Two popular theories of the cause of illegal management behavior have posited it in the psychosocial pathology of the individual perpetrator and in the inadequacy of internal auditing controls in reducing or eliminating the opportunity for fraud. Both of these theories fail to appreciate that behavior, illegal as well as legal, is learned and rationalized by social conditioning. Interviews with 50 convicted embezzlers showed their illegal actions to have the following steps or phases: (1) the attitude that a personal financial problem was unshareable, (2) knowledge about how to solve the problem by violating a financial trust related to their position, and (3) convincing oneself that the considered act does not conflict with the self-image of a trusted person. The latter step is crucial to the performance of the illegal deed. Rationalizations are most often convincing to a person when they are supported by the concepts and values of the subculture in which the behavior occurs-- the business community, in the case of management fraud. Surveys have shown that the attitudes and values of persons in the business community are influences and even dominated by the profit motive, which can override ethical values that do not serve that goal. What is needed most is for company leaders and leaders in particular industries to formulate and inculcate in employees standards of business performance that make rationalizations for illegal behavior increasingly difficult for persons under the influence of daily business contacts and operations. Footnotes are provided.