Rationalization forms in multiple ways. For example, the organization is strong enough to absorb what he stole from organization. Rationalization makes them not feeling shameful of their wrongdoing and gives them a motivation to do so. This case happened when the employees felt that the company or organization owed them when they never get raises in their salary for few years. In common, they treat themselves as honest people who are trapped in a difficult circumstance and not as a criminal.
In the case of Bayou Hedge Fund fraud case, Israel and Marino had made promise to the investors who invested $300 million initial funds in Bayou Group to have a return of $7.1 billion. However, they were suffering from the stress given by the investors when the fund started experiencing losses.
Israel found the easiest way to solve the problem he encountered at that time compared to the alternation of their strategy or winding up the business. Hence, he decided to cheat by setting up a new corporation to audit the accounts of Bayou Group.
The Mechanism of Bayou Hedge Fund Fraud