the situation. Additionally, the

LESSONS LEARNED FROM THE DENA BRENNER CASE 12

more people that interview the job candidate, the better chance of ensuring that the interviewee

presents a cohesive image of who they are, versus the psychopath who will usually cater their

interview to the person that they are “charming.” Additionally, the psychopathic candidate may

not react the same way with an interviewer that they see as “below” them in status. However, it

is very difficult to fully assess if the person you are interviewing is a psychopath; and further, is

going to eventually embezzle from the company. Additionally, many corporate psychopaths are

promoted from within the corporation, as in Dena Brenner’s case. Which leads us to the red

flags that a company can be on the lookout for in relation to team members that might pose a

larger risk for fraud than others.

Red Flags. Some red flags to consider come from Hare and Babiak’s seminal work in

relation to Organizational Psychopaths. The first red flag, we see in Dena Brenner’s case, is that

she was unable to form a team; and further replaced an entire department. Psychopaths often do

not see a need for a team and they will craft an objection, usually arguing that they have the best

interests of the organization in mind. That is exactly what happened in Dena Brenner case!

Also, in related to teamwork, supervisors and human resource staff need to be on the lookout for

complaints from co-workers citing misinformation or lack of credit for work completed from the

psychopathic employee. Another significant red flag is the inability to tell the truth. However,

this red flag is difficult to discern. We do see that Dena had a very difficult time with the truth.

For example, when asked if the $700,000 was the extent of her theft, she claimed it was, even

though she knew investigators were digging. Further investigation revealed her assertions as

untrue. This was the pattern; she continued to deny further thefts, and yet further thefts were

discovered. Another red flag is the inability to be modest. This point was not discussed in the

case; however, it is worthwhile to note. The inability to accept blame is another indicator that is

LESSONS LEARNED FROM THE DENA BRENNER CASE 13

reflected in Dena’s case. Throughout the ordeal, she never (reportedly) took responsibility or

showed any remorse. Hare and Babiak list an additional three red flags that are unknown in

relation to Dena Brenner but are often present in relation to corporate psychopathic behavior:

the inability to act predictably, inability to react calmly and the inability to act without

aggression. However, it can be argued that the way she treated her husband embodied the last

two traits. (Babiak & Hare, 2007, p. 248-258).

Conclusion

It is a scary thought that the traits held by an organizational psychopath are the same

traits that assist one to climb up the corporate ladder. The psychopaths lack of empathy is

especially concerning in relation to ethical decision making in the workplace. Some general

common sense, just as Klaus demonstrated, will go a long way in ensuring the protection of the

entity from an unscrupulous employee like Dena Brenner. If I had been a part of the executive

team I would have “listened” to the contrasting opinions in relation to Dena Brenner. I would

have had an “open-door” policy that encouraged communication or possibly set-up a whistle-

blower hot-line. Every corporation should make it easy for rank-and-file workers to express

concerns to upper management. Additionally, I would keep an eye out for employees that were

living beyond their means and refused to take vacations. I would strive to have (and apply) a

healthy dose of professional skepticism in all aspects of my work. The first part of Dena’s fraud

included gaining control of the payroll department. I would have questioned that decision;

furthermore, I would have interviewed the team members that were slated to be terminated to

determine if it was necessary. Then I would have cross-checked impressions gleaned from the

interviews of the team and impressions from other executives. Psychopaths tell a person what

that person wants to hear, and it may be different from what they tell others. I, like most, am

LESSONS LEARNED FROM THE DENA BRENNER CASE 14

flattered by positive attention of co-workers that look up to me in the workplace. I hope that as

my career path continues, I will also be self-aware of my weaknesses. Holding this knowledge

will ensure that it is more difficult for a psychopathic personality to manipulate me to their

advantage, just as Denna Brenner did with most of the executives at IAS.

Arbuckle and Cunningham demonstrated, in their research related to psychopathic

behavior, that a cohesive group atmosphere (identifying with a group as an extension of the self)

increased individual decision making for the group benefit. (Arbuckle & Cunningham, 2012).

This speaks to “tone-at-the-top.” I hope that when I am in a leadership position, I will encourage

all team members to act for the benefit of the team.

Another thing I will strive to do differently from IAS executives is to be on the look-out

for employees living beyond their means (as Dena Brenner did), as well as people who refuse to

take vacations and while holding control of a profit or cost center. Additionally, I would require

a greater separation of duties and require regular reconciliations of the bank and payroll

accounts. (The payroll accounts had not been reconciled in over two years)!

Whether or not Dena Brenner was a psychopath is an unknown. However, her case

presents many opportunities for management to learn from the past. The case also poses

questions that present further research opportunities as well. Researchers are learning more and

more about organizational psychopaths and how they operate. Some research has shown that

there is an actual difference in the MRI brain scans of psychopaths. (Kiehl & Hoffman, 2011).

It is rather chilling to consider that upwards of 10% of executives might only be concerned with

their own self-interest (organizational psychopaths); and yet, the decisions they make in relation

to the entities they control often affect millions of people both socially and monetarily. With

research showing differences in brain function, one might be tempted to suggest an MRI prior to

LESSONS LEARNED FROM THE DENA BRENNER CASE 15

employment for an executive position of a public company; and yet, I cannot go so far to

recommend MRI scans of executives. The question that remains is how can corporations protect

themselves and external stakeholders from the employee that does not feel empathy or have a

concern for others? Lastly, this paper brings up the point that it is theorized corporate

psychopaths are responsible for a disproportionate amount of crime; however, there is little

research on that theory. I do recommend additional research in relation to MRI brain scans and

psychopathic assessments on convicted white-collar criminals. The results of such studies might

provide guidance on how corporations can reduce fraud by organizational psychopaths.

LESSONS LEARNED FROM THE DENA BRENNER CASE 16

References

Albrecht, W. S. (2014, July/August). Iconic Fraud Triangle Endures. Www.fraud-magazine.com.

Retrieved March 9, 2018, from

http://www.fraudmagazine.com/article.aspx?id=4294983342

Arbuckle, N. L., & Cunningham, W. A. (2012). Understanding everyday psychopathy: Shared

group identity leads to increased concern for others among undergraduates higher in

psychopathy. Social Cognition, 30(5), 564-583. doi:10.1521/soco.2012.30.5.564

Babiak, P., & Hare, R. (2007). Snakes in suits. New York, NY.: HarperCollins.

Boddy, C. R. (2006). The dark side of management decisions: Organizational

psychopaths. Management Decision,44(10), 1461-1475.

doi:10.1108/00251740610715759

Decovny, S. (2012). The Financial Psychopath Next Door. CFA Institute Magazine,23(2), 34-35.

doi:10.2469/cfm.v23.n2.20

Kiehl, K. A., & Hoffman, M. B. (2011). The Criminal Psychopath: History, Neuroscience,

Treatment, and Economics. Jurimetrics, 51, 355–397.

Jones, T. M. (1991). Ethical Decision Making by Individuals in Organizations: An Issue-

Contingent Model. The Academy of Management Review,16(2), 366. doi:10.2307/258867

Mintz, S. M., & Morris, R. E. (2017). Ethical obligations and decision making in accounting:

Text and cases (4th ed.). New York, NY: McGraw-Hill Education.

Soltes, E. (2016). Why they do it: Inside the mind of the white-collar criminal. New York:

PublicAffairs.

Thomas, S. (2012). Ethics and Accounting Education. Issues in Accounting Education,27(2),

399-418. doi:10.2308/iace-50119

LESSONS LEARNED FROM THE DENA BRENNER CASE 17

Tonsick, J. (2015). The Ambitious Payroll Manager. In Fraud Casebook, J. T. Wells (Ed.).

doi:10.1002/9781119196631.ch2