Control fraud occurs when the CEO and executives of a company deliberately cook the books, announce phony profits, then personally profit from the fraud through salaries and stock options. The crucial thing to remember is they don’t care what happens to the company, the products, the employees, or customers. Their primary goal is enriching themselves. The failure of the entity is not a failure of the fraud. A truly successful control fraud will so completely loot a company that nothing of value exists.
What Volkswagen has done is very much like control fraud. They cooked the books by falsifying emissions control results, which goosed sales and profits, and those in the top echelons were well rewarded.
Control fraud occurs when a trusted person in a high position of responsibility in a company, corporation, or state subverts the organization and engages in extensive fraud for personal gain. The term Control Fraud was coined by William K. Black to refer both to the acts of fraud and to the individuals who commit them.
The concept of control fraud is based on the observation that the CEO of a company is uniquely placed to remove the checks and balances on fraud within a company such as through the use of selective hiring and firing.