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Business Fraud and Other Case Studies


Learn From the Unfortunate Experiences of Others

 

Internal fraud/embezzlement is costing U.S. businesses over $500 billion annually. To make matters worse—from the largest corporation to the smallest operation—no business is immune.

Even as you read this, an embezzler or other internal fraudster may be ripping off your organization. I mean right this minute! But how would you know? That is the question, is it not?

These easily preventable crimes are happening everywhere! Below are 31 of the most recent alleged embezzlement and/or fraud cases that were reported in the news media during the early part of this year. (Names of victim organizations and alleged perpetrators have been removed since they are of no preventative value.)

  • Assisted Living Facility: A “moonlighting” city councilman was charged with allegedly embezzling over $200,000 from an assisted living facility.
  • Computer Systems Design & Consulting: Bookkeeper employed by two companies charged with one count of wire fraud in the embezzlement of $319,322 from her two employers.
  • Fire Department: Police seeking six counts of embezzlement charges against a fire department lieutenant who is suspected of stealing $1,345 from his firefighters association.
  • Drug Task Force: Employee who admitted stealing $43,000 from a states’ enforcement group drug task force was sentenced to one year and one day in prison along with three years of supervised release for embezzlement and wire fraud.
  • Service Institute: At this 42-year-old company with $2 million in annual revenue, the unimaginable happened; for two years, starting in 2011, a highly trusted employee stole hundreds of thousands of dollars from that business. The owner said he never saw it coming and as result had a minor heart attack.
  • Body shop employee now facing embezzlement and fraud charges after making out three company checks to herself for $252, $500 and $183.52 according to warrants. The alleged crimes happened in July and August of 2013.
  • Medical Practice: A medical director of a pain management practice which he was no longer associated— wrote checks on the practice’s bank account to pay his personal expenses— admitted to embezzling more than $1.1 million from the business practice.
  • Patient Care: According to an indictment, formally the Chief Financial Officer, then Chief Executive Officer of a company that provides visiting nurse care, hospice care and related patient care services in two states, was indicted for allegedly embezzling approximately $600,000 from company accounts and falsifying documents to conceal embezzlement.
  • Church: Former bank manager was sentenced on May 16, 2013, to 37 months in prison for embezzling more than $300,000 from his employer. This manager was a church’s banker and oversaw the church’s business affairs, but had no signing authority for checks.
  • Town: A town’s finance director—who is accused of embezzling $2.3 million while financially supporting his mistress in Florida – has left the small community in financial crisis.
  • Law Firm: A grand jury indicted a former office manager on four counts of wiring $128,000 in embezzled money from her law firm employer’s bank account to hers.
  • Transportation Services: A former transportation services manager pleaded guilty to wire fraud and making and subscribing a false tax return was sentenced to 45 months in prison, three years of supervised release and ordered to pay $536,126 in restitution.
  • University: After pleading guilty to wire fraud, money laundering and tax fraud, this former university bookstore manager was sentenced to 63 months in prison and ordered to pay $1,329,484 in restitution.
  • Native American Youth Mental Health Program: Prosecutors allege $475,000 in federal funds went to a business owned by a retired professor, who served as a consultant.
  • City Payroll Coordinator pleaded guilty to six counts of wire fraud, and told a courtroom that she “abused a position of public trust” when she served as an employee in the city’s finance department. Prosecutors said this employee stole $365,000 over a six- year period.
  • Credit Union: After pleading guilty to embezzlement, this former employee was sentenced to three years of supervised release and ordered to pay $23,625 in restitution.
  • Construction Company: This company’s accountant was sentenced to 33 months in prison and ordered to pay more than $640,000 in restitution after pleading guilty to embezzling funds over a seven-year period.
  • Technology Group: This former bookkeeper pleaded guilty to embezzling $1.385 million from 2001 to 2009 from a technology group employer.
  • Industrial Company: Bookkeeper/Office Manager was sentenced to 33 months in prison for filing false income tax returns after receiving income of more than $451,000 through her embezzlement scheme.
  • Furnace Company: After pleading guilty, this payroll manager was sentenced to 51 months in prison and ordered to pay $1,106,403 in restitution to her employer and $428,595 to the IRS.
  • Former Social Security Administration Executive allegedly embezzled substantial funds from the Employees Activities Association (EAA) of the SSA and did not report $416,134 of additional, unauthorized income on his tax returns.
  • Real Estate Investment Company: This former secretary/office manager/bookkeeper was sentenced to 41 months in prison, three years of supervised release and ordered to forfeit $2,013,149. In addition, she was ordered to pay $1,332,329 in restitution to victims and $584,092 to the IRS, after pleading guilty to mail fraud and tax evasion.
  • Non-Profit Performing Arts Company: Former bookkeeper embezzled more than $800,000 in funds from the foundation over a four-year period.
  • Insurance Company: Former bookkeeper sentenced to four years, nine months in prison for $1.7 million fraud and tax evasion.
  • Major Healthcare Organization: Former manager sentenced to 33 months in prison and ordered to pay $1,803,667 in restitution and $142,530 to the United States Treasury.
  • Private Person: The bookkeeper working for this private individual wrote over 100 unauthorized checks to herself over a three-year period and was recently sentenced to 14 months in prison and three years of supervised release for interstate transportation of stolen money and tax evasion. This former bookkeeper was ordered to pay restitution of $152,918 to her employer and $26,697 to the IRS.
  • Nursing Home: Bookkeeper sentenced to 30 months in jail on one count of embezzlement and five counts of filing false tax returns. Evidence presented at the hearing established that during the course of her employment as a bookkeeper at the nursing home that over four years, she embezzled a total of $440,958.05.
  • Boys and Girls Club: The executive director of this Boys and Girls Club who had sole responsibility for managing the Club’s day-to-day finances was sentenced to 57 months in prison and three years of supervised release for embezzling $423,908 from the Club.
  • Retail Stores’ Foundation: The assistant to the head of this foundation was sentenced to 60 months in prison, three years of supervised release and ordered to pay $1,547,775 in restitution.
  • U.S. Navy: A former senior systems engineer with the United States Navy pleaded guilty in 2013 to submitting millions of dollars in fraudulent invoices to Navy contractors and subcontractors. The invoices totaled approximately $17,957,000.
  • Town Treasury: A former town bookkeeper was sentenced to 20 years in prison for embezzling more than $53 million from her community of 16,000 residents.

 

Each of the above alleged embezzlers/fraudsters had three things in common:
1.) Each held a position of trust, 2.) had little, or no supervision or oversight, and 3.) perceived to be honest and trustworthy.

In my book, Business Fraud: From Trust to Betrayal, I will not only show you how and where in the business process these devastating crimes occur, but also how business owners, managers, or other concerned individuals can significantly reduce your risks. Click here to look inside the book.

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