**6.4 Fraud income model**

How fraud income is explained

Fraud Income <sup>¼</sup> Income <sup>∗</sup> %Level of standards <sup>þ</sup> %Level of control <sup>þ</sup> %Level of punishment <sup>¼</sup> X. 3 � �


According to the level of these three elements determines the fraud income; in its probability, if its level is low, we will have a higher fraud income.

For example, low level of standards, control, and punishment, 20%, high probability of fraud income:

Fraud Income = 100 � (0.20 + 0.20 + 0.20 = 0.60/3).

Fraud Income = 100 \* (1–0.20) =.

Fraud Income = 100 \* 0.80 = 80.

Fraud Income = \$ 80.

Rent seeking, for example, fraud acts in both the public and private sectors, but if the government has a low level of regulations, control, and effective punishment of fraud, the scammer will look for that path to crime.
