In 1996, Tim Lloyd, an 11-year employee of OMEGA and a network administrator within the

company, was fired. Three weeks after he was fired,[11] he unleashed a hacking "time bomb" within
OMEGA's computer systems, deleting the software that ran all of OMEGA's manufacturing
operations at its factory in Bridgeport, New Jersey.[8][12][13] OMEGA spent nearly $2 million repairing
the programs and lost nearly $10 million in revenue, resulting in 80 employee layoffs, though Lloyd's
lawyer stated that OMEGA's losses were far smaller.[8][12][13] Tim Lloyd was convicted of computer
sabotage and was sentenced to 41 months in Federal prison.[13] The Tim Lloyd hacking case is
considered one of the largest employee sabotage cases in United States history.[12] The case also
aired in a Forensic Files episode "Hack Attack", episode 39 of season 8.[14]

The Fraud Triangle

To fight fraud one must not only realize that it occurs, but also how and why it occurs.
Several decades ago, after considerable research, Donald R. Cressey, a well-known
criminologist, developed the Fraud Triangle. Interested in the circumstances that led
embezzlers to temptation, he published Other People’s Money: A Study in the Social
Psychology of Embezzlement.

Cressey’s hypothesis was: "Trusted persons become trust violators when they
conceive of themselves as having a financial problem which is non-sharable, are
aware this problem can be secretly resolved by violation of the position of financial
trust, and are able to apply to their own conduct in that situation verbalizations which
enable them to adjust their conceptions of themselves as trusted persons with their
conceptions of themselves as users of the entrusted funds or property."

Essentially, the three elements of the Fraud Triangle are: Opportunity, Pressure (also
known as incentive or motivation) and Rationalization (sometimes called justification
or attitude). For fraud to occur, all three elements must be present.
Opportunity

If one is talking about theft, there must be something to steal and a way to steal it.
Anything of value is something to steal. Any weakness in a system—for example,
lack of oversight—is a way to steal. Of the three elements of the Fraud Triangle,
opportunity is often hard to spot, but fairly easy to control through organizational or
procedural changes.

Pressure

Pressure in this case is another way of saying motivation. What is it in one’s life that
drives one to commit fraud? Pressure sometimes involves personal situations that
create a demand for more money; such situations might include vices like drug use or
gambling or merely life events like a spouse losing a job. At other times, pressure
arises from problems on the job; unrealistic performance targets may provide the
motive to perpetrate fraud.

Rationalization
There are two aspects to rationalization: One, the fraudster must conclude that the
gain to be realized from a fraudulent activity outweighs the possibility for detection.
Two, the fraudster needs to justify the fraud. Justification can be related to job
dissatisfaction or perceived entitlement, or a current intent to make the victim whole
sometime in the future, or saving one’s family, possessions or status. Rationalization
is discernible by observation of the fraudster's comments or attitudes.

Capability

The Fraud Diamond, a newer theory of fraud proposed by David T. Wolfe and
Dana R. Hermanson, asserts that the fraudster's capability must also be taken
account. The fraudster, it is said, must have the required traits (e.g., greed,
weakness of character, excessive pride, dishonesty, etc.) and abilities (e.g.,
knowledge of processes and controls) to actually commit the fraud. It can be
argued, however, that traits are components of pressure and that abilities are
opportunity factors.

10-80-10 Rule*

The 10-80-10 Rule supports the general assumption of capability by breakdow

the population and the likelihood of fraud occurrences. Essentially:

 10 percent of the population will NEVER commit fraud. This is the type
person that will go out of their way to return items to the correct party.
 80 percent of the population might commit fraud given the right combina
of opportunity, pressure, and rationalization.
 10 percent of the population are actively looking at systems and trying to
a way to commit fraud.

*Source: National Association of State Auditors, Comptrollers and Treasurers

(NASACT) and the Oregon State Controller’s Division

B. Explain the application of three elements of the Fraud Triangle.

Based on the Fraud Triangle, the opportunity there is where Tim Lloyd, an 11-year
employee of OMEGA and a network administrator within the company and also who
actually built the network in the omegas health plant. He was the genesis of their whole
network. He knew it inside and out. He built it and he was friends with these people. He
was the designer for all the computer programming. He was the overseer of their
network. He maintained that he secured it and he nurtured it. Lloyd had been disciplined
for run-ins with co-workers shortly before leaving the company. There was conflict that
broke out between other employees between management bet supervisors. He would
bottleneck projects just because he was in charge of the projects that he hadn’t tested
projects before they went into production and so there were a lot of problems. One
person even testified that he had elbowed a female co-worker in the workplace. The
backup tape had been reformatted or essentially erased a matter days before the
search warrant executed. Lloyd’s time card showed that he worked late on days in feb. ,
april, and may. Each time just prior to the test run of the time bomb the olson found a
copy of time bomb on one of Lloyd’s hard drives. Prosecutors argue that Lloyd had
fallen out of favor with his supervisors and grown resentful when he was reassigned.
Investigators had been able to prove that Lloyd developed the time bomb code at home.
Then worked late so that he could install and test the code in secret. He planned on
quitting and was in the process of interviewing with another company when he was
fired. In fact, he told the recruiter at his new company that everybody’s job at Omega is
in jeopardy. He made the remark on July 31 the same day the computer crashed. But
the most compelling evidence was the bits of code the computer experts found and to
have this maliciously, damage ,delete and purge all the data from this point without
really having any idea that this was actually happening and to do it such a short and
quick fashion was very clever . He was gone and being fired actually helped him and he
probably sat back there and said now they’ll never connect me to this. Their biggest
mistke were caused by human factors beacause they trusted tim. Because they had
real affection for Tim.

The Opportunity there is Tim Lloyd, being an 11-year employee of OMEGA and a network
administrator within the company. He can do whatever he wants to the network because
is the one who actually built the network in the omegas health plant. He knew it inside and
out. He was the designer for all the computer programming. He was the overseer of their
network. He maintained that he secured and nurtured it. The company trusted Tim so
much because of his all contribution to the company. The Pressure there is when Tim
Lloyd may lose his job because of his behaviour. He had been disciplined for run-ins with
co-workers shortly before leaving the company. Also, he had elbowed a female co-worker
in the workplace. The Rationalization there is Tim unleashed a hacking "time bomb" within
OMEGA's computer systems, deleting the software that ran all of OMEGA's
manufacturing operations at its factory because he want some revenge. He knew for the
fact that he will get fired because of conflict that broke out between other employees and
management.