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In modern business it is not the crook who is to be feared most,
it is the honest man who doesn’t know what he is doing.
—William Wordsworth
Internal fraud is costing U.S. companies over $500 billion annually. To make matters worse—from the largest corporation to the very smallest operation —no business is immune. This crime could be happening in your place of work right now… you just do not know it!
I believe that no internal fraud can take place within any organization without the fraudster: 1) holding a position of trust, 2) having little or no supervision or oversight, and 3) being perceived as honest and trustworthy. Together, these three elements foster acts of dishonesty and betrayal.
Below are three recent examples that help to show that no employer is immune to internal embezzlement:
Music Industry, March 2014: A business executive who embezzled approximately $400,000 from a prominent rock band was sentenced to 14 months in prison. This former chief financial officer for the band’s management company, pleaded guilty to six counts of first-degree theft. He was initially employed in 2005 and over the next several years he used company accounts and credit cards to pay personal debts and fund lavish family vacations, airline tickets, restaurants, hotels, spa treatments, life insurance and pricey California wines.
Youth Organization, January 2014: A former top official for a girls youth organization pleaded guilty to one count of mail fraud and one count of money laundering. The perpetrator was also ordered to pay about $370,000 that prosecutors say he embezzled from the youth organization. The organization’s chief relations officer said, “We were outraged that a trusted member of our staff would violate the fundamental values we teach our girls every day.”
Alert officials became suspicious of the alleged perpetrator’s actions and hired private investigators, who uncovered his alleged connection to a private contractor that supposedly did work on the properties.
According to an affidavit by the FBI, the perpetrator allegedly withdrew $64,500 from accounts believed to contain proceeds from the scheme. This withdrawal allegedly took place one hour after he was confronted by FBI agents.
Allegedly, during the last year and a half, the suspect approved invoices for questionable services provided by a firm registered under the name of the suspect’s deceased brother. The organization issued 23 checks to that firm totaling $368,278 between August 2012 and October 2013, court records allege. FBI agents obtained evidence showing most of the checks were deposited into one of two bank accounts opened under the names of the company and the suspect’s deceased brother. According to the affidavit, bank surveillance photographs show an individual who looked like the suspect either depositing or withdrawing funds into or from those bank accounts. Authorities served seizure warrants on three bank accounts believed to contain embezzled funds – the alleged fictitious account and two personal accounts in the suspect’s name, into which he is believed to have transferred funds derived from the youth organization’s checks.
Technology Company, March 2014: The former chief financial officer of a technology company was sentenced to more than four years in federal prison for embezzling about $15 million from the company. Allegedly, the perpetrator had complete access to the company’s finances, and wired money from company accounts to his personal investment accounts and manipulated the company’s books in an attempt to conceal the theft, the U.S. attorney’s office reported.
Want to see more examples of where these crimes have occurred, click on the link below: