The Perils of Faked Resumes

May 27, 2014

The recent conviction of 39-year-old New York portfolio manager Mathew Martoma for insider trading has reminded hiring managers everywhere of the dangers of not being diligent in pre-employment screening.

Martoma was a SAC Capital Advisors trader who was found guilty in February 2014 on multiple counts of securities fraud. But his recent conviction was preceded by a number of serious misrepresentations about his credentials.

During the 1990s, Martoma falsified his educational transcript—first, in an attempt to obtain a federal court clerkship (he failed); and, to gain acceptance at Stanford Business School (he succeeded). It appears he even doctored emails to hide his previous lies. And there is little doubt that Mr. Martoma's many embellishments and fabrications helped him land his position at SAC Capital Advisors.

At every juncture in this long charade, the same question arises. How did Mathew Martoma manage to pull the wool over the eyes of elite institutions and high-powered corporations?

The answer is as enlightening as the question is perplexing. Statistics reveal that transcript tampering, lying on resumes, credential and license fabrication, and identity-hiding aliases are all epidemic today. According to the Society of Human Resource Management, 53% of all job applications contain inaccurate information, and industry statistics show that a whopping one in three job applicants lie outright on their resumes. In fact, SterlingBackcheck's own data reveals that errors are found on more that 15% of the education verifications it performs.

The relationship between lying on a resume and stealing

While taking steps to deceive a potential employer is unacceptable, it is a character flaw that may be associated with an even more reprehensible behavior once the applicant is hired: there is some research suggesting that liars are prone to steal as well. And employee theft is a problem that concerns every employer. According to the Association of Certified Fraud Examiners:

  • 75% of employees have stolen from their employers at least once
  • 37% of employees have stolen from their employers more than once
  • Employee theft costs U.S. businesses $50 billion every year
  • Employee theft is the root cause of one out of three business failures in America today

In his 2012 book, "The Honest Truth About Dishonesty," Duke University professor of psychology and behavioral economics Daniel Ariely confirms just how prone liars are to stealing. In a controlled experiment involving thousands of participants, Ariely handed subjects sheets that asked them to solve as many of a series of 20 math problems as they could in five minutes. For each problem they got right, Ariely promised a one-dollar reward. Once their five minutes elapsed, each subject was given an answer sheet so they could determine their own score – plus a shredder so that no one would ever know if they'd lied or told the truth about their scores.

Ariely says that on average, subjects told him they’d gotten six problems correct. But it's the conclusion of Ariely's experiment that shows us the integral relationship between lying and stealing:

"We pay them six dollars and they go home. But what the people in the experiment don’t know is that we’ve played with the shredders so they only shred the sides of the page, but the main body of the page remains intact. What we find is people basically solve four and report six."

By falsifying the number of problems they solved correctly, and therefore the number of dollars they were due, participants demonstrated that there was a consistent tendency in liars to steal, says Ariely.

Viewing these findings in the context of today's increasingly beleaguered hiring managers, it's suddenly a lot easier to understand why resume liars prone to thievery can slip by. Onerous deadlines, budgetary restrictions and overworked staff are just a few of the many factors that can lead to substandard review of candidates' personal and professional histories. A best practice for employers and recruiters is to implement a consistent background screening program that includes employment and education verifications - and by utilizing a third party provider, you can focus on important revenue-generating tasks, while an experienced background screening company focuses on providing you with thorough, FCRA-compliant background checks.