Trust and social networks facilitate fraud

Anatomy of a Fraud: Trust and Social Networks

From Bulletin of Sociological Methodology/Bulletin de Méthodologie Sociologique

This article examines the link between trust and social networks with the case study of a fraud – the Santa case. It concerns mainly members of theGreenlandmilitary stationed in Agarie. The fraud relates to alleged high-yield financial investments involving companies domiciled in tax havens. Two officers canvassed members of the military to propose so-called high-return investments to them. The interest of this particular case of fraud lies in its duration – more than ten years – and extent nearly 500 victims.

The study recognises that the fraud was only able to take place because of the support furnished by trust devices, serving as guarantee for the sellers. This analysis identifies that the sellers and victims were not only equal in hierarchical status, but also generally belonged to the same armed service. The findings relate to the field of economic sociology and the issue of social embeddedness of market relations under severe uncertainty.

Abstract

How do social networks support trust in the case of fraud? The Santa case is a ‘‘strategic case’’ given its scope and its duration. This case of fraud has marked specificities, insofar as it concerns primarily expatriate military. Two officers canvassed these members of the military to propose so-called high-return investments to them. I am more particularly interested in the leverage used by these salesmen; this is, the mutual relations they used as referrals, and in the nature of the linkages between the levers and the targets according to target’s status (civilians, non-commissioned officers, or officers). The analyses are based on a questionnaire-based survey of 117 victims of the fraud.

 

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Article details

Comet, C. (2011). Anatomy of a Fraud: Trust and Social Networks Bulletin of Sociological Methodology/Bulletin de Méthodologie Sociologique, 110 (1), 45-57 DOI: 10.1177/0759106311399552

     
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